The Patient Protection & Affordable Care Act, informally known as Obamacare, was signed into law on March 23, 2010 and has remained front and center in the public consciousness ever since. It has in turn become a symbol of political divisiveness, the subject of Supreme Court scrutiny, a hostage on the world economic stage, and the victim of technical difficulties. In short, the ACA is no longer really about health care reform in the minds of many.
The law has also undergone significant changes in recent years. Not only did the Supreme Court alter the scope of the ACA’s prescribed Medicaid expansion by making it a state’s decision and lessening the repercussions of opting-out, but the White House also decided to delay by a year the law’s mandate that employers with more than 50 employees provide health insurance.
This has only added to the confusion and politicization that is to be expected with any significant national reform measure, leading to countless questions about the law’s ultimate impact on daily life as well as who stands to benefit most and least as a result of its implementation.
This report sought to cut through the rhetoric and uncertainty to provide an unbiased, non-partisan assessment of how the Patient Protection & Affordable Care Act will affect each state from a purely economic standpoint, considering both the state government and individual perspectives. More specifically, we analyzed publicly available data using 11 metrics designed to gauge the impact of key provisions of the law on major consumer segments as well as each state’s budget, ultimately arriving at overall rankings for the states that stand to benefit most and least as a result of the ACA.
More information about our findings, methodology, and the Patient Protection & Affordable Care Act itself can be found below.
*Washington, D.C. ranked 18th.
- Red States Don’t Benefit as Much as Blue States: States that went to the Republican party in the 2012 presidential election received an average ranking of 31.9 in this report, compared to an average ranking of 20.7 for states that went Democratic. This largely speaks to the partisan divide when it comes to state Medicaid expansion.
- But If All States Opted-In, Rankings Would Change Drastically: WalletHub constructed alternate, hypothetical rankings to determine the extent to which the health care landscape would look different if all states were to opt-in for Medicaid expansion. Quite interestingly, Red States would benefit MOST in that scenario, seeing their average rank rise to 22.6 while Blue States would see their average rank fall to 29. In this everybody-expands scenario, West Virginia, Maine, Kentucky, New York, and South Carolina would assume the top five spots in the rankings. Nevada, Kansas, California, Minnesota, and Arizona would rank last. Georgia, which currently ranks last, would move up to 37.
- Taxpayers in Expansion States Receive a Significant Return on Investment: Taxpayers across the country are on the hook for Medicaid expansion costs, regardless of whether their state government decides to opt in or out given that federal income taxes are used to pay for the program. The only difference is whether or not taxpayers in a given state receive anything in return. For example, taxpayers in Vermont stand to receive an unlimited return on investment for every $1 they attribute to Medicaid, as the savings the Vermont state government stands to receive as a result of increased federal funding outweighs its citizens’ share of the federal income taxes used to fund the expansion in other states. On the flip side, Mississippi taxpayers are giving up $8.03 in federal funding for every dollar they are currently set to pay for Medicaid expansion in other states.
- States Paying Pennies on the Federal Dollar: Not only are states like Vermont, Massachusetts, New York, Delaware, and Maryland actually saving money on Medicaid expansion (i.e. the additional funding they will receive from the federal government exceeds the added cost of ACA-advised Medicaid expansion), but even the lowest-ranking states only have to pay up to $0.27 for each federal dollar they garner.
- Changes in Health Insurance Premiums Vary Widely: Average health insurance premiums are expected to stay the same or fall in nine states as a result of the ACA, with New York Colorado, Ohio, Massachusetts, and New Jersey expected to see reductions of up to 40%. On the other hand, premiums are expected to rise as much as 180% in states like Vermont, North Carolina, Arkansas, New Mexico and Nevada.
- Consumers Will Save Thousands on Out-of-Pocket Expenses: Out-of-pocket health care expenses are expected to decline significantly for consumers across the country as a result of the ACA. While the savings will be highest in Alaska, where consumers who spent above the ACA-mandated caps in 2012 will save more than $2,000 per year on average, savings are still expected to exceed $1,000 in even the lowest-ranking states, like Hawaii and Arizona.
