Social Welfare Final Paper

SPRING 2017 VOLUME 51, NUMBER 1 27 M. PAULA FITZGERALD, THOMAS K. BIAS, AND TAMI GURLEY-CALVEZ The Affordable Care Act and Consumer Well-Being:

Knowns and Unknowns The Patient Protection and Affordable Care Act, signed into law in 2010, is the latest in a long string of efforts to reform health care in the United States. In this article, we provide a brief background and explore key components of this law. We examine extant research on what is known about how insurance coverage impacts consumer well-being and the role health and financial literacy play in achieving well-being. We then introduce important research questions highlighting areas where little is known and where much opportunity lies to inform policy and improve consumer well-being. The Patient Protection and Affordable Care Act evokes strong emotions, especially when referred to by its imprecise nickname, “ObamaCare.” Headlines report divergent views. Press from the political left: “This Is What an ObamaCare Victory Looks Like” (Chris Hays withMSNBC, June 17, 2014), often has little in common with headlines in the con- servative press: “Fox News Poll: Voters Regret ObamaCare, Say Coun- try Is Worse off Under New Law” (Dana Blanton,Fo x N e w s, June 10, 2014).

In this article, we do not debate the politics behind the policy; instead, we outline the law’s major components for scholars interested in conducting research about consumer well-being. We provide extant evidence that access to health insurance is related to important dimensions of well-being and that health and financial literacy facilitate well-being. The bulk of this article then strives to flesh out some of the theoretical and empirical work needed to understand the impact of the Affordable Care Act (ACA), to M. Paula Fitzgerald ([email protected]) is Nathan Haddad Professor of Business Administration and Professor of Marketing and Thomas K. Bias ([email protected]) is Assistant Professor and Interim Co-Director of The Health Research Center, School of Public Health, both at West Virginia University. Tami Gurley-Calvez ([email protected]) is an Assistant Professor in the Department of Health Policy and Management at the University of Kansas School of Medicine.

The primary data reported in this article was funded by the West Virginia Offices of the Insurance Commissioner. The views expressed in this report are the views of the authors and do not necessarily represent the views of the Offices of the Insurance Commissioner, West Virginia University, or the state of West Virginia.

The Journal of Consumer Affairs, Spring 2017: 27–53 DOI: 10.1111/joca.12059 Copyright 2015 by The American Council on Consumer Interests 28 THE JOURNAL OF CONSUMER AFFAIRS inform policymakers and organizations who wish to facilitate its goals, and help consumers maximize their health and financial well-being.

AFFORDABLE CARE ACT OVERVIEW ACA is the result of years of effort to reform the US health care system.

It has been more than two decades since President Clinton’s 1993 attempt to reform health care at the federal level failed (see Heclo 1995). Yet, many programs and policies aimed at controlling costs, particularly costs asso- ciated with Medicaid and Medicare, have been successfully implemented at the state and federal levels. Most notably, Massachusetts passed three waves of health care legislation from 1988 to 2006, including an employer mandate to assist with health insurance costs, an expansion of the Medi- caid benefits to higher income brackets, a mandate for individuals to have health insurance, and the Massachusetts “Connector,” a marketplace in which insurance plans can be openly bought and sold (McDonough et al.

2006). These Massachusetts reforms were the basis for many federal ACA elements.

ACA has three primary goals (US Department of Health & Human Service 2014a): (1) the dual goal of improving the quality of health care and lowering costs, (2) increasing access to health care, and (3) providing greater consumer protection in health care. These goals focus on areas where the US health care market was not perceived as operating optimally.

Empirical work supports that premise.

With respect to health care costs, Davis et al. (2014) report that US health care spending per capita in 2011 was $8,508, the highest among 11 developed nations. 1Norway, the nation with the second highest expendi- ture, spent roughly $2,000 less per capita. Four nations’ per capita spending was 50% of US spending, less than $4,000.

The United States ranked last on three indicators of healthy lives: (1) deaths prior to age 75 that are potentially preventable with effective, timely health care (a measure known as mortality amenable to health care 2), (2) infant mortality, and (3) healthy life expectancy at age 60 (Davis et al. 2014). The Institute of Medicine (IOM) reports that when US life expectancy and health data are compared to 16 peer countries, 3 1. Australia, Canada, France, Germany, Netherlands, New Zealand, Norway, Sweden, Switzerland, United Kingdom, and the United States.

2. For a clear definition see: http://www.commonwealthfund.org/publications/in-the-literature/ 2011/aug/mortality-amenable-to-health-care-in-the-united-states.

3. Australia, Austria, Canada, Denmark, Finland, France, Germany, Italy, Japan, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, United Kingdom, and the United States. SPRING 2017 VOLUME 51, NUMBER 1 29 life expectancies are at (for males) or near (for females) the bottom. Addi- tionally, when compared to the average statistics of these peer nations, the United States has more injuries, teen pregnancies and sexually transmitted diseases, greater obesity, diabetes, heart and lung disease, and disability (Institute of Medicine 2013).

Davis et al. (2014) also explore access to health care. They report that the United States ranked last in access to care due to financial reasons, based on indicators such as inability to pay for prescriptions, insurance denial, and reports of over $1,000 in out-of-pocket expenses. However, the United States was fifth overall in terms of the timeliness of the care, a second dimension of accessibility. IOM, in its 2013 report, explicitly attributes at least part of poor health outcomes observed in the United States to low access, which the Institute attributes to lack of insurance, poverty, and limited availability of primary care.

Improving quality of care and lowering costs is being addressed by elements of ACA such as: (1) providing preventive services with no out-of-pocket expenses, (2) linking health care performance to pay for Medicare and other physician pay starting in 2015, (3) increasing price transparency for medical products and service, (4) providing small busi- nesses with tax credits to help these firms provide health insurance benefits, and (5) offering tax credits to middle-class families (individuals making 400% or less of the federal poverty level) that can be used to supplement the purchase of health insurance on state- or federally-operated marketplaces 4 (see US Department of Health & Human Services 2014b).

