ACA Marketplace Increasingly Less Affordable for Middle-Class Families

By Linda Carroll

November 05, 2021

NEW YORK (Reuters Health) - Between 2015 and 2019, insurance purchased through the Affordable Care Act (ACA) Marketplace became increasingly less affordable for middle-class families, a new study finds.

An analysis of data from the American Community Survey (ACS) revealed that while the median family income among middle-class families rose 3.5% from 2015 to 2019, the median premiums for the lowest-cost Marketplace plans rose between 49.7% and 59.3%, researchers report in Health Affairs.

Those high costs were temporarily mitigated with the American Rescue Plan Act, which expanded tax credit eligibility for 2021 and 2022, they note.

"Prior to the American Rescue Plan going into effect this past year, our analysis looking at the years 2015-2019 found that many middle-class families lacked financial support when shopping for Marketplace coverage," said Paul D. Jacobs, an economist at the Department of Health and Human Service's Agency for Healthcare Research and Quality in Rockville, Maryland.

"Some insurers priced competitively in the initial years of the Marketplaces and then later increased their premiums, while others faced declining competition," Jacobs told Reuters Health by email. "Additionally, some government programs designed to lower premiums expired or were discontinued. Taken together, the incomes of middle-income families have not kept pace with premium inflation."

To zoom in on changes in the cost of plans bought through the ACA Marketplace, the researchers analyzed data from the ACS, which is conducted by the Census Bureau, between 2015 and 2019. They simulated modified adjusted gross income using detailed information about family structure, amounts and sources of income, and the final regulations from the Internal Revenue Service. They obtained premium and deductible amounts from Centers for Medicare and Medicaid Services data files.

The team estimated the financial burden of the lowest-cost plans for people who had family incomes of 401% to 600% of poverty - those typically considered middle-class - and who had non-group coverage or were uninsured during the study period.

In 2019, the median financial burden of the lowest-cost bronze plan was 11.3% of income, while the lowest-cost silver plan was 14.9% of income and the lowest cost gold plan was 17.4% of income.

Financial burdens increased for all plans between 2015 and 2019. The increases hit certain age groups harder than others. For example, in 2019, the median financial burden of the lowest-cost bronze family plan was 10.4% of income for people up to age 20, 8.8% for people ages 21 to 44, 13.3% for people aged 45 to 54, and 18.9% for people aged 55-64.

"The study provides additional evidence of why it is important that the 'Build Back Better Act' now being debated by Congress, extends the Marketplace subsidy increases," said Dr.Michael Sparer, chair of health policy and management at the Columbia University Mailman School of Public Health, in New York City.

"These subsidy increases, first enacted on a temporary basis in the American Rescue Plan (ARP), ensure that families with incomes between 100-150% of the federal poverty level can have $0 contribution coverage, while those with income over 400% of poverty levels will pay no more than 8.5% of their income," Dr. Sparer, who was not involved in the study, told Reuters Health by email.

Those who don't get subsidies will be hit the hardest, observed Dr. Gerard Anderson, a professor at Johns Hopkins University in Baltimore, who also was not involved in the research.

"As healthcare costs increase the individuals that must pay the full cost are going to feel the greatest pain," Dr. Anderson said in an email to Reuters Health. "Most everyone else has much of their healthcare cost partially or mostly sheltered."

SOURCE: https://bit.ly/3BI50z1 Health Affairs, November 2021.

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