ACA Coverage Unaffordable for Millions of U.S. Residents, Experts Say
Experts say that for nearly three million U.S. residents with annual incomes three to four times the federal poverty level, the price of coverage under the Affordable Care Act might be unaffordable, Kaiser Health News/USA Today reports.
Under the ACA, U.S. residents purchasing coverage through the health insurance exchanges could be eligible for federal subsidies to offset the cost of coverage. However, those subsidies are tied to the federal poverty level and decrease in value as a person's income increases.
For example, individuals with incomes up to twice the FPL, or about $23,000 for an individual and $39,000 for a family of three, will pay 2% to 6% of their income toward monthly premiums before qualifying for a federal subsidy. Those with incomes of two to three times the FPL will pay up to 8% of the premium cost, while those with incomes three to four times the poverty rate will pay up to 9.5% of their income toward health care premiums before they qualify for subsidies.
By comparison, studies by the Urban Institute show that 50% of U.S. residents spent 3.1% or less of their annual incomes on health care before the ACA went into effect, in part because many were covered by employer-sponsored policies, which typically contribute higher amounts to workers' health plans. About 25% of U.S. residents spent at least 8.2% of their incomes on health care, including premiums and out-of-pocket costs.
Observers note that for many middle-income families, paying the penalty for remaining uninsured would be more affordable than purchasing coverage.
John McDonough -- a Harvard professor who served as an adviser to the Senate Committee on Health, Education, Labor and Pensions during ACA negotiations -- said the 9.5% benchmark was included simply as a means to keep costs down and pass the bill. He noted that if Congress does not act to lower that benchmark, coverage "won't be affordable to everyone who needs it" (Appleby, Kaiser Health News/USA Today, 2/8).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.