- States Will Save Up to $235 Per Capita on Uncompensated Care: The ACA is expected to alleviate the uncompensated care burden on state hospital systems by reducing the number of low-income uninsured individuals who must be treated for emergent health issues, yet cannot pay for coverage. Savings are expected to be highest ($185 - $235) in Kentucky, Delaware, West Virginia, Arkansas, and Nevada. Washington, Arizona, the District of Columbia, Hawaii, and Massachusetts will save the least ($22 - $70).
- State Uninsured Rates Offer Surprises: While one might assume that all of the states opting for ACA-advised Medicaid expansion would see larger reductions in their uninsured population than states opting out, that isn’t necessarily the case. Rather, the change in a state’s uninsured population depends on its Medicaid requirements prior to the ACA’s expansion as well as its decision to opt in or out of federally-advised expansion. That is why states like Rhode Island, Nevada, California, New Mexico, and Arkansas will see their per capita uninsured populations decline the most, while Pennsylvania, Maine, Iowa, Wisconsin, and Massachusetts will still see declines, but they will be less significant.
- The Smallest Employers Benefit Across the Board: The ACA provides tax credits to small businesses with fewer than 25 employees who make less than $50,000 per year on average. Based on analysis of Census payroll records, the average company of that size in every state would qualify for the tax credit. The states with the most qualifying small businesses per capita include Montana, Wyoming, Vermont, Maine, and South Dakota.
- Southern States Have the Most Preexisting Conditions: West Virginia, Kentucky, Mississippi, Ohio, and Alabama have the largest population segments with preexisting conditions and therefore stand to benefit the most from the ACA’s prohibition against health care coverage denial as a result of a preexisting condition.
- Access to Care to Dictate Benefits for Newly Insured: WalletHub’s Access to Care rankings reflect health care access and affordability scores for each state as well as the number of licensed physicians per capita in order to identify which states are most capable of handling the influx of newly-insured citizens resulting from the ACA. Washington, D.C., Hawaii, Massachusetts, Vermont, and Delaware are best positioned to do so, while Idaho, Georgia, Mississippi, Nevada, and Texas may encounter the most difficulty in this regard.
States Benefiting Most & Least from ACA (1=Benefiting Most)
|Current Rank||State||Hypothetical Rank (Change vs. Current)**||Current Rank||State||Hypothetical Rank (Change vs. Current)**|
|1||New York||4 (-3)||27||Tennessee||6 (+21)|
|2||West Virginia||1 (+1)||28||Minnesota||50 (-22)|
|3||Vermont||7 (-4)||29||Missouri||17 (+12)|
|4||Kentucky||3 (+1)||30||Louisiana||12 (+18)|
|5||Ohio||8 (-3)||31||Virginia||41 (-10)|
|6||Rhode Island||11 (-5)||32||Alabama||10 (+22)|
|7||Maryland||25 (-18)||33||Hawaii||43 (-10)|
|8||New Hampshire||18 (-10)||34||Montana||24 (+10)|
|9||North Dakota||23 (-14)||35||Pennsylvania||29 (+6)|
|10||Connecticut||33 (-23)||36||Wisconsin||26 (+10)|
|11||Delaware||27 (-16)||37||California||49 (-12)|
|12||Oregon||14 (-2)||38||South Carolina||5 (+33)|
|13||Michigan||28 (-15)||39||Mississippi||9 (+30)|
|14||Massachusetts||30 (-16)||40||Nebraska||46 (-6)|
|15||New Jersey||34 (-19)||41||Nevada||47 (-6)|
|16||Maine||2 (+14)||42||Kansas||48 (-6)|
|17||Alaska||21 (-4)||43||Florida||20 (+23)|
|18||District of Columbia||4(-22)||44||Iowa||44 (0)|
|19||Arkansas||19 (0)||45||North Carolina||22 (+23)|
|20||Washington||39 (-19)||46||Texas||36 (+10)|
|21||Colorado||38 (-17)||47||Arizona||51 (-4)|
|22||Oklahoma||13 (+9)||48||South Dakota||32 (+16)|
|23||Indiana||15 (+8)||49||Idaho||35 (+14)|
|24||Wyoming||16 (+8)||50||Utah||42 (+8)|
|25||Illinois||45 (-20)||51||Georgia||37 (+14)|
|26||New Mexico||31 (-5)|
** WalletHub constructed alternate, hypothetical rankings to determine the extent to which the health care landscape would look different if all states were to opt-in for Medicaid expansion. The numbers in this column represent each state’s rank in this hypothetical scenario as well as the change from the current, real-life environment.
