Health Affairs

From Health Affairs

Under Health Reform, a $280+ Average Annual Savings on Care for Those with Individual Insurance

Bethesda, MD -- There are more than 11 million Americans under the age of 65 covered by private individual health insurance plans, also called nongroup insurance. For this group, who are usually unable to get coverage through an employer, the implementation of the Affordable Care Act of 2010 will bring welcome financial relief. A new study, released today as a Web First by Health Affairs, simulated the effects of health reform on these individuals’ plans during 2001–08 and found that their average annual out-of-pocket savings on medical care and drugs might have been anywhere from $280 over the entire population to as much as $589 for those between 55 and 64. Under the Affordable Care Act, these individuals would obtain their insurance through insurance exchanges, and benefit generosity would vary with income. The author predicts that average savings for annual out-of-pocket spending on care would fall anywhere from $535 to $104, with those with lower incomes realizing more of a savings.

To arrive at his findings, the author drew a sample from the Medical Expenditure Panel Survey Household Component, a nationally representative household survey conducted by the Agency for Healthcare Research and Quality (AHRQ). A total of 2,672 adults with individual insurance between 2001 and 2008 were compared to groups of adults who had insurance through small employers (6,476) and large employers (54,360). All expenditures were inflated to 2008 dollars.

Other key study results:

• Adults with individual insurance spent an average of $1,100 annually out-of-pocket for medical care and prescription drugs, compared to those getting insurance through small ($607) and large ($546) employers.
  
  
• On average, those between 55 and 64 would save $589, and adults with chronic conditions would save $252 in annual out-of-pocket costs of care.

“Under the Affordable Care Act, an important improvement for everyone who currently has individual insurance will be the reduced probability of incurring very high out-of-pocket spending,” concludes Hill. “Adults who currently have individual insurance may benefit from reduced risk for high out-of-pocket spending and lower average out-of-pocket costs for medical care and prescription drugs.”

Health Affairs is the leading journal at the intersection of health, health care, and policy. Published by Project HOPE, the peer-reviewed journal appears each month in print, with additional Web First papers published periodically and health policy briefs published twice monthly at www.healthaffairs.org. You can also find the journal on Facebook and Twitter. Read daily perspectives on Health Affairs Blog. Download weekly Narrative Matters podcasts on iTunes.

The full text of each Health Affairs Web First paper is available free of charge to all Web-site visitors for a two-week period following posting, after which it switches to pay-per-view for nonsubscribers. Web First papers are supported in part by a grant from The Commonwealth Fund.