Accessibility was also addressed several ways. Health insurance mar- ketplaces were created to increase competitiveness of health insurance offerings, thereby increasing affordability and quality. Medicaid expansion was intended to cover the working poor, those making 100% to 133% of the poverty level (Medicaid 2014). According to the Kaiser Family Foun- dation, 27 states have expanded their Medicaid programs and three states are still having an open debate about the related costs and benefits (Kaiser Family Foundation 2014). States can also offer Medicaid services to dis- abled individuals at home, as opposed to requiring institutionalization.

As a last example of provisions to increase accessibility, ACA increased reimbursements for rural health care providers to encourage these profes- sionals to stay in rural communities. 4. Marketplaces, also known as exchanges, are generally Internet-based electronic supermarkets in which consumers can compare qualified health plans and purchase health insurance in a competitive space. They can also be accessed via pen and paper applications. 30 THE JOURNAL OF CONSUMER AFFAIRS Finally, many consumer protections have been established under a “New Patients’ Bill of Rights” (The White House 2012). Possibly the most well-known of these are disallowing (1) denial for pre-existing conditions, (2) rescinding coverage when the insured consumer becomes ill, and (3) lifetime limits on insurance coverage. Preventive care is covered at no fee beyond premiums. Additionally, consumers are guaranteed a right to appeal when an insurer denies coverage.

Clearly, ACA is a complex, multifaceted law with potentially far- reaching impact. We now turn to discussing what is known about access to quality health care, literacy, and their relationship to consumer well-being.

CONSUMER WELL-BEING Consumer well-being is “a state of flourishing that involves health, hap- piness, and prosperity” (Mick et al. 2012). Operationally, scholars have focused on several dimensions of consumers’ lives (e.g., health, financial, and food well-being) and used both subjective and objective well-being measures. As examples, Schmeiser and Seligman (2013) recently used nonhousing assets as an objective measure of financial well-being; Davis et al. (2014) used objective health outcomes (such as a diabetes diagno- sis) to assess well-being. Subjective health measures are also common, such as the Behavioral Risk Factor Surveillance System (BRFSS) ques- tionnaire in which consumers report their overall health using a 5-point “poor” to “excellent” scale (Centers for Disease Control and Prevention 2011). Finally, well-being is a continuum. Winter et al. (1999) examined well-being as a function of housing, food, and equipment, conceptualizing well-being as ranging from “in crisis” to “thriving.” Herein, we use a multidimensional approach to well-being, focusing primarily on the health and financial components. We begin with an overview of what is known about the relationship between insurance coverage (a major component of ACA via the individual mandate 5and Medicaid expansion that serve as vehicles to increase access to the health system) and well-being.

Insurance Coverage and Health Well-Being: What Is Known Having health coverage is related to objective and subjective health well-being. For example, The Commonwealth Fund (2011) reports that the 5. The individual mandate refers to the requirement that the vast majority of Americans must have health coverage or pay a penalty. For a plain English explanation, see https://www.healthcare.gov/ what- if- i- dont- have- health- coverage/. SPRING 2017 VOLUME 51, NUMBER 1 31 obesity rate among uninsured children is approximately 20% higher than those covered under private insurance (32% of uncovered children vs. 27% of those covered under private insurance). Uninsured consumers are also less likely to have chronic diseases controlled; consumers without insur- ance are more likely to have high blood pressure when a health care provider has previously diagnosed them with hypertension (71% vs. 51% of individuals with private insurance) and high hemoglobin levels when they have been diagnosed with diabetes (28% vs. 15% of those with private insurance). Deidentified medical records from West Virginia Federally Qualified Health Centers show significant differences in obesity rates for individuals with (33.1%) and without (39.8%) insurance, as well as greater mental illness and depression among uninsured consumers (21.4% for uninsured vs. 12.8% for insured; Bias et al. 2014).

Differences are also found from a subjective well-being standpoint.

For example, 17% of consumers without insurance respond “never” or “sometimes” to questions such as: the health care provider listens care- fully, respects what the patient has to say, and spends enough time with the patient. Compare this to 8% of individuals with private insurance (Com- monwealth Fund 2011). Additionally, a survey of West Virginians shows that insured consumers reported being in better health than uninsured con- sumers based on the BRFSS self-reported health scale (consumers with insurance: 59.9% indicating “good” or “excellent” vs. 44.4% of consumers without insurance; Bias et al. 2014).

Perhaps the ultimate in negative health outcomes is death. It is esti- mated that approximately 44,000 US deaths of adults ages 18–64 in 2005 were associated with lack of insurance (Wilper et al. 2009). Indeed, the odds of increased mortality for individuals without insurance remained higher even when factors such as gender, age, race, poverty, smoking, and other health-relevant conditions (body mass index, BMI; physician-rated health) were controlled. More recently, data examining Massachusetts’s health care reform suggest that the adult mortality rate and deaths from causes amenable to health care were significantly reduced when com- pared to a control group of counties located in other US states that did not require insurance coverage at the time (Sommers, Long, and Baicker 2014). Specifically, for each 830 adults gaining health insur- ance, one death was prevented. A report from the University of Kansas Medical Center estimates that over 5,000 lives would be saved annually due to smoking interventions, and 800 women could be diagnosed ear- lier with breast cancer (increasing their chances of survival) if the state expanded Medicaid coverage (Ellerbec, Engleman, and Gurley-Calvez 2014). 32 THE JOURNAL OF CONSUMER AFFAIRS It is important to note that researchers interested in further study of how increased insurance coverage in the United States impacts health will need to explicitly control potential confounds (e.g., income, education, and pre-existing conditions) that may affect health outcomes. It is likely that access to insurance has the capability to mitigate some of these health inequities; yet there may be underlying variables that mediate the relationship between health and insurance status.

Insurance Coverage and Financial Well-Being: What Is Known Evidence suggests that financial well-being is also positively related to insurance coverage. In 2009, a study using a random sample of US con- sumers filing bankruptcy concluded that 62.1% of 2007 bankruptcies were due to medical debt (Himmelstein et al. 2009). These authors used several indicators of medical cause, including the consumer owing more than 10% of their pretax income for medical expenses, a household losing income due to illness, or the consumer’s home being mortgaged to cover medical debt. Out-of-pocket medical costs for these families filing for bankruptcy averaged $26,971 for families who did not have health insurance coverage when the illness was diagnosed, and $17,749 for families who did have health insurance coverage when the illness was diagnosed.

