Just how affordable is the ACA?

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The Hill:

The twin goals of health insurance are to enable affordable access to healthcare and to ease financial burdens when sick or injured. Accordingly, a major objective of the Affordable Care Act's (ACA) coverage is explicit: its affordability. But what counts as "affordable?" For the 7 million people who have received, on average, a 76 percent reduction in premium costs in the new Health Insurance Exchanges (or "marketplaces") created by the ACA, health coverage has certainly become more affordable. And, for the individuals and families whose incomes are below 250 percent of the federal poverty level (FPL), the additional "cost-sharing reductions" in exchange plans that limit the out-of-pocket expenses enrollees pay toward deductibles, copayments and coinsurance also ensure that health coverage is less expensive. But what actually happens when people start using and paying for medical services? At that point the definition of affordability becomes less clear, particularly for folks who inch into moderate income brackets, are high medical-care utilizers, or unwittingly wade into the less well-known fiscal "landmines" embedded in some of the insurance policies offered under the law.

 

 

Consider this. A 51-year-old nonsmoker at 200 percent of the FPL making just shy of $23,000 a year (less than $12 per hour for a full-time worker) can purchase a subsidized "silver" ACA exchange plan in central Virginia with a $750 deductible and out-of-pocket maximum of $1,500 for about $1,400 a year. Theoretically, the maximum financial exposure for this individual would be $2,900 annually, or about 13 percent of income. If this same 51-year-old had an income of just over $23,000, or 201 percent of the FPL, a similar health plan's premium, with subsidy, would cost only $25 more but would carry a $2,350 deductible and $4,500 out-of-pocket maximum, with a potential financial exposure of $6,000 a year, or 26 percent of income. Moving up the income scale, at 251 percent of the FPL ($28,840) and now no longer eligible for the cost-sharing reductions, the subsidized health plan for this 51-year-old would cost about $2,300 a year, the deductible would rise to $3,350, and the out-of-pocket maximum to $5,500. At this level of income, the total possible annual expenditure could reach $7,800, or 27 percent of income. Contrast this with employer-sponsored health plans, where in 2013 the average worker's portion of the premium was about $1,000, the average annual deductible was $1,135 and the out-of-pocket maximum was often less than $3,000.