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By Kristen Golden Testa, The Children’s Partnership

Since when is 14,000 no different than 5,000? When the U.S. Treasury Department estimates the affordability of a family’s health insurance. If it goes uncorrected, their fuzzy math may deny affordable health coverage to 270,000 Californians–122,000 of whom are children.

While premiums continue to rise across the board, families face particularly steep increases. Since 2003, families have seen their employer-sponsored health insurance premiums increase by 50%, according to a new Commonwealth Fund report. Currently, the average cost for a family to purchase health insurance is just under $14,000. By comparison, single employee coverage costs $5,000 per year. We can all agree that $14,000 is much more than $5,000. Certainly parents feel that difference when writing a check for their family coverage. For the average family making budget decisions around their kitchen table, $5,000 versus $14,000 is the difference between affordable and not. But, according to the Treasury Department, they would make no distinction between the two. Huh?!

The Affordable Care Act (ACA) has already strengthened coverage for families, particularly for children, and more benefits are on the way. The Exchanges and federal subsidies that begin in 2014 will make insurance more affordable for families. However, a very significant proposed ACA regulation by the Treasury Department would ask families to ignore the additional premium cost of their dependents in determining whether employer-sponsored family insurance is affordable. This fuzzy math would make some employer-sponsored family insurance seem more affordable than it really is. And that, in turn, reduces the likelihood that any given family will qualify for tax subsidies designed to make private insurance more affordable.

The ACA requires that, to qualify for federal premium subsidies, families must not have access to affordable employer coverage. That makes sense. But calculating what is affordable for a family by including only the cost for one person in that family sure doesn’t.

In California, as across the country, this proposed rule will have a real impact on children getting coverage. A recent California analysis shows that 270,000 Californians would be able to access federal insurance subsidies if families could count their dependents’ premium costs when calculating whether their employer-sponsored coverage is affordable. Most notably, 122,000 of those Californians are children–that amounts to about 1 in every 70 children living in California. These children have family incomes too high to qualify for public insurance programs like CHIP and Medicaid but their incomes would still render $14,000 prohibitively expensive. The availability of federal subsidies will make the difference between purchasing insurance or not.

The ACA’s “affordability test” was crafted so as not to spend federal subsidies when affordable employer coverage is available, which makes sense. However, proponents of the proposed rule say that calculating the whole families’ premium costs in the “affordability test” would generate too large a federal price tag. However, the California analysis, estimates that the federal cost of such a change to the proposed rule is magnitudes less than previous estimates.  

Making ACA work for kids and families means getting the implementation right. Let’s start by changing the “affordability test” in the Treasury Department’s exchange subsidies rule to include the whole family’s premium costs. That common-sense change would help children get the health care they need. It also makes “kitchen table” math sense.

Let’s build ACA regulations that they make sense in the real world.