The sweeping health-care law created nearly a decade ago to put insurance within reach of more Americans has left significant holes in the ability of older, middle-class people to afford coverage, particularly in rural areas, according to a new analysis.
Sixty-year-olds with a $50,000 income must pay at least one-fifth of what they earn for the least expensive premiums for health plans in Affordable Care Act marketplaces across a broad swath of the Midwest, the analysis shows. In much of the country, those premiums require at least one-sixth of such people’s income.
The findings, issued Tuesday by the Kaiser Family Foundation, underscore why the Trump administration and other Republicans are pushing inexpensive insurance that bypasses ACA rules and protections — and why Democrats are pursuing strategies to make ACA plans more affordable.
Both parties focus on the fraction of Americans who need to buy insurance on their own — the group the ACA marketplaces were intended to help — and who earn too much to qualify for federal premium subsidies created under the law. As premiums have escalated, the proportion of consumers buying ACA health plans without a subsidy has dwindled.
More Americans could decide to forgo coverage if it is too expensive now that Congress and President Trump have eliminated a penalty the ACA imposed on consumers who shirked the law’s requirement that most people carry health insurance. The penalty ended in January.
The new analysis documents county by county that even as average ACA premiums for the most popular level of coverage dipped slightly for this year — the first time that has happened since the marketplaces opened in 2014 — there is wide geographic variation in how affordable rates are.
Middle-class and older adults are especially vulnerable to high insurance costs for ACA coverage because of two features of the law. One is a “cliff” in which premium subsidies end at 400 percent of the federal poverty line, nearly $49,000 for an individual and just over $100,000 for a family of four. The effect is that most 40-year-olds just under the cliff pay no more than 5 percent of their income for coverage; for those with slightly higher incomes, fewer than 10 U.S. counties have premiums as affordable.
The other feature allows ACA health plans to charge three times as much to older adults — before they turn 65 and become eligible for Medicare — as younger ones.
The combined effects of these rules are especially stark in rural areas, where health plans tend to be more expensive. The analysis shows that in almost all of Nebraska, a 60-year-old with a $50,000 income would pay between 30 percent and 50 percent of that income in premiums for the least expensive ACA health plan.
The Trump administration cites unaffordable premiums as it is trying to increase the sale of short-term health plans with skimpy benefits and consumer protections. Democrats propose different remedies, such as allowing subsidies for consumers with higher incomes, letting people in their 50s buy into Medicare, or creating reinsurance programs that help insurers balance the costs between those with healthy customers and sicker ones.