ACA: Plans Still Too Costly For Many, Especially Young Adults

Marcia Frellick

September 09, 2014

More young adults are insured with Affordable Care Act (ACA) coverage expansions, but in some cases, the premiums for the least-expensive plans are higher than the penalty for not having insurance.

That may lead some to forgo insurance altogether, researchers say.

Results of two studies released online September 8 and September 9 examined how the ACA has affected coverage, affordability, and use of services among different age groups.

Affordability Cliffs Daunting

In a study published online September 9 in the Annals of Internal Medicine, Ilana Graetz, PhD, from the Department of Preventive Medicine, University of Tennessee Health Science Center in Memphis, and colleagues assessed marketplace affordability for the lowest-cost health plans offered in every US county after subtracting subsidies. Government subsidies are meant to make the insurance more affordable for low-income Americans. The penalty for not having insurance is waived if the least-expensive (bronze) plan available costs more than 8% of an individual's income.

The authors found that young adults with low incomes often pay as much or more than older adults for the least-expensive plans. However, because young adults are generally healthier, they may not see as large a need for healthcare services and may weigh the premiums relative to the penalty when making coverage decisions.

"If substantial numbers of younger, healthier adults choose to remain uninsured because of cost, health insurance premiums across all ages may increase over time," the researchers write.

They compared scenarios for those with an individual income of 200% of the poverty level, or $23,340 a year. A 64-year-old pays less for the premium than the penalty (a $0 annual median after-subsidy premium vs a $230 annual penalty), However, a 27-year-old faces much higher premiums (a $804 annual median after-subsidy premium vs a $230 annual penalty). The cheapest plan costs more than the penalty for those aged 21 to 53 years who earn 200% of the federal poverty level (FPL) in most counties, but the reverse is true for older individuals (aged 54 - 64 years).

The authors found "cliffs," or points at which coverage costs change dramatically. They gave these examples of affordability as follow:

  • At an income of 200% the FPL, individuals of all ages have access to affordable bronze health plans.

  • For those earning 300% or 400% of the FPL ($35,010 and $46,680, respectively), most counties still offer affordable bronze plans. However, some age groups in some counties lack access to affordable coverage. (A 50-year-old earning 400% of the FPL will pay between $131 and $364 a month after the subsidy, depending on location, and will not have access to an affordable bronze plan in 5% of counties.)

  • Affordability starts to drop at incomes just above 400% FPL. "At an income of 401% of the FPL, only 64% of counties offer an affordable bronze plan for 50-year-olds and just 3% offer one for 64-year-olds," the authors write.

  • A couple aged 55 and 53 years living in Albany, Georgia, earning $62,040 (400% FPL) with no dependents, will pay $1536 a year after subsidies, or 2.4% of their income, for a bronze plan. If their income increases even $1, the annual cost for the same plan would be $14,928, or 24% of their income.

In the last case, of income rising $1, a couple may opt either not to have insurance, because the penalty would no longer apply, or to cut back on work hours to reduce income.

The authors note that the Congressional Budget Office said that cutting back on hours because of this subsidy cliff would lead to a decrease in hours worked equivalent to 2 million full-time jobs in 2017.

Coverage Rises for Young Adults

In a second study, published online September 8 in JAMA Pediatrics, researchers found that after the ACA allowed young adults to remain on their parents' plans until they were 26 years old (starting in 2010), health coverage for 19- to 25-year-olds increased from 68.3% in 2009 to 71.7% in 2012.

However, that change in coverage had little effect on how young adults used healthcare services, on their health status, or on perceived healthcare affordability, the authors report.

Meera Kotagal, MD, MPH, from the Department of Surgery, University of Washington, Seattle, and colleagues used a difference-in-differences (DID) approach comparing 19- to 25-year-olds with 26- to 34-year-olds and found:

  • that the likelihood of having a usual source of care dropped in both groups but fell more among 26- to 34-year-olds (DID, 2.8%; 95% confidence interval [CI], 0.45% - 5.15%);

  • that no significant change was seen in health status for the 2 groups (DID, −0.5%; 95% CI, −1.87% to 0.87%);

  • that there was no significant change in the percentage who got a routine checkup in the past year (DID, 0.3%; 95% CI, −2.25% to 2.85%); and

  • that no change was seen in the ability to afford prescription medications (DID, −0.4%; 95% CI, −2.93% to 1.93%), dental care (DID, −2.6%; 95% CI, −5.61% to 0.61%), or physician visits (DID, −1.7%; 95% CI, −3.66% to 0.26%).

"[T]hese results underscore the idea that insurance may be necessary, but not sufficient, to alter health care use and overall health. Health policy must continue to address access and quality in addition to coverage," the authors conclude.

Dr. Kotagal was supported by a University of Washington Department of Surgery training fellowship grant from the National Institute of Diabetes and Digestive and Kidney Diseases. The other authors have disclosed no relevant financial relationships.

Ann Intern Med. Published online September 9, 2014. Abstract

JAMA Pediatr. Published online September 8, 2014. Abstract

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