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ACA Subsidies Associated with Lower Out-of-Pocket Spending

Analysis  |  By Jack O'Brien  
   March 01, 2021

Marketplace subsidy implementation was also associated with a 30% lower probability of catastrophic health expenditures among low-income adults.

Affordable Care Act (ACA) marketplace subsidies were associated with lower out-of-pocket spending among healthcare consumers, according to a Health Affairs study released Monday afternoon.

In reviewing survey data from 2008 to 2017, researchers found that marketplace subsidy implementation was associated with a 30% lower probability of catastrophic health expenditures among low-income adults, those at 139–250 percent of the federal poverty level (FPL).

Among that same group, individual marketplace subsidy implementation was also associated with a 17% drop in out-of-pocket spending.

Meanwhile, middle-income adults, those at 251–400% of the FPL, did not "experience reduced financial burden by either measure."

The study concluded that the marketplace subsidies are effective measures to assist healthcare consumers, especially low-income individuals, across the country.

"Amid efforts to undermine the ACA Marketplaces, including halting of cost-sharing subsidy payments to insurers and elimination of the individual mandate, our findings provide evidence that the Marketplace subsidies are advancing one of their central objectives: reducing the financial burden of health care for working-age people in the US," the researchers wrote.

Related: Out-of-Pocket Spending was Mostly Concentrated in Short Time Intervals

The Health Affairs findings were released as the fate of the ACA rests with the Supreme Court, which heard a challenge to the constitutionality of the landmark healthcare law in November.

In an interview with HealthLeaders following the oral arguments in California v. Texas, Brenda Pawlak, managing director at Manatt Health, said that the potential repeal of the ACA is "frightening" for provider organizations because "somebody's going to have to pick up that cost and states are in such a crisis everywhere, so it's going to fall on hospitals."

Related: What SCOTUS Oral Arguments in ACA Case Mean for Hospitals

This is also the latest Health Affairs research into the financial impact of ACA marketplace subsidies.

At the end of 2019, a study found premiums for subsidized health plans under the ACA fell more in rural markets than they did in urban markets from 2017 to 2019.

Monthly premiums fell from $288 in 2017 to $162 in 2019 for subsidy-eligible enrollees in rural markets. 

Related: Rural Subsidy-Eligible ACA Enrollees See Biggest Premium Declines

Jack O'Brien is the Content Team Lead and Finance Editor at HealthLeaders, an HCPro brand.

Photo credit: CHICAGO, ILLINOIS - JULY 22, 2017: [A sign advertising Obamacare] / Editorial credit: Heather A Phillips /

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