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How much did subsidies cut consumers' health insurance costs?

Health Care and Health Insurance
by Tony Proulx
U.S. keeps making health insurance gains, but changes loom
U.S. keeps making health insurance gains, but changes loom

The Patient Protection and Affordable Care Act's mandated health insurance exchanges helped to reduce consumers' costs by giving them subsidies. In general, those were extremely beneficial to many qualifying Americans.

The average amount of premium that a person who qualified for tax credits paid for their coverage every month is $82, down from $346 of premium had they not received such assistance, according to a new report from the U.S. Department of Health and Human Services. That's a savings of 76 percent on average. Within that low average monthly cost, nearly 7 in 10 consumers who receive the tax credits pay less than $100 per month, and 46 percent pay $50 or less. Of those receiving tax credits, 13 percent paid between $101 and $150, and only 18 percent of those receiving assistance paid more than $150 for their monthly coverage, the report said.

Meanwhile, those people signing up for coverage also had a wide range of options available to them for the most part, the report said. In all, 82 percent of the enrollees were able to choose from among 3 and 11 insurers on their states' exchanges. Further, the study states, "An additional issuer in a rating area is associated with a 4 percent lower benchmark premium."

What's the breakdown?
However, it is important to note that the average savings is not evenly distributed, but varies based on the plan chosen, the report said. For instance, those selecting the bronze health coverage had an average monthly premium of $68, only one dollar less than the $69 monthly cost for those on silver plans. However, those selecting the latter package had $276 in savings, versus just $221 for the latter. These are average figures; the report did not analyze the results by age.

Within each metal level, individuals tended to choose the plans with the lowest premium levels. For example, within the silver plans, 43 percent of the enrollees chose the lowest-cost plan and 22 percent chose the second lowest-cost plan.

Health insurance companies should take note of these trends. More than 8 million people signed up through the Marketplace, "the vast majority of whom are receiving financial assistance," the report said. This represents a great opportunity for health insurers.

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