Ninety percent of American families living above the federal poverty level ($22,350 for a family of four) will be able to afford health insurance thanks to the Affordable Care Act, according to a Commonwealth Fund report released Wednesday. But families with high out-of-pocket medical costs may continue to struggle.
The report, "Will The Affordable Care Act Make Health Insurance Affordable?" finds that new subsidies available through health insurance exchanges established under the ACA will make premiums affordable for most families.
The exchanges, which are scheduled to begin in 2014, will offer a federally determined essential benefits package. Health plans in the exchanges must cover, on average, 60% of the costs of the insurance. In addition, the out-of-pocket limit for enrollee spending can't exceed the regulated level for health savings accounts or about $6,000.
The Commonwealth Fund report uses consumer spending data to analyze family budgets across income levels, and compares them to the costs of purchasing health insurance through HIEs and typical out-of-pocket healthcare spending. The analysis shows that the majority of families, even lower-income families, have room in their budgets for premiums and typical out-of-pocket costs.
Households between 100% and 150% of the FPL (up to $33,525 for a family of four) spend 75 percent of their resources on necessities—including child care, food, housing, taxes and transportation—leaving most families in that income range able to afford some health-related expenses.
While the families had room in their budgets for necessities, health insurance premiums, and moderate levels of out-of-pocket costs, that was not the case with high levels of out-of-pocket costs. In each income range examined, some families would struggle to afford all their healthcare expenses because of high out-of-pocket costs.
For example, 10.8% to 17.5% of families with incomes between 100% and 200% of the FPL could not afford all their necessities plus health-related costs when they had high out-of-pocket medical costs. At 200% to 300% of FPL high out-of-pocket medical costs meant about a quarter of families could not afford all their necessities plus health-related costs. Families with incomes over 500% of FPL ($111,750 for a family of four) were found to have room in their budgets for healthcare even with high out-of-pocket costs.
"Our analysis is promising, as the vast majority of people will be better off because of the premium subsidies and cost-sharing limits in the Affordable Care Act," said Jonathan Gruber, an economics professor at MIT and the lead author of the report. "However, the concerns about high out-of-pocket costs are notable and should be addressed so that people who become very sick don't face out-of-pocket costs that they are unable to afford."
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Margaret Dick Tocknell is a reporter/editor with HealthLeaders Media.
