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Are the federal health care subsidies sustainable in the long run?

Welcome to VoteFacts.org.  Let's take a closer look at some facts surrounding the health care subsidies contained in the Affordable Care Act (ACA).  I know VoteFacts readers are interested in seeing if, and how, the subsidies will directly and indirectly affect them.  Here is the data from the most reliable resources on the subject.

The Congressional Research Service (CRS)

The ACA says premium credits (subsidies) are available to those whose income “exceeds 100 percent Federal Poverty Line [FPL] but does not exceed 400 percent [FPL]....”  See table below

The ACA then provides for lawfully present noncitizens who are at or below 100% FPL and who are not eligible for Medicaid to obtain premium credits (subsidies).  Non-aged citizens and legal permanent residents at or below 133% FPL will be eligible for Medicaid and therefore ineligible for premium credits.    (CRS), Page 3

CRS, Page 4

However, premium subsidies will only be available to individuals enrolled in a plan offered through an Exchange.    CRS, Page 4

Under the ACA's health insurance exchanges, a couple may receive a lesser subsidy, and consequently incur higher out-of-pocket insurance premiums, if they are married, as opposed to unmarried, all other things being equal, thus resulting in a "marriage penalty."   CRS, Pages 18-19

According to the Congressional Budget Office (CBO), 29 million individuals are projected to be enrolled in exchange coverage in 2019.  Of those, 19 million are projected to receive premium subsidies.  CRS, Page 1

(According to the Center for Medicare and Medicaid Services (CMS), an estimated 25 million Exchange enrollees (79 percent) would receive these Federal premium subsidies.)  CMS, Page 5

What does the future look like for subsidy recipients?

The Center for Medicare and Medicaid Services (CMS)

CMS estimates that the subsidy costs in 2018 would exceed the limit on the Federal cost of the premium and cost-sharing subsidy amount, with the result that the enrollee share of the total premium would generally increase in 2019 and later.    CMS, Page 5

The Congressional Budget Office (CBO)

Total federal subsidies for premiums are projected to grow over time - starting at $21 billion in 2014 and reaching $118 billion by 2021 - because of rising enrollment in the exchanges and an increasing average subsidy per enrollee.   CBO, Page 3

However, the new health care law includes a provision that makes it likely that exchange subsidies will grow at a slower rate after 2018, so the shares of income that enrollees have to pay will increase more rapidly at that point, and the shares of the premiums that the subsidies cover will decline.  Such possibilities could lead to pressure on lawmakers to adjust those policies.   CBO, Page 9

And the CBO repeats this warning...  After 2018, an additional indexing factor will probably apply; if so, the shares of income that (subsidy) enrollees have to pay will increase more rapidly, and the shares of the premiums that the subsidies cover will decline.  Whether a widening gap between subsidies and premiums will increase pressure on the Congress to adjust the subsidy schedule and how the Congress might respond are uncertain.    CBO, Page 29

  CMS, Page 5

 

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