Obamacare is key to combating income inequality, study finds
The Affordable Care Act (ACA), the landmark health care bill known as Obamacare, has been a point of contention since it was implemented back in 2010.
The constitutionality of the ACA is currently being argued in the Supreme Court. If the law were to be overturned, an estimated 21 million Americans would lose their health care coverage.
And a new study from Health Affairs found that repealing ACA would also contribute to income inequality by rescinding key benefits to lower-income Americans.
Poorer Americans (who were able to obtain Medicaid through Obamacare) “are better off because their out-of-pocket health spending is reduced and they do not pay private health insurance premiums,” the report found when factoring in government taxes, health care coverage, and tax credits when calculating income.
As a result of Obamacare, the analysis estimated, those in the bottom 10% of income distribution saw their incomes rise by an average of 18.8% of the federal poverty level (FPL). (In 2020, the FPL was $12,670 for an individual, $17,240 for a family of 2, $21,720 for a family of 3, and $26,200 for a family of 4.)
The findings corroborate previous study from the Tax Policy Center found that the ACA has played a major role in keeping low-income Americans from going bankrupt.
‘The Medicaid expansion makes a noticeable difference’
Matt Buettgens, senior fellow at the Urban Institute and one of the authors of the report, said he and his fellow researchers wanted to see what would happen if Obamacare was entirely repealed when factoring in taxes and health care coverage as well.
“It’s not exactly the same as going back to 2013 when the ACA was implemented because a lot has changed since then,” Buettgens told Yahoo Finance. “We constructed a picture with and without the ACA for 2019.”
Those in the bottom 10th percentile in Medicaid expansion states get an estimated 22.4% boost in their income because of the ACA, in comparison to only 11.4% in non-expansion states. Currently, 39 states have adopted the expansion.
“The pattern all the way through is about how the Medicaid expansion makes a noticeable difference just about everywhere,” Buettgens said. “There's a lot of research about other benefits of Medicaid expansion, including some papers that show that it actually saves lives. It actually decreases mortality, which is a very strong, strong result. This sort of adds to that.”
If a person’s income is below 138% of the FPL and their state has adopted the Medicaid expansion, they qualify for Medicaid. And if someone’s income is between 100% and 400% of the federal poverty level, they qualify for premium tax credits that lower their monthly premium.