CBBP – Percentage of Income Households Would Pay for Premiums Would Edge Up Over Time

report by the Center on Budget and Policy Priorities reveals a big affordability problem that I haven’t heard discussed: In the House and Finance cmt. bills, out of pocked costs for premiums in the exchange are capped as a percentage of income for the first year only. After that they are indexed to a percentage of the actual premium to be paid. As we all know, premiums are increasing at roughly 9% per year while incomes rise roughly in line with overall inflation (3% max). This means that the amount that people will be forced to pay for insurance in the exchanges will rise dramatically in future years, far outpacing income growth. I was always under the impression that your out of pocket costs were always to be tied to your own income, capping out at 12% for people at 400% FPL. I can live with that. But if costs are tied to premiums — with no public option to fall back on — the legislation will do more harm than good. Check out the box about half way through the report for details.

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