Figures and data in The COMPARE microsimulation model and the U.S. Affordable Care Act

Abstract

In anticipation of upcoming health care legislation, the RAND Corporation developed a microsimulation model to forecast the responses of individuals, families and firms to such legislation. The COMPARE (COMPrehensive Assessment of Reform Efforts) microsimulation has been used to estimate the impact of major policy changes in the United States, such as the Affordable Care Act on uninsurance rates, participation in the group and the non-group insurance markets, firms’ insurance offer rates, enrollment in public programs such as Medicaid and CHIP, private insurance premiums and costs to the federal and state governments.

The team selected utility maximization to model behaviors, a methodology that is better suited than spreadsheet or econometric models to predict how individuals, households and firms will respond to wholly new insurance options, such as the Health Insurance Marketplace and the Small Business Health Options Program (SHOP) Exchanges created by the Affordable Care Act. Modeling can be done both at the national and at a state-specific levels. In this paper we provide a summary of COMPARE’s basic principles, its nationally representative databases, its utility-maximization behavioral models, and how we have used COMPARE to estimate the consequences of the Affordable Care Act.

This article contains 2 figures and 4 tables.

Figures

**Figure 1.** How COMPARE creates a synthetic representation of the U.S. from its data sources.

**Figure 2.** Schematic representation of the reweight-calibrate-run or RCR procedure.

Tables

Table 1. U.S. Health insurance coverage in 2012.

Type of coverage	Who is covered	Funding source	Number (in millions)	Percentage of the population
Employer-sponsored insurance	Employees of offering firms and their family members	Employer and employee contributions	170.9	54.9%
Private Nongroup (also known as “individual market”)	Individuals and families purchasing coverage	Individual premiums	30.6	9.8%
Medicaid/CHIP	Low-income children, parents, elderly, and disabled; childless nondisabled adults are eligible in some states	Federal government and states; counties share financial responsibility in some states	50.9	16.4%
Medicare	Elderly and disabled	Federal government	48.9	15.7%
Military	Current members of the armed forces and their families, veterans	Federal government	13.7	4.4%
Uninsured	N/A	N/A	48.0	15.4%
TOTAL			311.1	116.7%

Note: Percentages total more than 100.0% because some Current Population Survey Annual Social and Economic Supplement (CPS-ASEC) respondents reported more than one type of coverage during Calendar Year 2012.

Source: Carmen DeNavas-Walt, Bernadette D. Proctor, and Jessica C. Smith, U.S. Census Bureau, Current Population Reports, P60–245, Income, Poverty, and Health Insurance Coverage in the United States: 2012, U.S. Government Printing Office, Washington, DC, 2013, p. 67.

Table 2. Medical loss ratio assumptions in compare.

	Pre-Reform, Grandfathered, and Large Group Plans	Post-Reform, Regulated market
Group Market
< 25	0.80	0.88
26–100	0.87	0.88
101 +	0.92	NA
Non-group market	0.70	0.80

Note: NA means not applicable, since the MLRs of firms with 101+ employees are not modified by the Affordable Care Act.

Table 3. Comparison of compare and CBO national-level coverage estimates for the non-elderly U.S. population in the year 2016 (in millions).

Insurance Coverage	CBO (no ACA)	CBO (ACA)	CBO (change due to ACA)	COMPARE (no ACA)	COMPARE (ACA)	COMPARE (Change due to ACA)
Medicaid and CHIP	33	45	12	46	62	16
Employer sponsored	161	155	−6	154	154	0
Non-group and Other	26	22	−4	24	12	−12
Individual Exchanges	NA	22	22	NA	26	26
Uninsured	56	31	−25	52	23	−29

Note: ACA=Affordable Care Act.

ACA	Affordable Care Act
ACS	American Community Survey
ASEC	Annual Social and Economic Supplement
ASPE	Office of the Assistant Secretary for Planning and Evaluation
CBO	Congressional Budget Office
CCIIO	Center for Consumer Information and Insurance Oversight
CHIP	Children’s Health Insurance Program
CMS	Center for Medicare and Medicaid Services
COMPARE	COMPrehensive Assessment of Reform Efforts
CPS	Current Population Survey
CSG	Council of State Governments
DHHS	U.S. Department of Health and Human Services
EHB	essential health benefits
ESI	employer-sponsored insurance
FFEs	Federally-Facilitated Exchanges
FPL	Federal Poverty Level
HIEU	health insurance eligibility unit
HRET	Health Research and Educational Trust
MEPS	Medical Expenditure Panel Survey
MEPS-HC	Medical Expenditure Panel Survey, Household Component
MSPS	Multistate Plans
NATSEM	National Centre for Social and Economic Modeling
NHEA	National Health Expenditure Accounts
OPM	Office of Personnel Management
SAGA	State-Administered General Assistance
SBE	State-Based Exchanges
SHEA	state health insurance expenditure accounts
SHOP	Small Business Health Options Program
SIPP	Survey of Income and Program Participation
SoA	Society of Actuaries
SPE	Assistant Secretary for Planning and Evaluation
SUSB	Survey of U.S. Businesses