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Kaiser Analysis Predicts Wide Availability of Health Law Subsidies

By CQ Staff

August 14, 2013 -- Nearly half of all Americans who currently buy their health insurance in the individual market will be eligible for health law tax credits, according to a recently released Kaiser Family Foundation analysis.

Kaiser officials estimate that the tax credits for policies people buy on the new marketplaces average $5,548 per family and cover 66 percent of the premium costs.

For consumers who select the bronze plan, which has a less rich benefit package and costs less, the tax subsidies under the health law (PL 111-148, PL 111-152) would cover a greater portion of their premiums, the analysis finds. For individuals, the subsidy they get for the bronze plan would cover 38 percent of the premiums.

Tax credits, Kaiser researchers said, "have the potential to cover a substantial portion of the premiums paid by current individual market enrollees."

It's still difficult to say exactly how much people will be paying when coverage on the new exchanges kicks in on Jan. 1. (The marketplaces are set to open for enrollment on Oct. 1 but the policies will take effect on Jan. 1.) While a number of states have released their rates, the majority of people enrolling in the exchanges will do so in the federal marketplace and those rates are not expected to be made public until September.

The Kaiser analysis, which used the Congressional Budget Office's estimate of an average premium for the second-lowest cost silver plan in 2016, estimates that, for example, the national average benchmark premium for a 40-year-old in 2014 would be $3,857 a year. Kaiser officials said that estimate is consistent with the rates that some states have released.

"There are many reasons why premium costs in the individual insurance market will change under the ACA before tax credits are applied," the analysis said. "For instance, insurance companies will be prohibited from discriminating against people with pre-existing conditions, leading to higher enrollment of people with expensive health conditions. More young, healthy people may also enroll due to the ACA's individual mandate and premium subsidies."

The analysis also pointed out that the minimum benefits the health law requires for all health insurance policies will raise premiums for those who currently have more bare-bones coverage. But the result of having insurance policies that cover more services is also expected to lower consumers' out-of-pocket costs.

"Premiums before and after the law goes into effect are not necessarily comparable as health plans in the new marketplaces will be required to cover a broader range of services than are found in many current individual market policies and the health needs of people who will enroll are likely to be different," Kaiser officials said.

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