SACRAMENTO, Calif. — Covered California released a new analysis on Monday, March 20th, that goes into greater detail regarding how consumers could be impacted by the changes in financial assistance proposed under the American Health Care Act (AHCA).
The latest figures take into account the recent Congressional Budget Office (CBO) analysis and detail how consumers would be affected in all 19 of California’s rating regions for non-group coverage.
“We have made great progress in reducing California’s uninsured rate to a historic low of 7.1 percent,” said Covered California Executive Director Peter V. Lee. “The main reasons for that are that the financial assistance currently available helps many afford coverage, and for those not receiving subsidies we have kept premium increases to historically low levels. The current AHCA proposal would dramatically reduce financial assistance for most Californians while increasing costs for those who do not get help.”
The CBO examined the AHCA and determined that health insurance premiums would be 15 to 20 percent higher in 2018 and 2019 than they would have been under existing law. The amount of tax credits under the proposed legislation would be 60 percent of what is provided under the current law.
The result would be that some older Californians, particularly those who are lower-income and live in higher-cost areas, would see large increases in their costs, requiring them to spend a significant amount — or even their entire income — to maintain their health insurance coverage.
“The proposed changes to the subsidy structure would put coverage out of reach of many,” Lee said.
The examples below compare the financial help that consumers would receive in 2020 based on the current Patient Protection and Affordable Care Act (ACA) subsidies — which consider a consumer’s age, income, family size and where they live — to the proposed age-based-only subsidies of the AHCA.
For example, under the age-based subsidy structure, consumers purchasing the second-lowest-cost Silver plan would fare very differently depending on their income and where they live:
- In Sacramento under the ACA, a 27-year-old earning $17,000 would pay 3.7 percent of her income toward health insurance premiums ($622 per year or $52 per month). By contrast, under the AHCA that individual would be asked to spend nearly 25 percent of her income on her health insurance premium, paying $4,036 per year or $336 per month.
- In Kern County, a 62-year-old earning $30,000 a year would pay 8.3 percent of his income toward health insurance premiums ($2,494 per year or $208 per month under the ACA). If the AHCA were in effect, he would be asked to allocate more than 30 percent of his income to health insurance, paying $9,182 a year or $765 per month.
- Finally, in Monterey County, a 62-year-old earning $17,000 would receive support under the ACA to limit her premium to 3.7 percent of her income ($622 per year or $52 per month). Yet under the AHCA, this consumer would have to spend 100 percent of her income on her premium and would still fall short of what it would take to purchase a plan that costs $17,873 per year, or $1,489 per month.
Covered California provided data for consumers aged 27, 40 and 62 years old who earn $17,000; $30,000; or $75,000 per year in each of California’s 19 rating regions. The premium projections estimated premiums and tax credits in 2020 under both the AHCA and ACA, using Covered California’s trend of a 7 percent average rate change during its first three years of operation to establish a “baseline” of what ACA coverage would cost.
Lee says the AHCA does address some of the gaps in our current health care system, such as providing needed financial assistance to those above 400 percent of the federal poverty level.
“The proposal addresses the real challenges for some Californians on the ‘cliff,’ of being at 400 percent of the federal poverty level. However, the proposal does not take into account what people earn or the cost of where they live. As a result, many of the most vulnerable Californians will be priced out of coverage under the proposed system,” Lee said. “The likely result is a smaller and less healthy risk pool, which would mean higher premiums for everyone in the individual market.”
The data for all scenarios, in each of Covered California’s rating regions, can be found here: http://coveredca.com/news/pdfs/AHCA_ACA_comparison_chart.pdf.