Kaiser Family Foundation
Based on the Patient Protection and Affordable Care Act (including subsequent amendments in the Health Care and Education Reconciliation Act of 2010), as signed by the President.
The premiums are illustrative examples in 2014 dollars derived from estimates of average premiums for 2016 from the Congressional Budget Office.
Premium subsidies are based on a silver plan (with an actuarial value of 70%), so all premiums shown are for silver coverage. People may be able to pay a lower premium for less comprehensive coverage (i.e., a bronze plan, with an actuarial value of 60%). The tables showing results by age and income also reflect premiums for silver coverage, though the minimum insurance that people would be required to obtain would be bronze coverage.
The actual premium calculated is adjusted for family type, and for age (within the three to one limit specified in the proposal). Subsidized people can enroll in more expensive plans, but must pay the full difference in the premium.
Health Reform Subsidy Calculator:
By Don McCanne, MD
On June 28, the Supreme Court will release its ruling on the constitutionality of the Affordable Care Act. If the full Act is repealed, individuals who would have purchased plans in the state insurance exchanges will receive neither their premium subsidies nor their tax credits for out-of-pocket expenses. What precisely would they be losing?
Let’s use the Health Reform Subsidy Calculator to check a few examples. In each example, we will assume that the policyholder is 45, has a family of four, and does not have employer coverage available. For this family living in a region with a medium cost factor, the predicted premium for the silver plan (70% actuarial value) is $14,245. In the examples, we will change only the income level.
Income: $31,155 (133% of poverty)
Premium payment: None – covered by Medicaid
Maximum out-of-pocket costs: None – covered by Medicaid
Income: $31,156 (133% of poverty plus $1)
Premium payment: $935
Maximum out-of-pocket costs: $4,167
Note that at this level, one additional dollar of income results in the family losing the more comprehensive benefits of the Medicaid program, and mandates that they pay a premium of $935 plus potential out-of-pocket expenses of $4,167, for a total exposure of $5,202. That’s a staggering amount at this income level. Compliance surely would be a problem, not by lack of will but simply by inability to pay.
Income: $93,700 (400% of poverty)
Premium payment: $8,901
Maximum out-of-pocket costs: $8,333
Income: $93,701 (400% of poverty plus $1)
Premium payment: $14,245
Maximum out-of-pocket costs: $12,500
So at an income of $93,700, the premium would be $8,901 and the potential out-of-pocket costs would be $8,333, for a total exposure of $17,234. That is quite a dent for a family that is trying to save for two college educations, a retirement fund, and maybe for replacement of the broken-down family automobile. But add just one more dollar of income and the premium shoots up to $14,245 and potential out-of-pocket expenses to $12,500, for a total of $26,745. Then what are you going to cut out of the family budget? And isn’t the $9,511 increase quite a “tax” to pay on that one dollar of additional income?
Just the premium increase alone might cause this family to downgrade their coverage from silver (70% actuarial value) to bronze (60%) in order to save on the premium. If so, this family literally would be placing a bet that none of them would develop a serious medical problem, and it would lose the bet if any of them did so. Should we really be forcing a family to gamble on its health care coverage?
If the Affordable Care Act is repealed, all of this goes away, and many more would remain with no coverage at all. That would be tragic. But even if the Act is upheld, this coverage is still far from satisfactory, and should be unacceptable as a standard for our nation. Regardless of the Supreme Court decision, we should replace the Affordable Care Act with a program that really does work: a single payer, improved Medicare for all.