As the Affordable Care Act wobbles into its second month, more people are enrolling on the healthcare.gov website and learning if they are eligible to get a subsidy and what their monthly premium payment could be.
Not everyone is happy, especially those who happen to be just above the subsidy cutoff.
Some single older adults who don’t qualify for a subsidy – the cutoff is $45,980 for one person – are pulling out dictionaries (it’s a book older people use) and rereading the definition of affordable.
In Southeastern Pennsylvania a silver-tier plan, which covers 70 percent of insurance costs, can carry a monthly premium of $575 to $1,012, depending on the plan.
For middle class married couples who don’t have children, the subsidy cutoff is $62,000. A silver-tier policy premium for two can range from $1,150 a month to $2,021, again depending on the plan.
Some of those couples are complaining that the law has a hidden marriage penalty. Here’s why: Say a couple has a household income of $70,000 with one spouse making $30,000 and the other $40,000. Combined, they are ineligible for a subsidy. But if they were just living together, each would be eligible for a subsidy.
“We’ve known all along that some people will do better in this market and some people will do worse,” said Joel Ario, a managing director at Manatt Health Care Solutions and a former Pennsylvania insurance commissioner. “In the long run everyone gets more stability out of the marketplace.”
The ACA, like the tax code, is complicated, and it sometimes provides a marriage subsidy and a penalty, said Mark Duggan, a health economist at the University of Pennsylvania’s Wharton School.
“Will it encourage some weird stuff like some people getting divorced? Yeah,” Duggan said. “That was the challenge of this thing. Where do you draw the line?”
The line was drawn using the 2012 federal poverty level. People with an income between 100 percent and 400 percent of that number are eligible for subsidies when they buy health insurance in the ACA marketplace. That amounts to 64 percent of Americans, said Duggan.
“That is a pretty big chunk of the population that is getting a subsidy,” he said. “They could have extended the subsidy to 74 percent of the people under 500 percent of the poverty line. But that would have cost more.”
One fact that has been lost amid the bumbling of the law’s rollout is that health costs are now rising at the slowest pace in 50 years.
“So overall we are bending the price curve better than we have in 50 years,” Ario said. “We can argue about whether the ACA has a lot to do with that or only a little. That is disputable. What is not disputable is that in the end, people are getting less health care cost increases year over year than they have gotten in 50 years on average.”
Another thing that is clear is that changing the way health insurance is delivered in America is a huge undertaking. Before that change can be made, people have to realize “that there will be a significant amount of destruction,” Ario said. In other words, the country will have to break a few eggs to make this omelet.
“It is somewhat complicated,” Duggan said. “But the hardest time with something like this is in the beginning. Medicare Part D was a mess, a total mess for the first several months. What matters for half of the population is that they don’t need to know the million different provisions of the law. They need to know how to get coverage.”