Analysis of Exchange Subsidies and Enrollee Payments in the Senate Finance Committee's Specifications
(as of September 5, 2009)
September 10, 2009
The table below illustrates the average subsidies that single individuals and families of four would receive - and the premiums and average amounts of cost sharing they would have to pay - if they obtained coverage through the new insurance exchanges in the year 2016. Those subsidies and payments would vary depending on those individuals' and families' income relative to the federal poverty level (FPL).
The analysis focuses on enrollees who purchase one of the low-cost Isilver" plans offered in the exchanges (which have an actuarial value of 73%) because federal subsidies would be tied to the premiums of those plans. Premiums would vary by geographic area, but the table shows the approximate national average of premiums - about $5,000 for single policies and about $15,000 for family policies in 2016. Enrollees could purchase more extensive coverage or more expensive plans for an additional premium. (Note that all dollar figures have been rounded to the nearest $100.)
Under the proposal, the share of income that enrollees would have to pay for a low-cost silver plan would range in 2013 from 3% for those at the federal poverty level to 13% for those with income equal to 300% of the FPL. Those with income between 300% and 400% of the FPL would have the same 13% cap. After 2013, those income caps would all be indexed so that the share of the premium that enrollees pay (in each income band) would be maintained over time. As a result, the income caps would gradually become higher; they are estimated to range from 3.2% to 13.9% in 2016. The table shows the resulting premium that single and family enrollees would have to pay, on average, in each income band.
Under the proposal, enrollees with income below 200% of the FPL would also be given cost-sharing subsidies that raise the actuarial value of their coverage to either 90% (for those between 100% and 150% of the FPL) or 81% (for those between 150% and 200% of the FPL). The table shows the average dollar value of those subsidies in 2016, and the average amount of cost-sharing that single and family enrollees would have to pay in each income band.
The table also shows the sum of enrollee premiums and average cost-sharing amounts for each income band, and the share of income such spending would represent. As the figures indicate, single enrollees would be eligible for a subsidy if they have income up to 400% of the FPL - but on average the premium for the low-cost silver plan in 2016 is expected to be less than the 13.9% cap on premiums as a share of income for those with income roughly above 300% of the FPL. Family enrollees would also be eligible for a subsidy if they have income up to 400% of the FPL, and they would probably receive some subsidy because the expected premium in 2016 would exceed 13.9% of their income at that income level.
To put those figures in perspective, it is useful to compare those payments to the amounts people would pay under current law either for employment-based or individually purchased (non-group) coverage. However, such comparisons are difficult to make because many factors affect those premiums, including enrollees' health status, family size, employment status, employer behavior, state-level insurance market regulation, and the extent and nature of insurance coverage obtained.
One point of comparison would be payments under current law for employment-based coverage, the primary source of health insurance for the non-elderly population. Under current law, average premiums for employment-based coverage are expected to be about $7,500 for a single policy and about $19,000 for a family policy in 2016. Several considerations affect the comparison of those amounts to the average premiums in the exchanges:
Another point of comparison would be payments under current law for coverage purchased in the non-group insurance market. Under current law, average premiums for non-group coverage in 2016 are projected to be about $6,000 for individuals and about $11,000 for family coverage. Several considerations affect the comparison of those amounts to the average premiums in the exchanges:
Analysis of Exchange Subsidies and Enrollee Payments in the Senate Finance Committee's Specifications (as of September 5, 2009)
Includes Percent-of-Income Premium Caps up to 400% of the Federal Poverty Level (FPL)
2016 Approximate Averages for Low-Cost "Silver" Plan
Source: Congressional Budget Office and the Staff of the Joint Committee on Taxation.
NOTES: All dollars figures have been rounded to the nearest $100; n.a. = not applicable.