Largest & Smallest Percentage of <65 Population with a Preexisting Condition
|States Benefiting Most||%||States Benefiting Least||%|
*Data for this metric was only available for 46 of the 51 geographic areas that WalletHub considered in this report.
Most & Least Savings on Out-of-Pocket Medical Expenses
Best & Worst Changes in Average Premium
|1||New York||- 40.40%||47||Vermont||+ 117.03%|
|2||Colorado||- 22.13%||48||North Carolina||+ 136.38%|
|3||Ohio||- 21.15%||49||Arkansas||+ 138.30%|
|4||Massachusetts||- 20.37%||50||New Mexico||+ 141.75%|
|5||New Jersey||19.02%||51||Nevada||+ 178.75%|
Most & Least Tax Credit-Eligible Small Businesses Per Capita
Largest & Small Reductions in Per Capita Uninsured Rate
Most & Least Emergency Room Visits Per Capita
|Rank||State||Visits Per Capita||Rank||State||Visits Per Capita|
|1||District of Columbia||12.09%||47||South Dakota||0.306|
Most & Least Savings on Uncompensated Care Per Capita
|Top 5||State||Savings||Top 5||State||Savings|
|3||West Virginia||$212.62||3||District of Columbia||$66.42|
*Given that only states opting-in for Medicaid expansion stand to save on uncompensated care, the above table only considers such states.
|Rank||State||Benefit Per $1 Burden||Rank||State||Funding Sacrificed Per $1 Tax Burden|
|26||District of Columbia||0.25|
* The savings the Vermont state government stands to receive as a result of increased federal funding outweighs its citizens’ share of the federal income taxes used to fund the expansion in other states. Vermont, therefore, is essentially freerolling.
States Spending Most & Least Per $1 in New Fed Medicaid Funding
|Rank||State||Expense Required Per $1 in Fed Funding||Rank||State||Expense Required Per $1 in Fed Funding|
|1||Vermont||- $0.50||47||New Jersey||$0.17|
|3||New York||- $0.21||49||Arizona||$0.18|
*Negative numbers indicate states that will save money as a result of Medicaid expansion, given that the federal government will now pay for coverage they offered already. States that are opting-out of Medicaid expansion all received a “0” for this metric, as they are not increasing their Medicaid budgets.
Best & Worst Access to Care
|1||District of Columbia||47||Idaho|
Metric 1: Preexisting Conditions Per Capita – (weight = 1)
The ties between preexisting conditions and the ACA are obvious. The ACA prohibits insurers from denying coverage due to preexisting conditions, thereby solving a significant problem in today’s health care system. Because coverage for preexisting conditions is not dependent on Medicaid expansion, relative state benefits can be determined simply by analyzing the per-capita rate of preexisting conditions in each state. More specifically, states where a large percentage of the population is afflicted by a “preexisting condition” would benefit most from this particular aspect of the law, as a relatively large segment of their population would therefore become newly eligible for insurance coverage.
Metric 2: Savings Per Capita on Out-of-Pocket Medical Expenses – (weight = 1)
The ACA caps out-of-pocket medical expenses for families and individuals covered by health insurance. State benefits can therefore be determined by comparing the number of people in each state who have previously spent above the projected caps and the amount by which they have done so. Adjusting these figures for state population differences ultimately unearths per-capita savings rates stemming from the ACA’s cap on out-of-pocket medical expenses.
Metric 3: Average Change in Premium – (weight = 1)
Moral, ethical, and political motivations aside, the most important implication of health care reform for the currently insured is cost – particularly the amount of their monthly premium. Premiums represent the primary fixed cost associated with health insurance, and changes to its amount could have serious ramifications for a consumer’s overall budget.