Using state Medicaid expansions from 1992 to 2004, Gross and Notowidigdo (2011) estimated the impact of health insurance on bankruptcy filings. At the time of their study, 48.9% of individuals eligible for Medicaid actually enrolled. Gross and Notowidigdo report that a 10% increase in the share of the Medicaid-eligible population to 58.9% enrollment would decrease personal bankruptcies by 8% (about 1,900 bankruptcies). The authors estimate that out-of-pocket medical costs are a pivotal cause in one-out-of-four bankruptcies among low-income households. Evidence from the Oregon Health Insurance Experiment, in which a lottery was used to allocate Medicaid eligibility, also suggests that insurance reduces financial hardship by reducing the probability that unpaid bills were sent to collection by about 10% (Finkelstein et al. 2012).

However, the relationship between health care costs and financial well-being is not crystal clear; economists examining Massachusetts’s bankruptcy rate following its health care reform found an increase in bankruptcy filings (Badding, Stephenson, and Yeoh 2012). These authors suggest that Massachusetts’s relatively modest required level of coverage may have led to unexpected out-of-pocket costs or, alternatively, reduc- tions in reimbursements to providers resulted in more aggressive debt collection tactics. SPRING 2017 VOLUME 51, NUMBER 1 33 Overall, the bulk of the evidence supports the proposition that lack of insurance, which serves as a proxy for “access” to health care, is negatively related to health and financial well-being.

Consumer Literacy and Well-Being: What Is Known SeveralJournal of Consumer Affairsspecial issues are devoted to health and financial literacy. Health literacy is defined as “the degree to which individuals have the capacity to obtain, process, and understand basic health information and services needed to make appropriate health decisions,” (US Department of Education 2006, iii). Remund (2010, 284), based upon an extensive literature review, defined financial literacy as, “a measure of the degree to which one understands key financial concepts and possesses the ability and confidence to manage personal finances through appropriate, short-term decision making and sound, long-range financial planning, while mindful of life events and changing economic conditions.” Empirical work suggests that health and financial literacy are low among substantive proportions of US citizens. About 12% of US adults have “proficient” health literacy and about 38% have only “basic” or “below basic” health literacy (US Department of Education 2006). Huston (2010) notes that about nine of every 10 measures of financial literacy fail to categorize individuals’ level of literacy; however, among the ones that do, the news is not good. Based on Bankrate’s (2003) general financial literacy measure, 20% of randomly selected adult Americans earned a “D” and 35% an “F”; Jump$tart Coalition for Personal Financial Literacy reported that the average financial literacy score in 2008 among high school seniors was 48.3% and a sample of college students scored 62.8% (Mandell 2008).

“Health insurance literacy” reflects aspects of financial and health literacy. Initial work conceptualizing and measuring this construct is being conducted in the contexts of older Americans using Medicare (McCor- mack et al. 2009) and in private health insurance (Paez et al., 2014). These researchers focus on the skills and knowledge needed to successfully select and use health insurance. McCormack et al. (2009) conclude that older adults generally had low to moderate health insurance literacy; Paez et al. (2014) are continuing their work to determine appropriate bench- marks for “high” and “low” health insurance literacy levels. The authors suggest that health insurance literacy is essential in using the health care system.

Health and financial literacy have been linked to well-being. The US Department of Health and Human Services (2014c) identifies several 34 THE JOURNAL OF CONSUMER AFFAIRS aspects of health negatively related to health literacy including reduced use of preventive services (resulting in individuals entering the health care system sicker), lessened ability to manage chronic disease, and lower self-reported health status. Huston (2010) lays out theory that explicitly links financial literacy as an antecedent to financial well-being. Empirical work tends to support that theory. For instance, a massive study of 65,000 college students showed that students from states mandating financial literacy education exhibit more responsible loan, banking, and credit behaviors (Higher One 2014).

A thorough discussion of ACA needs to acknowledge that ACA imple- mentation is at the confluence of two types of consumer literacy and that a significant portion of Americans struggle with these skills. In partic- ular, health literacy may be key to taking advantage of the preventive measures and consumer protections addressed by ACA. Financial liter- acy is important as it relates to the selection and use of private (i.e., employer-based or Marketplace-based) or public (i.e., expanded Medicaid) insurance.

THE UNKNOWNS: RESEARCH OPPORTUNITIES FOR THEORY DEVELOPMENT AND EMPIRICAL TESTING Researchers interested in consumer affairs have a unique opportunity to be at the forefront of evaluating the impact of ACA on consumer’s understanding, navigation, and use of health insurance and services, their changes in health-oriented behavior and ACA’s overall impact on consumer well-being. We can make significant contributions to the important work being conducted by health policy researchers and economists, as we are trained to view the marketplace from the con- sumer’s perspective. We examine behavior (such as signing up for a new health insurance plan) as bounded by systematic biases. We consider objective marketplace characteristics (such as price) as perceptions, arguing that perceptions may have a greater impact on behavior than reality. As such, consumer research should illuminate the reasons why marketplace changes occur (or do not occur), thus facilitating posi- tive impact of ACA and leading to appropriate corrective action, when needed, based on an understanding of factors associated with nega- tive outcomes. We now turn to a large number of “unknowns” in the health care market as ACA implementation continues. We identify seven broad research issues, all of which directly or indirectly affect consumer well-being. SPRING 2017 VOLUME 51, NUMBER 1 35 Research Question 1: How Do Consumers Make Affordability Judgments?

