For many Americans, the idea behind the Patient Protection and Affordable Care Act was that, as the name implied, it would allow them to potentially reduce their health insurance costs by a significant amount every year. However, data suggests that most people are seeing their costs rise for the 2015 calendar year, and as a result, many Americans are likely worried about the impact this will have on their budgets.
However, it's important to note that the ACA wasn't necessarily intended to bring health coverage costs down for the average American, but rather make sure they don't grow quite as quickly as they did before, according to new data from the Kaiser Family Foundation. That fact likely provides little succor, at this point, for consumers who only know their premiums are on the rise once again, but some experts say this might be a matter of misconception more than anything else.
The fact of the matter is that in most states, consumers can expect to pay more for the second-lowest priced "silver" plan on the ACA's mandated health insurance exchanges per-month before the savings from the tax credits are figured into the equation, the report said. However, once the tax credit is taken into account most states are seeing marginal drops in after-tax credit premiums of around $1 per month, which is a 0.8% decrease. In fact, consumers in 43 of the states will experience this $1 per month decrease on their monthly after-tax credit premium. In contrast, the change in premiums on a pre-tax credit basis vary greatly among the states and range from -25.5% in Mississippi to 28.4% in Alaska and averaging to a 0.1% decrease, according to the report.
So why the difference?
The reason the percent of premium changes vary so much between pre and post-tax credit is because the maximum amount a consumer receiving tax credits has to pay is based on their income and where it falls compared to the federal poverty level, and not the actual premium charged by the insurer. The 2015 poverty levels have increased from 2014 as well as the defined percentage of income that is used to calculate the maximum amount a consumer will pay. These changes have resulted in the average premium dropping by $1 per month after the tax credit and this explains why the decrease is so consistent across the states. The pre-tax credit premium change varies greatly across the states because it is based on the premium the insurer will charge in 2015.
The more insurers can do to explain to consumers the ways in which the health care laws are affecting them, and reach consumers who might feel disenfranchised by what they perceive to be rising costs, the more likely the entire industry is to be healthy going forward.