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The Economic Impact of Health Reform in Colorado

February 2011 |

As initial implementation of the Affordable Care Act (ACA) begins, questions remain as to what the actual budgetary impacts will be on Colorado families, businesses and on the state.

The New America Foundation, a nonpartisan research organization, conducted an in-depth economic study that assessed the effect of health care reform on the Colorado economy. The report gauged the impact of the two major pieces of the ACA: an expansion of health care coverage, and initiatives to improve efficiency in the health care system. The University of Denver’s Center for Colorado’s Economic Future independently validated the findings which were based on data provided by a broad range of Colorado stakeholders and government agencies. As the research for the study began prior to federal health care reform, it was based on the recommendations of Colorado’s Blue Ribbon Commission for Healthcare Reform (208 Commission). This issue brief summarizes the findings of that study, The Future of Colorado Health Care: An Economic Analysis of Health Care Reform and the Impact on Colorado’s Economy, and updates selected findings to reflect the specifics of the ACA.

ABSTRACT

The Future of Colorado Health Care: An Economic Analysis of Health Care Reform and the Impact on Colorado’s Economy projected that health care cost growth will be between 5.5% and 17% lower in Colorado than it would have been without reform. This translates into premiums for employer-sponsored insurance in 2019 that are between 10% and 25% lower due to lower overall cost growth. This means that families and businesses in Colorado could expect premiums for employer-sponsored insurance to be $1,962 less per year for individual coverage and $3,917 less per year for family coverage in 2019 than they would have been without federal health care reform.

The study also projects that increasing health insurance coverage in Colorado will spur increased economic activity and create more jobs, even after accounting for the costs of financing reform. In 2019, state economic output should be nearly 1% higher than it would be without reform and there will be roughly 19,000 new jobs as a result of the coverage expansion.

Key reasons for these savings include:

  • EXPAND COVERAGE AND LOWER UNCOMPENSATED CARE COSTS. It is estimated that uncompensated care would have cost Coloradans $1.8 billion dollars in 2019 without federal health care reform. The ACA calls for expanded coverage, equalization of Medicaid reimbursement levels and for private payers to hold down their cost increases.
  • MAKE THE MEDICAL SYSTEM MORE EFFICIENT. The ACA encourages health system reforms such as paying health care providers for value rather than for volume and the expansion of programs like medical homes, accountable care organizations and health information technology.
  • INCREASE ECONOMIC ACTIVITY AND NEW JOBS. As more Coloradans obtain health insurance and seek medical care, there will be an increased demand for health care workers. In turn, this increased demand will lead to more health care-related job opportunities in Colorado, resulting in more individuals with disposable income to buy other consumer goods from Colorado businesses.
  • IMPROVE PRODUCTIVITY WITH IMPROVED HEALTH. The economic losses from the uninsured are between $1.82 billion and $3.87 billion in Colorado per year.1 At least some of this value could be recouped through healthier, more productive workers who would earn more income and thereby increase the state’s tax base.

Download this issue brief by clicking here or on the link to the right.