Affordability is defined by ACA as “annual premium for self-only coverage…no greater than 9.5% of annual household income.” 6 Researchers should first note that there is no consideration of deductibles, copays, or coinsurance in this definition. Additionally, affordability is defined as a specific percent of household income—meaning that afford- ability is set “objectively” at a particular price point. While this follows economists’ tradition of examining price as an actual dollar amount, it ignores consumer research that treats price as subjectively, based on Monroe’s seminal work (Monroe 1973) that models price perceptions as dependent on the price consumers use as a reference point. Thus, a $200 premium may be perceived as “fair,” or “unfair,” or “affordable” or “unaffordable.” A key issue, then, is what reference point are consumers using? And much more likely—what reference points are various consumer segments using? Some of the possibilities include:

•Individuals who are previously uninsured may use $0.00, as they are comparing the premium to “no premium.” •Consumers with limited disposable income may examine the pre- mium relative to goods and services that must be traded-off to buy health insurance. Focus group interviews suggest that a premium may be compared to the need for a second car or to the need for discretionary income used to support family bonding goals (Bias et al. 2014).

•Consumers with past experience in paying for insurance (such as being responsible for all or partial premium payments through their employer, having private insurance, or using COBRA 7)may use past premiums as a reference point for prices available on Marketplaces.

Researchers need to determine what types of reference points are being used, as well as addressing the normative issue of what type of reference point is “most appropriate” in facilitating goals of financial well-being. 6. Quote taken from health care.gov glossary https://www.healthcare.gov/glossary/affordable- coverage/.

7. Consolidated Omnibus Budget Reconciliation Act (COBRA) health benefits; see http://www.dol .gov/ebsa/faqs/faq- consumer- cobra.html. 36 THE JOURNAL OF CONSUMER AFFAIRS TA B L E 1 Premiums by Household Composition and Income—Age 35 Percent FPLAnnual Premium SubsidyNet PremiumMonthly PaymentChild Enrollment Status Income=$35,000 One adult 305% 3,011 0 3,011 251 Two adults 226% 6,022 3,503 2,519 210 One adult, two children 179% 6,140 4,270 1,870 156 Medicaid Parent only 179% 2,464 594 1,870 156 Income=$50,000 One adult 435% 3,011 0 3,011 251 Two adults 322% 6,022 1,272 4,750 396 One adult, two children 256% 6,140 2,028 4,112 343 CHIP Parent only 256% 2,464 0 2,464 205 Income=$75,000 One adult 653% 3,011 0 3,011 251 Two adults 484% 6,022 0 6,022 502 One adult, two children 384% 6,140 0 6,140 512 Notes: Premiums and subsidies were calculated using the Kaiser Family Foundation subsidy calculator available at http://kff.org/interactive/subsidy- calculator/. Calculations are based on nonsmokers with no employer coverage in Monongalia County, West Virginia. As noted above, ACA’s cost focus is on the premium. For the 2014 open enrollment period, Silver plans 8were the most popular, and the aver- age monthly premium was $69.00 (Burke, Misra, and Sheingold 2014).

However, average premiums mask substantial differences across families and the complex interactions between income, family size, percentage of income caps for subsidies, and state Medicaid and Children’s Health Insur- ance Programs (CHIP) as illustrated in Table 1. All calculations provided in the table are based on families headed by a 35-year-old adult. Consider the first row of premium data, a household with one adult earning $35,000 per year is at 305% of the federal poverty level (FPL) and her estimated premium for a Silver plan is $3,011 per year. Although she earns less than 8. There are five primary health plans offered on the marketplaces—Catastrophic, Bronze, Silver, Gold, and Platinum. Generally, premiums increase and deductibles and out-of-pocket caps decrease as the plan moves toward Platinum. The premium subsidy, or tax credit, is the amount of the premium for the second least expensive Silver plan that is in excess of the maximum percent of family income allowed under the law (2% to 9.5% depending on family income relative to the federal poverty level). Only Silver plans are eligible for cost-sharing reduction subsidies that lower deductibles, copayment, and coinsurance costs (seeHealth Affairs2013 and https://www.

healthcare.gov/blog/6-things-to-know-about-deductibles-in-the-health-insurance-marketplace/). SPRING 2017 VOLUME 51, NUMBER 1 37 400% of the FPL, the premium is not more than 9.5% of her annual income and she does not qualify for a subsidy. Her monthly premium is $251 per month.

Next consider a household with two 35-year-old adults and an annual income of $35,000. This household is at 226% of FPL and qualifies for a subsidy of $3,503 toward their total premium of $6,022. Their net monthly insurance payment is $210 per month.

The next two rows contain estimates for a household with a 35-year-old adult and two children. This household is at 179% FPL and has an estimated premium of $6,140 per year. However, at 179% FPL, the children qualify for West Virginia Medicaid and are not eligible for coverage through the Marketplace. Thus, the parent must purchase a single adult policy as estimated in the next row. After the subsidy, the parent has a monthly premium payment of $156.

The next two sections repeat the analysis for households earning $50,000 and $75,000. Again, the one-adult household does not qualify for subsidies at 435% FPL and has the same $251 monthly payment as the one-adult household earning $35,000. The two-adult household again qualifies for subsidies with income at 322% FPL and an estimated pre- mium of $6,022 per year; their net monthly premium amount is $396.

The household with one adult and two children is now at 256% FPL and both children qualify for the state CHIP program, making them inel- igible for the Marketplace plan. The estimated annual premium for a parent-only plan is $2,464 and although the household is barely above 250% FPL, the parent does not qualify for a subsidy because the pre- mium is only 4.9% of annual income. The parent has a monthly pre- mium payment of $205. At an annual income of $75,000, none of the households qualify for subsidies, Medicaid, or CHIP. Monthly premi- ums range from $251 for a single adult to $512 for an adult with two children.

Importantly, the premium is only one component of price. Maxi- mum out-of-pocket costs also vary; Healthpocket.com (2014) reports that the average deductible for an individual is $2,907, with a cap of $5,730. Importantly, out-of-pocket costs can be reduced when consumers qualify for premium deductions. Yet, very little is known about how out-of-pocket expenses are used in decision making. Indeed, exit surveys suggest that, while consumers report both pricing components as impor- tant, more West Virginia Marketplace users felt the monthly premium was “very important” (91.1%) than the out-of-pocket costs (80.4%; Bias et al. 2014). 38 THE JOURNAL OF CONSUMER AFFAIRS Research Question 2: What Factors Facilitate and Inhibit Enrolling for Expanded Medicaid or Private Insurance on the State- and Federally-Facilitated Health Insurance Marketplaces?

