Effects of Advanced Premium Tax Credits and Cost-Sharing Reductions on Health Care Utilization and Expenditures

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PROJECT SUMMARY/ABSTRACT DESCRIPTION: See instructions. This must contain a summary of the proposed activity suitable for dissemination to the public (no proprietary/confidential information). It should be a self-contained description of the project and contain a statement of objectives and methods to be employed. It should be informative to other persons working in the same or related fields. DO NOT EXCEED THE SPACE PROVIDED. There is limited research on the effects of two distinct Patient Protection and Affordable Care Act (ACA) subsidies designed to incentivize the purchase of private health insurance: premium tax credits and cost- sharing reductions. The premium tax credits and cost-sharing subsidies are intended to reduce the price of obtaining insurance and medical care for low-income people who did not previously have access to affordable insurance coverage. People with incomes at 100% of the federal poverty level (FPL) gain eligibility for substantial premium tax credits and cost-sharing reductions, lose eligibility for cost-sharing reductions at 250% FPL, and lose eligibility for premium tax credits at 400% FPL. Little evidence exists on how low- income people's health care use and expenditures change in response to premium tax credits and cost- sharing reductions for private insurance. The proposed research will use a quasi-experimental design and an ideal data source, the Medical Expenditure Panel Survey, to investigate the effects of premium tax credits and cost-sharing reductions on health care utilization and expenditures. Aim 1 assesses changes in the types (i.e., any use) and intensity (i.e., counts of services) of health care use associated with different levels of eligibility for the ACA premium tax credits and cost-sharing reductions. By examining the observed patterns of health care utilization, Aim 2 assesses changes in medical expenditures and patient cost burden. This study directly informs two areas of focus for the Agency for Healthcare Research and Quality: (1) increase accessibility by evaluating ACA coverage expansions, and (2) improve health care affordability, efficiency, and cost transparency. The proposed research will address a significant knowledge gap by assessing the degree to which eligibility for the ACA premium tax credits and cost-sharing reductions separately affect health care use and expenditures among low-income consumers. It is critical to understand whether low-income people are using their insurance to obtain different types of medical care or change the volume of services to inform modifications to the ACA subsidies. The subsidies are intended to substantially reduce the out-of-pocket burden. This study will assess whether that aim is achieved. By comparing different levels of subsidies, the results will also be useful to policymakers to modify the subsidy structures within the 100% to 400% FPL range and potentially above 400% FPL. Many of the remaining uninsured fall below 400% of the FPL, and the results would allow for better forecasts of the budgetary, coverage, and health care use effects of expansions to the subsidies.