The Impact of the Affordable Care Act on Household Economic Wellbeing

Co-funded with the Robert Wood Johnson Foundation

The Affordable Care Act (ACA) has made health insurance newly available to about 15 million individuals, both through expanded Medicaid coverage for very low-income adults and through the availability of new, subsidized private coverage for low- and middle-income households.  In addition to reducing cost-related barriers to care and providing protection from high medical costs, the new coverage options have the potential to impact household budgets.  Presumably, as households spend less on health care and health insurance, this frees up resources for other purposes, such as savings or the consumption of food, housing and transportation.  Such changes in consumption can provide an assessment of the ACA’s impact on overall economic wellbeing.  However, the potential for positive spillovers or reductions in out-of-pocket spending on consumption of other goods—and, therefore, enhanced economic wellbeing—has not yet been systematically explored.

Sayeh Sander Nikpay, Helen Levy and Thomas Buchmueller will use data on consumer spending to examine how the ACA has affected economic wellbeing. They will estimate the impact of Medicaid expansion and the ACA premium tax credits and cost-sharing subsidies on health spending and non-health consumption among targeted households.  They will also investigate whether the coverage expansions could result in substantial increases in the total resources that are available to low- and middle-income households and, as a result, improve their economic wellbeing.