Much is unknown about how consumers select to enroll in ACA programs such as Medicaid and the Health Insurance Marketplaces. An economics approach to the issue would likely focus on four primary fac- tors: (1) the price of insurance, (2) expected health expenditures and poten- tial losses, (3) health insurance beliefs and preferences, and (4) enrollment costs. In this framework, individuals would weigh the costs and benefits of enrolling in an insurance plan to decide whether they and/or their family would be better off with or without health insurance.

Price of insurance includes insurance premiums and expected out-of-pocket expenses for deductibles, copays, and coinsurance. The probability of obtaining health insurance decreases as price increases.

However, the rational decision maker model is hindered by the complex calculations and sophisticated predictions about future health service utilization needed to determine expected out-of-pocket expenses with and without insurance. Thus, consumers will likely look for a way to make the decision easier, perhaps unconsciously, by focusing on one factor such as the premium (see Feldman et al. 1989 for an exploration of choice among insurance plans). One would expect the more complicated elements of copays for rare events (e.g., emergency department visits) and coinsur- ance rates to have a smaller impact on consumers’ decisions than more transparent elements such as monthly premiums and plan deductibles.

Thus, the probability of insurance coverage might decrease as premiums and deductibles rise.

In terms of the second factor, insurance would be more attractive to those with higher total expected health expenditures to potential financial losses. Expected health expenditures are the product of (1) the probability of needing a health service and (2) the cost of that service. Again, this is a complex calculation requiring the probability of future events and medical prices. In practice, consumers may focus on past utilization and experiences of friends and neighbors to generate these expectations. In general, expected health expenditures will be higher for those with greater health risk (e.g., older individuals, those with chronic conditions, those who have higher-risk hobbies) and for those who believe that major health events (e.g., accidents, cancer, and stroke) are more common.

The third factor, preferences and beliefs about insurance, include overall perceptions of the health care system, medical treatment efficacy, and attitudes toward the role government entities play in health care. Seldom SPRING 2017 VOLUME 51, NUMBER 1 39 have researchers in consumer affairs had the opportunity to explore the impact of political beliefs on behavior. Indeed, in focus groups, one enrollment assister (professionals tasked with helping consumers enroll in expanded Medicaid or on Marketplaces) stated, “…the word Obama is one thing people don’t want. [Consumers ask], ‘When you say the Affordable Healthcare Act, are you meaning ObamaCare?…I don’t want anything to do with that President Obama’” (Bias et al. 2014).

Finally, this framework includes largely nonmonetary enrollment costs such as time spent and emotional stress, as well as costs such as travel to assister appointments. Even in the absence of monthly premiums (such as a no-premium expanded Medicaid plan), obtaining insurance requires consumers to act. Their desire to have insurance must outweigh status quo bias, or the general tendency to avoid change. Further, consumers must know where to enroll, find the information they need to apply, and complete the enrollment process. For example, difficulties providing information such as dependents’ Social Security numbers, or technical problems with enrollment websites make enrollment more burdensome.

Higher enrollment costs reduce the likelihood of enrollment.

A complementary consumer behavior approach frames this issue in terms of Awareness→Interest→Desire→Action using the classic hier- archical AIDA model. Prior to the marketplaces opening, awareness of the marketplaces and one of their key benefits (subsidies for those who qualify) was low. One national survey found that just prior to the October 1, 2013 launch of the state and federal marketplaces, only 40% of US adults were aware of the marketplace or knew that subsidies were available (Collins et al. 2013). The AIDA model suggests that all is lost, unless awareness occurs.

Interest and desire are likely a function of perceived benefits. The primary benefits (as promoted by the US Department of Health and Human Resources, 9nonprofit organizations, 10 and insurance companies 11) are access to preventive care at no out-of-pocket cost and the ability to financially weather a significant injury or illness. ACA requires a number of preventive care benefits to be covered without out-of-pocket cost 12; yet, behavioral evidence suggests that preventive care may not be highly 9. https://www.healthcare.gov/why-should-i-have-health-coverage/.

10. For example, see: https://www.getcoveredamerica.org/get-covered-101/why-do-i-need/.

11. See this BlueCross BlueShield site: http://www.bcbsil.com/getting_started/health_insurance/ why_important.

12. For a list of these benefits, see: https://www.healthcare.gov/what-are-my-preventive-care- benefits/#part=1. 40 THE JOURNAL OF CONSUMER AFFAIRS valued by a substantial portion of Americans. For example, more than half (58.5%) of adults aged 18 and older failed to get a flu vaccine in 2013 (CDC 2013) and nearly one third (29%) of insured women age 40 and over went without a mammogram within the past two years (American Cancer Society 2013). Kahn and Luce (2006) theorize that compliance with preventive health procedures that require repeated adherence is determined by “hassle” (distress of a shot) and “false security events” (determining that because you did not get a flu shot last year and did not get the flu, you are less vulnerable to the flu in the future). To our knowledge, their interesting theory has yet to be tested.

Further, a second commonly touted benefit, the ability of health insur- ance to mitigate financial crises, may be perceived as less important to indi- viduals without insurance than to those with insurance. One can liken this to the economics model presented previously, in which protecting assets may be less important to individuals with few assets. Indeed, West Virgini- ans without insurance were significantly less likely to agree or strongly agree with the statement, “I am financially better off with health insurance than I am without health insurance,” than those with insurance (49.7% vs.

69.5%; Bias et al. 2014).

Action, that is actually purchasing, paying for, and using health insur- ance to access the health care system, is the ultimate goal. There are at least three interesting research issues when examining action: the role of interpersonal influence in facilitating action, the impact of emotions on a decision generally considered to be “rational,” and the impact of negative consumer experiences and media on future actions.

Research examining one state’s Medicaid reform in which individuals were offered a choice between two Medicaid programs concluded that the reform might have been more successful if informed individuals had been actively used to help Medicaid recipients in their choices (Walsh et al.

