The Affordable Care
Act (ACA), also known as Obamacare, expanded health care access
and coverage around the country while also creating some inefficiencies in the
U.S. health care system.
One of the flaws, according to experts, is the
stark difference between costs for those who are subsidized and unsubsidized.
According to a report from eHealth, individuals with federal subsidies
through the ACA pay an average of $80 per month, which is approximately $720 a
year. For those who are unsubsidized, the average monthly premium for
individuals was $456 — or $4,572 per year.
“It’s not unreasonable to call it a flaw or a
limitation in the original design,” Dr. Gerald Kominski, a professor at UCLA’s
Fielding School of Public Health, told Yahoo Finance. “The intention was to try
and help people who were most likely to be uninsured and also who had the most
difficulty affording insurance in the marketplace.”
‘It’s the middle-class
folks that get the burden there’
President Obama signed the ACA into law in March
2010, and the Obamacare health care marketplaces opened for business in the
fall of 2013.
ACA subsidies were intended to help certain
Americans pay for their health insurance premiums if they met the qualifications: They must be U.S. citizens living in the U.S.,
not incarcerated, and have an income that’s no more than 400% of the federal
poverty level.
Kominski described the threshold as “a balance
between trying to provide the most health care to the most people [and] how
much this will cost the federal government.”
In 2019, the federal poverty
level was $12,490. If an individual made more than $49,960 a
year, they wouldn’t qualify for an ACA subsidy. For a family of four, the
threshold would be an annual income of $103,000 (since the poverty level for a
four-person household is $25,750).
“As soon as you cross the threshold,” Kominski
said, “suddenly the subsidies go away completely and a small change in your
income can dramatically increase the amount you have to pay for health insurance
if you’re buying in the marketplace. That is something that really should be
corrected.”
(Source: ACA Index Report on Unsubsidized
Consumers in the 2020 Open Enrollment Period).
The eHealth report found that individuals and
families who don’t meet the subsidy threshold “are often required to pay four
to five times more for comparable coverage.” A family of four can pay between
$17,000-$25,000 a year for unsubsidized health care coverage, depending on
whether or not they received medical care subject to the deductible.
“What we’ve found is that people are just right
on the cusp for paying four to five times more, comparable to their neighbors
who are just under that amount,” Nathan Teater, the manager of IFP sales at
eHealth, told Yahoo Finance. “The average subsidy is $500 for those who qualify.
We’re really finding that it’s the middle-class folks that get the burden
there, that if we expanded it just a little bit, it would encompass them and
help with their costs.”
‘The ACA was an
important step but it doesn’t give everybody access’
The candidates in the upcoming U.S. presidential
election have very different approaches to Obamacare.More
President Trump aims to eliminate Obamacare altogether, while
former Vice President Joe Biden proposes fixing flaws and expanding upon the
existing law.
Biden’s health care plan would provide federal subsidies to
everyone, regardless of income, and ensure that those enrolled in ACA coverage
would pay no more than 8.5% of their income. Health insurance is deemed “unaffordable”
by the ACA if the annual premiums for the lowest-priced plan costs more than
8.05% of your modified adjusted gross income in 2018.
In the meantime, some states have pursued routes
of extending subsidies on their own. California, for example, extended subsidies up
to 600% of poverty, which would be an income of up to approximately $150,000
for a family of four.
“This report calls attention to it but again for
those of us who work in this field and are trying to move the country further
to get to universal access — because the ACA was an important step but it
doesn’t give everybody access to health insurance — we’re well aware this is a
limitation and more is necessary to get truly everybody in the country
insured,” Kominski said.
Adriana is a reporter and editor
covering politics and health care policy for Yahoo Finance. Follow her on
Twitter @adrianambells.
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