Health Care Law Blog

HHS Report Reveals That Many Affordable Care Act Consumers Received Large Subsidies

In a recently released 26 page report the Department of Health and Human Services revealed that federal subsidies cover 76 percent of premiums for those who have signed up for coverage under the Affordable Care Act in the 36 federally administered markets. According to the Los Angeles Times, the total cost of subsidies could exceed $16.5 billion this year, which is significantly higher than the $10 billion cost that the Congressional Budget Office projected earlier this year.

While the extent of the subsidies appears to be the issue generating the most interest, the report more broadly addresses premiums, competition, and choice among plans in the insurance marketplace. It specifically notes the items mentioned below:

• Tax credit subsidies helped reduce the average individual's premium from $346 to $82 per month.

• Sixty-nine percent of individuals selecting plans with tax credits have premiums of $100 or less after tax credits—nearly half (46 percent) have premiums of $50 or less after tax credits.

• Most individuals had a wide range of health plan choices. 82 percent of individuals eligible to purchase a qualified health plan live in rating areas with 3 to 11 issuers in the Marketplace; 96 percent live in rating areas with 2 to 11 issuers in the Marketplace.

• Competition, as measured by the number of issuers in a rating area, is associated with more affordable benchmark plans (the second-lowest cost silver plan) for individuals and reduced costs for the federal government. An additional issuer in a rating area is associated with a 4 percent lower benchmark premium.

Rating areas with a greater number of issuers also tend to offer a wider range of choices among plan types (e.g. PPOs, HMOs) to better meet consumers’ preferences and financial needs.

The report also includes a state-by-state comparison of the amounts residents pay for coverage after subsidies are considered. Figures reveal that Mississippi residents paid the least for coverage after subsidies (averaging $23 per month on premiums of $438), while New Jersey residents paid the most (an average of $148 per month on premiums of $465).

Michigan residents paid on average $97 per month on premiums of $342, a 72 percent reduction in premium after tax credits.

For more information on the Affordable Care Act, please contact one of the Foster Swift healthcare experts.

Categories: Health Care Reform, Health Insurance Exchange