2011). ACA offers consumers several different types of interpersonal help, generically known as enrollment assisters. 13 Some states have chosen to use more enrollment assisters (generally funded through grants) than other states. These individuals are trained to help consumers understand the choices they are making and the plans from which they are choosing. Very little is known about the impact of enrollment assisters on satisfaction with the plan chosen or the enrollment process; even though theory would suggest that there is potentially large impact. Moreover, the perception of these assisters may also be important—are they viewed by consumers as 13. Among this group are Navigators, In Person Assisters (IPA), and Certified Application Coun- selors (CAC). SPRING 2017 VOLUME 51, NUMBER 1 41 “outsiders” or “insiders”? As an example, within the state of West Vir- ginia, significant effort was devoted to hiring and training local residents as assisters in order to facilitate initial positive social context. The impact of source characteristics (i.e., similarity, expertise, and trustworthiness) along with the relative efficacy of using assisters in terms of actual enrollment numbers and satisfaction with a particular plan, are ripe areas for both data collection and theory testing.

Financial decisions, such as choosing insurance, are generally framed as rational, cognitively dominated processes. Yet, recently a handful of researchers have examined the emotive side of financial decisions. Lee and Andrade (2011) used a stock market simulation to examine sell decisions as a function of fear; and Peterson (2007), in a review of relevant neuroscience research, concludes the emotions such as fear, greed, panic, or euphoria lead to poor financial decisions. Interestingly, enrollment assisters suggest that there is strong positive emotion (e.g., joy expressed when health care coverage is found to be affordable after periods of illness and no coverage) and negative emotion (e.g., disappointment when the coverage is explored, but not affordable to the consumer; Bias et al. 2014). How these strong emotions impact the financial decision at hand, satisfaction with insurance when it is needed, as well as future decision making (i.e., re-enrollment) appears to be wide open for empirical and theoretical work.

Research Question 3: What Will Happen to Access to Health Care?

The health care system faces challenges and opportunities as a result of ACA, many of which can be framed in terms of the channels of distribution perspective. They deal with managing demand and capacity for health care providers and utilizations of the institutions providing these services. As millions of Americans receive health coverage, some of whom have been uninsured for years, it is possible that primary care centers, family doctors, hospitals (including their emergency departments), and other health service providers will see increased patient loads (Ezzati-Rice and Rohde 2008; Hofer, Abraham, and Moscovice 2011). At the same time, there is no expected increase in the number of physicians and specialists who will be available to see patients (Kirch, Henderson, and Dill 2012). Thus, demand may exceed supply.

Additionally, it is unknown what will happen with specialist care mov- ing forward. While, as discussed below, individuals without insurance may have access to primary care in various ways, it is less likely they have access to specialty care for chronic disease. As these individuals become covered, it is possible there will be a high burden on specialists in the United States, 42 THE JOURNAL OF CONSUMER AFFAIRS especially if deductibles and copays are not a significant barrier to seeking out specialty care.

From an institutional perspective, one key issue discussed by pol- icymakers and health care researchers is emergency department (ED) utilization. Usually, such discussions revolve around the uninsured, but studies have not conclusively shown the impact of insurance status on ED use. In Massachusetts, one study has shown decreases in ED visits after the individual mandate was established (Miller 2012). Another study showed no changes in ED usage in Massachusetts when compared to other states (Chen, Scheffler, and Chandra 2011). On the other hand, an increase in ED utilization was associated with a higher number of Medicaid patients in Oregon (Taubman et al. 2014). What variables underlie and moderate these very different conclusions?

The primary care system in the United States is designed to provide basic health care to the general population. Health care centers provide a wide range of services, from checkups to outpatient surgery, in some areas. Designated and funded health centers such as Federally Qualified Health Centers (FQHCs) and Rural Health Centers provide primary care to communities that often have greater health needs such as poor, rural, and urban populations. These primary care centers will frequently offer services on a “sliding scale” where each service is pegged to the income and ability to pay of the patient. Additionally, there is a national system of “free clinics” which provide services at no cost to low-income individuals who are not eligible for Medicaid and have no other insurance.

FQHCs and free clinics provide two important points. First, many individuals who are uninsured may be receiving primary care services. It is estimated that within some community health centers, 40% of all patients served are uninsured (Adashi, Geiger, and Fine 2010). Free clinics see close to two million uninsured patients annually, as well (Darnell 2010). Because many uninsured have access to some type of primary care, it could mitigate the demand on the primary care system as a result of ACA. At the same time, these patients rarely have the same access to specialists and specialty care, so there are wider implications for other types of health services providers. Because the free clinics focus solely on uninsured patients, their future is uncertain. Will the model for free clinics change (such as allowing them to accept Medicaid payments) or will they transition to primary care centers accepting all types of insurance? Certain patients, such as the homeless, may not avail themselves of Medicaid. In other states, where Medicaid expansion did not take place, there is likely still a role for such free clinics. Thus, researchers interested in answering access types of SPRING 2017 VOLUME 51, NUMBER 1 43 questions need consider a wide range of outlets that may be growing, or shrinking, in supply and demand, and may vary by state.

Research Question 4: What Will Happen to Consumer Health?

As noted earlier, the individual mandate for health insurance coverage, in conjunction with the Medicaid expansion and other ACA requirements, attempts to ensure that all Americans have access toaffordablehealth insurance. These efforts are intended to help individuals with chronic disease control their health issues. Furthermore, the preventive measures built into ACA are intended to help reduce or delay the onset of chronic disease among the population. Of course, measurable change in health metrics at the population level will likely not be observed for years. We may see an early increase in diagnosed chronic disease as some previously uninsured individuals gain access to care for the first time in years. Within the primary care setting, there may be an increase in control of chronic disease and adherence to medical advice and preventive strategies.

Additionally, ACA includes many measures intended to increase prevention of disease. Recall that ACA requires health plans to cover preventive services with no copays or deductible requirements (Koh and Sebelius 2010). These services, selected and rated by the US Preventive Services Task Force, are designed to prevent chronic disease from happen- ing and save on long-term costs of care (Maciosek et al. 2010). Moving forward, it is unclear how many consumers or providers will take advan- tage of preventive services, but it is essential to the stated goal of reducing the costs of health care in the United States. This step helps move the nation from what has been termed a “sick care system” to a truer “health care system” by providing maintenance and prevention to those who are well (Loeppke et al. 2011). This type of a paradigm shift is dependent upon con- sumers actively taking part in preventive services; yet as previously noted, a significant proportion of consumers fail to take these actions. Research is needed to determine the best cognitive and behavioral strategies to increase participation. Research could focus on those most likely to benefit, yet also least likely to participate. It is that latter component, breaking the resistance factor, which would be most interesting and useful to explore.

