A 2011 study by the Commonwealth Fund called Will the Affordable Care Act Make Health Insurance Affordable? was conducted to see if the upcoming health care reform will truly make health insurance affordable. The study was centered around all of the exchanges and subsidies related to Obamacare and the most pressing concerns related to health care reform.
The study estimates that 90% of households who are above the federal poverty line are likely to be able to afford the healthcare premiums that are set to go into place. This is in part due to the fact that tax credits will be issued as part of the health care subsidies.
These subsidies only apply to individuals and families who do not have health insurance through their employer and are instead searching for self paid coverage. The goal of the subsidies is to create affordable health insurance that is not out of a reasonable price range for your annual wages.
For example if you income level is between 133-399 % of the current federal poverty level you are insured that your health care premiums will not be more than 3-9.5 percent of your income. If you income is below 133% of the poverty line you may be eligible for Medicaid.
While healthcare premiums will be more affordable for low-income families the study found that there are some other factors to consider.
While the reduced premiums are designed to create affordable health insurance there will still be high out-of-pocket expenses. Health care reform laws place caps on annual out of pocket spending but the caps are quite high for low-income families.
The cap for spending for households 133-199 percent of the poverty level is $1,983 annually and $5,950 for household earning more than 400% of the poverty level. So while a family may have health insurance the costs for co-pays, deductibles, and prescriptions may still be too high for them to actually see a physician when they are in need of care.
The study shows that the average low-income household spends 75% of their monthly income on necessities. This means that the cost of the monthly health care reform premiums may be reasonable to include into the budget, but not many other out-of-pocket expenses.
The Commonwealth Fund found that the percentage of families that would fall into this extreme low-income category is in the minority, but that there is still cause for concern. The concerns being that those who need affordable health insurance the most will still not be able to afford the actual trips to the doctor—even if they can afford the monthly premiums.
With income being so low do you choose to purchase food for your family or pay a physicians co-pay? The need for healthcare may still come in second to the need to eat, pay rent, and utilities. The delay this causes for receiving necessary healthcare can lead to more serious and expensive health conditions down the road.
Don’t wait until the Affordable Health Care (ACA) takes full effect in 2014 to purchase health insurance. Buy your policy now, before the law changes and you may be able to keep today’s rates for another year.
Health insurance plans bought in late 2013 may be “grandfathered” in for a year until they are brought into full compliance with the 2014 Affordable Health Care Act. You may be able to lock in lower prices with a reputable insurance company for a short time period and choose to remain with this company even when it switches over to ACA compliant plans.