ECONOMIC REPORT OF THE PRESIDENT

(Marketplaces), web-based markets that help consumers comparison shop
to find a plan that matches their particular preferences and needs.
The second component of these reforms was designed to ensure
that coverage on the reformed individual market was affordable. To overcome
the affordability challenges that kept many low- and middle-income
Americans from obtaining coverage before the ACA, the law created a
premium tax credit for people with incomes between 100 percent and 400
percent of the FPL who purchase coverage through the Marketplaces.9 The
premium tax credit ensures that all consumers have affordable coverage
options by limiting the amount enrollees must contribute to a “benchmark”
plan to a specified percentage of their income; if the premium for the benchmark
plan exceeds that amount, the tax credit makes up the difference. For
individuals with incomes below 250 percent of the FPL, the law also provides
cost-sharing reductions that reduce enrollees’ out-of-pocket costs. As an
additional measure to keep premiums affordable, the law implemented
an individual responsibility provision that requires people who can afford
coverage to make a payment if they elect to go without it. This requirement
encourages healthy individuals to enroll in coverage, which protects
the individual market’s ability to pool risk between the healthy and the
sick, thereby helping keep premiums affordable; indeed, the Congressional
Budget Office has estimated that individual market premiums would be
around 20 percent higher in the absence of this provision (CBO 2015b). The
provision also discourages individuals from shifting their health care costs
to others in the form of uncompensated care.
The U.S. uninsured rate has declined dramatically since these reforms
took effect at the beginning of 2014, falling from 14.5 percent in 2013 to 8.9
percent in the first half of 2016, as illustrated in Figure 4-1. The decline in the
uninsured rate seen over this period is, by far, the largest decline since the
years following the creation of Medicare and Medicaid in 1965. Consistent
with the nearly unprecedented magnitude of this decline, research aimed at
isolating the effect of the ACA from other trends in the health care system
or the economy has concluded that the overwhelming majority of these
gains are directly attributable to the ACA’s reforms (Courtemanche et al.
2016; Blumberg, Garrett, and Holahan 2016). Using a methodology that
controls for unrelated economic and demographic changes, HHS estimates
that 17.7 million non-elderly adults have gained coverage since the end of
2013 because of the ACA’s comprehensive reforms (Uberoi, Finegold, and
Gee 2016). Combining these gains since 2013 with the gains for young adults
9 In states that have expanded Medicaid, people with incomes between 100 and 138 percent of
the FPL receive coverage through Medicaid. In non-expansion states, these people are generally
eligible for subsidized coverage through the Marketplace.
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