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Senate Bill Still Cuts Tax Credits, Increases Premiums and Deductibles for Marketplace Consumers
While the Senate bill’s cuts to tax credits are structured differently and are somewhat smaller on average, their broad consequences would essentially be the same: coverage and care would become much less affordable for millions of people with modest incomes. Moreover, the Senate’s subsidy changes, like those in the House bill, would particularly harm older people, lower-income people, and people in high-cost states.
What the Senate Health Bill Would Do
The Senate health bill, released June 22, makes five major changes affecting marketplace premiums and financial assistance.
First, it makes an across-the-board cut to premium tax credits by linking them to less generous health coverage. Today, premium tax credits are based on the value of “silver plan” coverage: coverage with a 70 percent actuarial value. In other words, tax credits are calibrated so consumers can afford plans that cover 70 percent of their medical costs (on average); consumers pay the remaining 30 percent through deductibles, copays, and coinsurance. Under the Senate bill, tax credits would instead be based on the cost of a plan with an actuarial value of 58 percent — roughly equivalent to current “bronze plan” coverage. This means consumers would have to pay 42 percent of the cost of health services that their insurance plan covers, rather than 30 percent. This would mean much higher deductibles: in 2016, the median deductible for bronze plans was about twice as high as the median deductible for silver plans — $6,300 versus $3,000.[1]
Second, the bill rearranges the current tax-credit schedule, generally reducing premium tax credits for older people while increasing them for younger people. For example, under current law in 2020, people with incomes between 300 and 350 percent of the poverty level (between $36,000 and $42,000 for a single person) would pay about 9.9 percent of their income in premiums to obtain “silver plan” coverage — with the tax credits covering the remainder.[2] Under the Senate bill, older people in this income range would pay about 12 to 17 percent of income for the lower-value “bronze” coverage, meaning that they would pay significantly more in premiums to buy plans that have much higher deductibles. (Younger people would pay 4.5 to 6.7 percent of income for bronze-plan coverage.)[3]
In dollar terms, a 60-year-old with income of $36,000 would see her out-of-pocket premium rise from $3,425 for silver-plan coverage to $4,174 for (skimpier) bronze-plan coverage due to this change. In contrast, a 25-year-old would see her premium fall from $3,425 to $1,620.
What the Senate Health Bill Would Do
The Senate health bill, released June 22, makes five major changes affecting marketplace premiums and financial assistance.
First, it makes an across-the-board cut to premium tax credits by linking them to less generous health coverage. Today, premium tax credits are based on the value of “silver plan” coverage: coverage with a 70 percent actuarial value. In other words, tax credits are calibrated so consumers can afford plans that cover 70 percent of their medical costs (on average); consumers pay the remaining 30 percent through deductibles, copays, and coinsurance. Under the Senate bill, tax credits would instead be based on the cost of a plan with an actuarial value of 58 percent — roughly equivalent to current “bronze plan” coverage. This means consumers would have to pay 42 percent of the cost of health services that their insurance plan covers, rather than 30 percent. This would mean much higher deductibles: in 2016, the median deductible for bronze plans was about twice as high as the median deductible for silver plans — $6,300 versus $3,000.[1]
Second, the bill rearranges the current tax-credit schedule, generally reducing premium tax credits for older people while increasing them for younger people. For example, under current law in 2020, people with incomes between 300 and 350 percent of the poverty level (between $36,000 and $42,000 for a single person) would pay about 9.9 percent of their income in premiums to obtain “silver plan” coverage — with the tax credits covering the remainder.[2] Under the Senate bill, older people in this income range would pay about 12 to 17 percent of income for the lower-value “bronze” coverage, meaning that they would pay significantly more in premiums to buy plans that have much higher deductibles. (Younger people would pay 4.5 to 6.7 percent of income for bronze-plan coverage.)[3]
In dollar terms, a 60-year-old with income of $36,000 would see her out-of-pocket premium rise from $3,425 for silver-plan coverage to $4,174 for (skimpier) bronze-plan coverage due to this change. In contrast, a 25-year-old would see her premium fall from $3,425 to $1,620.
http://www.cbpp.org/research/health/senate-bill-still-cuts-tax-credits-increases-premiums-and-deductibles-for
