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Cost-Sharing Subsidies Make Marketplace Coverage Affordable, Study Says

By Rebecca Adams, CQ Roll Call

February 11, 2015 -- Certain federal subsidies for purchasing health insurance, now under review by the Supreme Court, are making products sold in the new marketplaces much more affordable for many consumers, according to a new analysis by the nonpartisan Kaiser Family Foundation.

Those subsidies lowered the average maximum amount that a consumer would have to pay out of pocket for a silver plan from $5,826 for a single person to $881 for someone whose income is 150 percent of the federal poverty level or less, according to a Kaiser report released Wednesday. The subsidies could be struck down due to a challenge to the 2010 health law. In considering the King v. Burwell case, the Supreme Court is looking at subsidies for states that rely on the federal marketplace to enroll people. The court case will be heard on March 4 and a ruling is expected by late June.

The health care law has two types of subsidies, and the court could rule that both are not allowed under the law. One subsidy lowers monthly premiums for people with income that is 400 percent of the federal poverty level or less. Another, for people with 250 percent of the poverty level or less, reduces out-of-pocket costs, such as copays, deductibles, and other cost-sharing.

The Kaiser analysis examined the cost-sharing subsidies in silver plans for lower-income people in states that use The subsidies slashed the average annual deductible for medical and drug coverage from $2,556 for a single person to $737 for people with income between 150 percent of poverty and 200 percent of poverty, and to $229 for people with income below 150 percent of poverty.

The poverty level for marketplace coverage this year is $11,670 for an individual.

The subsidies are particularly helpful for people who are sick and have high medical costs.

Insurers have a lot of flexibility in setting copayments, deductibles, and other cost-sharing. All of the plans at a certain metal level have to have the same overall actuarial value, with silver plans covering 70 percent of costs, for example. However, even plans offered in the same state and at the same metal level of coverage could have vastly different cost-sharing, as long as the overall value of the costs that are covered meets the guidelines.

The average copay amount for a primary care visit is $28 for standard silver plans. For people with income between 200 percent of poverty and 250 percent of poverty, the average copay drops to $23. People with income between 150 percent of poverty and 200 percent of poverty pay an average of $17 per visit, and those with income at 150 percent of poverty or below pay an average of $14 per primary care visit.

The subsidies “can result in thousands of dollars of savings for individuals and families who have significant medical events or ongoing medical needs,” said the analysis.

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