Research Question 5: What Will Happen with Consumer Learning and Re-Enrollment?

Continuous enrollment in health care coverage coupled with long-term engagement in preventive behaviors are needed to maximize any positive 44 THE JOURNAL OF CONSUMER AFFAIRS effect of ACA on consumer well-being. Thus, it is important to examine what consumers learn when using health care plans. In fact, Hamel et al.

(2014) report that 57% of consumers who enrolled in a qualified health plan on the Marketplaces were previously uninsured, most of whom had not had insurance for two or more years; thus, the learning curve may be steep.

Recall that the focus of “affordability” has been on monthly premiums.

What will consumers take away from their first year experiences with health insurance? It is likely that for most consumers, health insurance is an “experience good,” i.e., a service for which price and quality is unlikely to be ascertained prior to actually using the service, yet can be assessed by use. It is possible that some consumers’ experiences may lead them to believe that they are receiving very little benefit from health insurance.

First, Kaiser Family Foundation estimates that about 25% of the popu- lation does not use any health care during the year. 14 Consumers in this situation may frame their premium payments as “a waste” and choose to pay the penalty. Alternatively, theWall Street Journal, using actual health records, found that consumers purchasing insurance on the Marketplaces were more likely to visit health care providers (28% vs. 23% of those who purchased off the marketplaces) and more likely to have chronic diseases (27% vs. 21%) than individuals with other health care plans (Mathews and Weaver 2014). This suggests that a relatively large proportion of the newly insured will experience out-of-pocket expenses. Consumers new to health insurance may experience strong negative emotions, even “shock” and “disbelief,” when confronted with medical bills. Indeed, if the deductible is never met, it could be rational for a consumer to interpret his/her experience in the market as “a waste.” This proposition partially flows from research from the Massachusetts Connector showing that the greater the cost-sharing requirements of the Commonwealth Care Plan (i.e., the plans offered to individuals who do not qualify for Medicaid, but have incomes at or below 300% of the federal poverty level), the more likely the consumer reported delaying or choosing not to obtain care due to costs (McCormick et al. 2012).

It is also likely that previously uninsured individuals with chronic ill- nesses will take-away that their insurance is worth the expense (mone- tary and nonmonetary costs). Yet, the take-away here is that researchers know little about how consumers learn over time in this environment in which demand for the service may fluctuate dramatically, monetary and 14. See http://kff.org/interactive/subsidy-calculator, Keiser Family’s interactive subsidy calculator. SPRING 2017 VOLUME 51, NUMBER 1 45 nonmonetary costs are difficult to capture, and that the value of “peace of mind” should a dramatic event occur, is unknown by researchers.

Research Question 6: Will Greater Price Transparency under ACA Translate to Consumer Wellness and, If So, How?

Portions of ACA are designed to increase transparency in health care pricing. Toward that end, massive datasets have been released by Centers for Medicare & Medicaid Services (CMS; CMS 2013). The first, a dataset of over 157,000 lines released in May 2013, provides hospital charges for inpatient services for 100 of the most common Medicaid stays. These data allow prices to be compared by hospital and region. More recently, the Medicare Provider Utilization and Payment Data: Physician and Other Supplier (CMS 2014) was released that contains over nine million records on 2012 Medicare fee-for-service payments to individual health care providers. Work needs to be completed to translate this data into useful information for consumers, providers, and insurers.

Basic questions exist on whether, when, and how consumers may use pricing information with respect to health care. First, one must address what the “actual” price is from the consumer’s perspective. There are many possibilities: (1) the “list price” for the procedure, (2) the price to the insurer, (3) immediate out-of-pocket costs, (4) price as discounted by tax-advantaged payment sources (such as consumers using tax-advantaged health savings accounts), and/or (5) price after the consumer negotiates a discount. Does the consumer incorporate the monthly premium into price, and if so, how? In fact, are consumers even aware that they can negotiate some prices and if so, when and how do they negotiate?

Interestingly, given health care services’ high price tag, it is necessary that researchers address moderators of pricing effects. In particular, it may be that price only impacts consumers under certain conditions and is treated as “irrelevant” to the decision in other circumstances. Does price play differentially into consumer decision making before and after the deductible is met? In which situations will price be used as a key indicator of quality and when will price be judged as simply “overly expensive”?

What is the impact of consumer stress or urgency? It seems logical that nonurgent or preventive procedures for which consumers can plan would be areas in which price information may be used by consumers in making decisions, yet the urgency and stress of an acute problem (heart attack, and stroke) may render price information irrelevant.

The general impact of price transparency on providers’ marketing strategies may also be of importance. Based on CMS’s information on 46 THE JOURNAL OF CONSUMER AFFAIRS hospital inpatient pricing, it is clear that some hospitals are charging considerably more than other hospitals serving the same regional market.

Might this information be used to drive consumer choice of hospitals? If so, are factors other than simply price resulting in price discrepancies? For example, one might think that a teaching hospital may charge more than a nonteaching hospital due to higher overhead. Alternatively, a regional hospital may have sicker patients than community hospitals, resulting in higher “average” pricing. Can, and should, these factors be incorporated into pricing information?

Finally, the issue of fairness in pricing is a popular topic in the press.