WalletHub therefore examined historical premium rates for males and females ages 27, 40, and 64 and compared them to the average premiums associated with the plans available on state and federal health care exchanges for the same cohorts in order to gauge the monetary gains or losses that may be experienced by consumers in each state as a result of the ACA. When this metric is considered along with changes to out-of-pocket spending and expanded coverage criteria, one is able to garner a fairly clear picture of the ACA’s effects on the household level and how they differ across the country.
Metric 4: Tax Credit-Eligible Small Businesses Per Capita – (weight = 1)
Small businesses and tax-exempt organizations with fewer than 25 full-time employees are eligible for a significant tax credit (now up to 35% of the employer’s contribution to health insurance coverage, increasing to 50% in 2014). Companies are eligible if they cover at least 50% of the cost of health insurance for employees and have average annual wages of less than $50,000 per year.
WalletHub examined historical payroll data for companies with fewer than 20 employees and found that the average company of that size in every state would qualify for the ACA tax credit. We considered companies with <20 employees rather than those with <25 employees due to the limitations of publically available data, with the assumption that the findings would not differ for companies that have 20-24 employees.
Metric 5: Change in Per Capita Uninsured Population – (weight = 1)
The Affordable Care Act is expected to expand insurance coverage to millions of previously uninsured Americans through Medicaid expansion, tax credits, and other assistance measures. However, this aspect of the ACA was dealt a blow by the Supreme Court when it ruled that states could not be required or unduly coerced to expand their Medicaid criteria.
WalletHub examined projections for the change in each state’s uninsured population under both the opt-in and opt-out scenarios and used the latest available information regarding each state’s ultimate expansion decision to estimate the ACA’s impact on health insurance coverage across the country.
Metric 6: Emergency Room Visits Per Capita – (weight = 1)
High emergency room visit rates are considered a sign of a poorly functioning health care system, as emergent patients are most commonly uninsured, low-income individuals who lack the means to pay for regular care and therefore only receive medical attention under dire circumstances.
WalletHub therefore examined historical per-capita emergency room statistics for each state in order to determine the most and least significant opportunities for improvement as a result of the ACA.
Metric 7: Average Savings on Uncompensated Care Spending Per Capita – (weight = 1)
Uncompensated care – health services not covered by insurance for which hospitals are not reimbursed – is expected to decline as a result of the ACA’s new minimum care requirements as well as the state-optional expansion of Medicaid. The latter stands to have the more significant impact, as it will provide coverage to low-income individuals and families who previously lacked the means to either acquire health insurance or pay for emergent care out of pocket.
A given state’s stance on Medicaid expansion will therefore have a significant impact on the health of its hospital system as well as that of its economically disadvantaged populous. Not only will millions of Americans remain uninsured in states that opt against Medicaid expansion – thereby preventing any decline in uncompensated care rates – but with nationwide cuts to safety-net hospitals planned for 2014, a tremendous monetary burden will also be placed on the hospitals that provide the most uncompensated care in those states.
WalletHub compared published reports estimating each state’s uncompensated care savings to determine the average savings each state can expect and thereby construct its rankings for this metric. For the purposes of this report, states that have opted out of Medicaid expansion or are likely to do so were considered to incur no savings.
Metric 8: Cost-Benefit of Medicaid Expansion – (weight = 1)
Each state’s decision regarding Medicaid expansion stands to have widespread implications for its budget and overall economic well-being.
For starters, expanding Medicaid coverage to everyone up to 138% of the poverty line would require most states to allocate additional funds to their Medicaid programs. Even though the federal government will match 100% of the cost of expansion for the next three years, before gradually reducing assistance to 90%, some states are still shying away from the added costs. The thing is, federal income taxes are used to pay for Medicaid, which means taxpayers in states that do not expand coverage will still be forced to pay a share of the cost of expansion without reaping any of the benefits. There also stands to be a cost-benefit disparity among states that do expand coverage given the differences in Medicaid requirements that existed prior to the ACA’s implementation. In other words, the federal government will now be picking up the tab for programs currently being funded at the state level in certain cases.
