Whenever I read stories about the sticker shock that may hit some consumers when the Affordable Care Act takes effect, it reminds me that buying insurance can be more mystifying than buying a new car. There have been so many jalopies being sold in “mint condition” in the wild west of the insurance market for so long that it’s going to take some time for consumers to realize how much better the insurance products will be once the ACA consumer protections take full effect.
They will finally be getting what they are paying for – coverage that will cover essential health needs and won’t disappear when they need it most. Don’t forget, there will be other important features included in next year’s models (in other words, improvements brought about by the ACA market reforms such as the elimination of pre-existing condition discrimination and gender-based rating.)
These sticker price narratives also often ignore the fact that many people won’t be paying the full sticker price because they will be eligible for federal tax credits and/or cost-sharing protections offered by the ACA to offset the cost of insurance. A new report from the Kaiser Family Foundation found that 48% of people now buying their own insurance would be eligible for a tax credit that would offset their premium. Among the approximately half of current enrollees who will be eligible for tax credits, the average subsidy would be $5,548 per family, which would reduce their premium for the second-lowest-cost silver premium by an average of 66%.
So the next time you hear the refrain that insurance coverage will cost more under the ACA, ask yourself more expensive than what and are the premium tax credits and cost-sharing protections being taken into account?