‘ObamaCare’ tax subsides will reduce the premium cost of health insurance

Posted by AzBlueMeanie:

There has been some seriously "craptacular" reporting by conservative media about the alleged premium "rate shock" in insurance rates under "ObamaCare." Every time you see one of these reports about premium “rate shock,” make certain you note whether the reporting accounts for tax subsidies or not.

Adrianna McIntyre from Project Millenial reports, Most young adults on the individual market today will qualify for subsidies in 2014:

The Kaiser Family Foundation has a new report out that examines how people currently in
the individual market will be affected by the reforms taking effect in
2014. Premiums will change for  variety of reasons. You should read the whole issue brief, or Jon Cohn’s commentary here. As
Kaiser acknowledges, premiums will go up for some people and down for
others. They go a step further, though, and look at how many people in
the current market will benefit from the premium tax subsidies.

About half (48%) of
people now buying their own insurance would be eligible for a tax credit
that would offset their premium. This does not include over one million
adults buying individual insurance today who will be eligible for
Medicaid starting in 2014 (i.e., they have family income up to 138% of
the poverty level and are living in states that have decided to expand Medicaid under the ACA).

Now, that’s all adults, regardless of age. I was curious, how does that stack up against just young adults? I looked at these numbers a few months ago,
but my analysis back then was limited to childless adults. Josh
Fangmeier was kind enough recently to rereun the numbers for everyone,
with or without kids (more related to that here).
A predictable trend holds for those currently on the individual market:
younger individuals tend to have lower incomes, so they’re going to
benefit more than average from the exchange subsidies offered to those
below 400% of the poverty line.

Bottom line? Just over 70% of young adults that hold individual plans
today could qualify for subsidies in 2014. Even if you chop off the
kiddos under 26—who might not need an individual plan, since they can
take advantage of extended dependent coverage—the proportion of
subsidy-eligible 26- to 35-year olds is 65%, still well over the 48%
attributed to the whole market.

* * *

But if you want to talk rate shock, make sure you also talk about the
fact that young adults are more likely to receive subsidies than their
older counterparts.

Jonathan Cohn’s commentary, The Big Savings Obamacare Critics Miss:

I know. You're getting tired of hearing about the subsidies. Bear with me, because today we have some new and important information, thanks to a new study from the Kaiser Family Foundation.

To
review: Obamacare provides offers tax credits to offset the cost of
insurance. If your income is less than four times the poverty line, and
if you're buying through one of the new insurance exchanges, then the
tax credit will operate like a discount. The less money you have, the
bigger the discount. Nowadays, most Obamacare critics acknowledge that
the subsidies exist. But they tend to dismiss them as trivial. “Some
low-income people will get subsidies," Rich Lowry of the National Review wrote on Monday. "But that doesn’t change the essential facts.” 

Actually, it does change the essential facts—by quite a lot. The study, by Larry Levitt, Gary Claxton and Anthony Damico, shows it.

The authors start by figuring out what the initial, upfront cost of
insurance will be for people buying coverage on the exchanges. Based on
Congressional Budget Office projections, the average across all
households—that is, individuals and families, of all ages—works out to
$8,250 a year. That’s not a bad price for comprehensive coverage: It’s
in the same ballpark as policies that employers provide employees.
Still, it’s more than some families buying coverage on their own might
pay today, because they have skimpy policies or benefit from
preferential pricing for the healthy that Obamacare prohibits. That’s
why conservatives insist people won’t want to sign up for Obamacare's
insurance options.

But, again, those are the initial premiums.
According to the Kaiser study, the subsidies on average will reduce
premiums by $2,672, or about a third of the price. The averages mask a
lot of variation, with more affluent people getting less assistance and
less affluent people getting more assistance. People with incomes of
more than four times the poverty line, or about $94,000 for a family of
four, get no discount at all. That's one reason why some people really
will pay more for their insurance next year.

Still, the number of
people receiving discounts is a lot larger than even many analysts seem
to realize. It turns out that about half the people who buy their own
insurance today will be eligible for subsidies. For them, the subsidies
will be worth an average of $5,548 per household, effectively
discounting the price by two-thirds. The study defines the “typical”
plan as the second cheapest silver option. (Silver plans cover about 70
percent of the average person’s expenses.) Keep in mind that people who
choose less expensive options, like those that cover fewer expenses,
will pay even less for their coverage.

"It makes sense to look at what people will pay for health insurance
after taking tax credits into account, just like we do for things like
401(k) plans, child care, or educational expenses," Levitt told me. "The
law provides a surprising amount of financial relief for people who are
buying their own insurance today, not to mention the uninsured, who
tend to have lower incomes." Len Nichols,
a health economist at George Mason University, agrees. "In many ways,
what the ACA is about is extending premium tax breaks to those without
good employer offers today, and doing so through a sliding scale that
provides the most help to those who need it most."

* * *

For now, we should at least agree on the arithmetic, which the Kaiser
Foundation study lays out nicely. A large portion of people who buy
individual coverage through Obamacare are going to be eligible for
subsidies. And those subsidies are going to be worth, on average,
thousands of dollars per person.

Unfortunately, GOPropraganda doesn't do math.

UPDATE: Kaiser Family Foundation provides a Subsidy Calulator Premium Assistance for Coverage in Exchanges. http://kff.org/interactive/subsidy-calculator/