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Reform Would Increase Healthcare Spending, But Millions More Would Have Insurance, Says RAND

Janice Simmons, for HealthLeaders Media, February 17, 2010

In just over a week, congressional leaders will meet on Feb. 25 with President Obama in a televised healthcare reform summit.

As a way of anticipating questions about the two reform bills passed last year by the House and the Senate, RAND researchers have been examining the impact of the bills, with a focus on access, quality, and cost.

Their analysis was done using "micro simulation" methods, which provide a "way of quantifying how well a policy option will achieve its goal," said Elizabeth McGlynn, associate director of RAND Health and co-leader of the RAND Compare initiative. These methods are similar to the methods "used by the Congressional Budget Office to provide Congress with estimates of the effects of proposed legislation on federal spending."

Both bills would reduce the number of individuals without health insurance by more than 50%, McGlynn said Tuesday at a telebriefing. "We project that by 2019—if no new laws are passed—about 53 million people will be uninsured. The House bill (HR 3962) would reduce that number to 24 million, whereas the Senate bill (HR 3590) would reduce that number to 25 million."

National spending on healthcare would rise slightly more than it would if the bills were not passed—related to increased Medicaid spending and federal subsidies for those participating in a health exchange, McGlynn said. "We estimate that under the House bill, national spending would increase about 3.3%, whereas the increase would be 2% under the Senate bill."

Under the House bill, government spending would rise by $1 trillion between 2013 and 2019, McGlynn said. Under the Senate bill, "We project an increase of $899 billion between 2014 and 2019."

Among other findings in the RAND analysis:

  • Under the House bill, by 2019, about 12 million more people would be enrolled in employer sponsored insurance. At the same time, 10 million more would be enrolled in Medicaid, and 8 million more would be enrolled in non-group insurance, including the national Health Insurance Exchange proposed by the bill.
  • Under the Senate bill, employer sponsored insurance members would increase by 12 million, and the number of insured in the non-group market—including the state level Health Benefit Exchanges proposed in the bill—would increase by 10 million.
  • By 2019, in the Senate bill, about 28 million people would purchase insurance through the Health Benefit Exchanges mandated by the legislation. The exchanges would be state run organizations through which private companies would sell health insurance to individuals. An estimated 15 million who use the exchanges would qualify for government subsidies to help pay for their insurance.
  • Of the 25 million Americans who would remain uninsured in 2019, about one third (9 million) would be eligible for Medicaid but not enroll. There may be opportunities to further increase coverage by conducting outreach efforts to improve Medicaid enrollment among those newly eligible, according to researchers.

The individual mandate plays the "largest role" in increasing insurance coverage, according to McGlynn. It could reduce the number of uninsured by 21.5 million (41%). The employer penalties and Medicaid expansions by themselves would reduce the number of uninsured Americans by 1.5 million and 8 million, respectively.

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