This metric was therefore used to determine how much federal funding each state would receive for every $1 of additional Medicaid funding it will be on the hook for as a result of ACA expansion (i.e. the sum of state budget additions and the share of the new Medicaid burden assumed by taxpayers). Opt-in states were ranked based on the multiples they are expected to receive on their investment, while opt-out states were evaluated in terms of how much federal assistance they are leaving on the table relative to how much taxpayers are already on the hook for (i.e. how much taxpayers in a given state are spending on federal expansion in other states).
In light of how this metric encapsulates the ramifications of each state’s particular health care policies and therefore its interactions with the ACA, it was also used as a tiebreaker in the event that two states tied in the overall rankings.
Metric 9: State Spending Required for Federal Funding – (weight = 1)
This metric was used to determine how much money each state government must spend in order to garner $1 in added Medicaid funding from the federal government. States that opt-out will obviously neither spend additional money on Medicaid, nor receive additional federal funding. States that opt-in, however, will essentially receive federal funding at different price points given their existing Medicaid requirements and the corresponding added expense of complying with federal standards. The rankings for this metric therefore indicate the return on investment that each state gets on its spending, as opposed to the previous metric which indicates the return on investment for taxpayers.
Metric 10: Access to Care – (weight = 1)
Simply considering changes to the size of the uninsured population in state would not effectively gauge the ACA’s true impact on health care availability and affordability. After all, as Aurelie Thiele, associate professor in the Department of Industrial and Systems Engineering at Lehigh University, posited in a recent interview with WalletHub, “If more people have health insurance but can’t schedule an appointment with a primary-care provider within a reasonable amount of time due to provider unavailability, what is the point of having health insurance?”
Considering relative differences in terms of access to care in each state can therefore provide a sense of what type of health care environment the newly insured in each state will enter as well as the logistical barriers to health that they will encounter. WalletHub’s Access to Care rankings are a product of number of licensed physicians per capita in each state as well as the low-income access and affordability scores given state health care systems by non-profit groups.
Metric 11: Preliminary Applications – (weight = 0.25)
The Department of Health and Human Services recently released application, eligibility, and enrollment statistics from the ACA’s first month, and while these figures are obviously tainted by the myriad technical difficulties that have afflicted the new online health care exchanges, they also cannot simply be ignored. As a result, WalletHub compared “Obamacare exchange” application numbers from each respective state to the size of its pre-ACA uninsured population in order to gauge early interest in and accessibility to the law’s provisions. We assigned this metric a relatively low weight due to the limited sample size provided by the data, the assumption that the website problems will eventually get sorted out, and the propensity people have to put off change until the last minute.
States were considered IN or OUT for Medicaid expansion based on their decisions as of 11/18/2013. If a state had not yet made an official decision regarding Medicaid expansion by that date, WalletHub made an In/Out determination based on the most likely outcome.
States that WalletHub considered to be expanding Medicaid include Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Kentucky, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Dakota, Ohio, Oregon, Rhode Island, Vermont, Washington, and West Virginia. The District of Columbia is also expanding Medicaid.
States that WalletHub considered not to be expanding Medicaid include Alabama, Alaska, Florida, Georgia, Idaho, Indiana, Iowa, Kansas, Louisiana, Maine, Mississippi, Missouri, Montana, Nebraska, North Carolina, Oklahoma, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, Wisconsin, and Wyoming.
Data used to conduct this report is from the U.S. Census Bureau, the U.S. Department of Health and Human Services, the New York State Department of Health, the Urban Institute, the Federation of State Medical Boards, HealthAffairs.org, the Commonwealth Fund, the Manhattan Institute, the U.S. Small Business Administration, the Kauffman Foundation, Families USA, the and the Internal Revenue Service.
WalletHub would also like to extend special thanks to Robert A. Schapiro from the Emory University School of Law, Gail Wilenski from Project Hope, Ed Haislmaier from the Heritage Foundation, Paul Fronstin from the Employee Benefit Research Institute, and Aurélie C. Thiele from Lehigh University for lending their insights as we conducted this report.
For questions or to schedule an interview regarding this report, please contact our media department.