USA Todayrecently explored both the pros and cons of the $1,000-per-pill hepatitis C drug, sofosbuvir (trade name Sovaldi; see Saab 2014 andUSA TodayEditorial Board 2014), questioning the high price for the course of treatment required to cure the disease. As prices become more transparent, perceptions of fairness will become more important. Ferguson and her col- leagues (Ferguson and Ellen 2013; Ferguson, Ellen, and Bearden 2014; Ferguson, Ellen, and Piscopo 2011) have extensively explored fairness, i.e., perceptions that a price is reasonable and acceptable when compared to other alternatives. These researchers generally find that consumers per- ceive a price as more fair when they are given a reasonable explanation about the relationship between firm’s costs and consumer’s prices (pro- cedural fairness) and the price is in line with what others are paying (dis- tributive fairness). Additionally, suspicion that the firm is taking advantage of the consumer drives perceptions of “unfairness.” Given that health care patients may feel “trapped” or restricted in the number of available alter- natives to treat their condition, it is possible that consumers may be quite suspicious of health care pricing. If so, transparency without explanation may negatively impact perceptions of health care providers. Additionally, transparency may show that different consumers, based on their insurer’s negotiated rates and/or the consumer’s own ability to bargain, are paying different prices for similar procedures and equipment. This too, may lead to perceptions of unfairness.

Research Question 7: What Are the Nonhealth Relevant Financial Impacts on Families?

Interestingly, ACA provisions might have opposite effects on the financial uncertainty of households at the upper and lower ends of the income/wealth distribution. Higher income households that purchase plans on the Marketplace likely have less financial uncertainty as Market- place plans insure against large financial losses by setting out-of-pocket SPRING 2017 VOLUME 51, NUMBER 1 47 spending maximums ($6,350 for an individual plan and $12,700 for a fam- ily plan, where premiums do not have to be counted toward the maximum).

These limits also apply to lower income households and are further reduced for households with income up to 250% of the Federal Poverty Level (FPL) that qualify for out-of-pocket subsidies. However, the limits are likely to have a disproportionate benefit for higher income/wealth house- holds that have more assets at risk in the event of a major medical event or illness. 15 Conversely, several elements of ACA design likely increase financial uncertainty for lower income households. These elements include decision making in the presence of low health and low financial literacy, as discussed above, and eligibility churning and greater uncertainty in federal tax liabilities, discussed below.

Shortly after passage of ACA, researchers began to note the possi- bility that a combination of Marketplace and Medicaid policies would increase the likelihood of “churning” or involuntary movement between insurance systems (Buettgens, Nichols, and Dorn 2012). Under ACA, eligibility churning is possible between Medicaid, the Marketplace, and employer-sponsored insurance. For an individual to be eligible to pur- chase insurance on the Marketplace, he/she must not have an affordable employer-sponsored insurance option. Additionally, he/she cannot be eli- gible for Medicaid. Note that eligibility for subsidies on the Marketplace as well as Medicaid eligibility is income-based. As household income fluc- tuates throughout the year and people change jobs, they might gain or lose an affordable employer-sponsored insurance option and/or eligibility for Medicaid or the Marketplace. Researchers estimate that just under 30 mil- lion people will churn between eligibility for Medicaid, the Marketplace, and ineligibility for either program (Buettgens, Nichols, and Dorn 2012; Sommers and Rosenbaum 2011).

ACA premium and out-of-pocket subsidies are administered as tax credits through the Internal Revenue Service (IRS) and reconciliation of credit eligibility occurs when the household files their annual tax return (Fernandez 2014). 16 This ACA design element separates the initial credit determination and insurance decision from the ultimate cost and payment.

For example, credits received and decisions made during the 2014 open enrollment period (October 1, 2013 through March 31, 2014) will be reconciled on tax forms due April 15, 2015, which is after the end of the 15. Research consistently suggests a link between higher income levels and greater probabilities of health insurance purchase (e.g., Marquis and Long (1995) and Krueger and Kuziemko (2013)).

16. See http://www.irs.gov/uac/Affordable-Care-Act-Tax-Provisions for a description of IRS provi- sions related to the ACA. 48 THE JOURNAL OF CONSUMER AFFAIRS 2015 open enrollment period in February 2015. In other words, consumers might face two open enrollment decision periods before they learn the financial consequences of their first decision.

Several writers have warned of the possibility of large tax liabilities if actual income exceeds the expected income used to calculate subsidies (e.g., Archambault 2014). Estimates from California suggest that more than one third of families receiving subsidies might have to pay back some or all of their subsidies (Jacobs et al. 2013). Heibrunn (2013) notes that the greatest financial risk is for households near the 400% FPL cut-off and their potential need to pay back subsidies. Residents in states with federally run Marketplaces face additional uncertainty as federal appellate court rulings are mixed on whether the subsidies are available in Marketplaces that are not state-run (Kitchenman 2014).

As a final note, across all evaluation questions, there are a number of already existing data at the federal (and sometimes state) level that can be useful to answer these questions. Unfortunately, many of these sources have a one- to two-year cleaning period and lag behind real-time estimates of consumer health, economics, insurance coverage, and other important indicators. Nevertheless, it will be important to follow trends from these data sources over the intermediate and long-term to understand broader impact on consumer health and economic indicators. Discussion of these data sources and their potential use for evaluating the effect of ACA Marketplaces is available in Bias, Fitzgerald, and Gurley-Calvez (2014).

CONCLUSION For researchers interested in consumer well-being, ACA offers many areas for both theoretical work and empirical investigation. Researchers have a host of opportunities to build and test theory in the domains of consumer understanding and use of price information, compliance with preventive medicine, new product adoption and readoption, economic well-being of individuals and families, improving the health care system efficiency, and transforming that system from focusing on treating illnesses to facilitating wellness.

We end with two brief thoughts. First, researchers need to be aware that some of the key components of ACA are implemented by the individual states, thus research questions dealing with analysis of efficacy and pre- dictions of impact may need to be conducted on a state-by-state level. (For an excellent example, see Richardson and Yilmazer 2013).

Second, many of the research issues revolving around ACA easily lend themselves to interdisciplinary teams, as they cut across disciplinary SPRING 2017 VOLUME 51, NUMBER 1 49 boundaries. Academics, policymakers, and practitioners knowledgeable in the varied fields of consumer behavior, health care systems, political science, economics, medicine, family sciences, ethics, and distribution systems in service industries have much to contribute and to learn from each other. Discussions can be lively, framing of problems unique, and the opportunity for professional growth and the advancement of consumer well-being ample.

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