December 18, 2009

Premium and Cost-Sharing Subsidies under Health Reform: Implications for Coverage, Costs, and Affordability

Bowen Garrett, Lisa Clemans-Cope, and Matthew Buettgens present a hypothetical experiment where they crafted a final health reform bill that can be passed in both Houses of Congress to balance government costs against making health insurance affordable for low- and middle-income families. The levels of premium and cost- sharing subsidies greatly determine how affordable insurance coverage and access to medical care would be for families under reform. Using the Urban Institute's Health Insurance Policy Simulation Model (HIPSM), they estimate the household financial burdens under the America's Healthy Future Act of 2009 (AHFA) proposed by the Senate Finance Committee and under two modifications of the AHFA that use alternative subsidy schedules: those specified in the Patient Protection and Affordable Care Act (PPACA), and those specified in H.R. 3962, passed by the House of Representatives on November 8, 2009. To be specific, they only look at the effects of changing the premium and cost-sharing subsidies that were included in the Senate Finance Committee (SFC) bill, holding all other features of the SFC bill constant. The focus is largely on those who would purchase health insurance coverage directly through a new health insurance exchange. They found that the number of uninsured would drop from 49 million to about 19 million people under the SFC bill and that the uninsured would decrease by less than half a million more under subsidies of the Senate Leadership bill and by about another 2 million with the subsidies specified in the House bill. Those eligible for Medicaid or CHIP under reform would face little or no out-of-pocket health care costs after reform if they enroll in those programs. People getting coverage through employers would generally face lower financial burdens than those enrolling in nongroup coverage, even in the exchange, as employers that offer coverage typically contribute significantly to the cost of premiums for their employees.