Abstract:
As of January 1, 2014, most provisions of the Affordable Care Act (ACA) take full effect. For health insurers, this legislation is expected to dramatically expand the individual segment, as previously uninsured individuals purchase insurance through the exchanges and as others lose their private employer group coverage. Most of the existing literature focuses on data available prior to 2012 which describes the uninsured and non-group (individual) segments up through 2007. This project uses the consolidated data file from the Medical Expenditure Panel Survey (MEPS) 2010, available to the public as of September 2012, to profile these populations and explore the implications with regard to the 2014 changes.

MEPS is not a random sample of the population, but uses a complex survey design with multi-stage clustering and stratification. Person weights must be used to produce reliable population estimates from the data in this survey. Therefore, this project uses SAS survey procedures to profile these populations, compare mean expenditures across populations with regard to insurance coverage status, and estimate the size of these segments as of 2010. An introduction to these survey procedures is covered in this presentation.

Based on MEPS 2010 data and the uninsured population profile developed in this project, it seems likely that the expansion of the individual market in 2014 will decrease costs in the short term due to an influx of younger males without chronic medical diagnoses. However, in the long term, efforts to mitigate behavioral risk factors such as smoking and physical inactivity may be necessary to maintain the health of this population along with its lower associated costs. Since the uninsured and non-group insured segments believe that they are healthy enough to not need insurance and/or that it is not worth the cost, insurers may wish to target these groups with low cost, high deductible health plans (HDHPs). Customer segmentation strategies for acquisition, retention, and engagement of customers in the expanded individual market should take note of distinguishing characteristics of the uninsured profile.