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Government is subsidizing more ACA premiums

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Just how much is health coverage costing those who purchased it on the federally-facilitated exchanges? And how much of the tab is being picked up by the taxpayers? The U.S. Department of Health and Human Services (HHS) provided some information in its latest report, issued this week.

The HHS report said that people who selected silver plans, the most popular plan type in the federal marketplace, paid an average premium of $69 per month when tax credits were factored into the cost. In the federal marketplace, 69 percent of enrollees who selected marketplace plans with tax credits had premiums of $100 a month or less, and 46 percent of enrollees had premiums of $50 a month or less after tax credits. For the purposes of comparison, all the premium and subsidy amounts in the HHS report were based on the silver plans.

Under the Affordable Care Act, tax credits were offered to consumers who bought policies in the marketplace and made less than four times the poverty level – or about $46,000 for an individual and $94,000 for a family of four.

According to the report, on average, monthly premiums for people who selected plans with tax credits fell 76 percent after tax credits, dropping the cost of the average monthly premium from $346 before tax credits to $82 after tax credits across all plan types. This means that about three quarters of these premiums were subsidized through tax credits.

People who selected silver plans, the most popular plan type in the federal marketplace, paid an average premium of $69 per month after tax credits.

The average tax credit amount for those who selected a silver plan was $276 per month and 94 percent of those who selected plans were eligible for a tax credit.

Premiums varied across the 36 states that sold coverage through the federal marketplace. The average monthly premium after tax credits ranged from a high of $148 in New Jersey to a low of $23 in Mississippi. Mississippians had the largest percentage of the tab covered through tax credits, with an average of 95 percent of monthly premium offset through tax credits. Arizona’s percentage of the cost covered through tax credits was the smallest, at 58 percent.

But what about those who did not qualify for tax credits? HHS reports the average monthly premium across the 36 federal marketplace states was $346, and ranged from a high of $536 a month in Wyoming to a low of $243 in Utah.

So what will all this cost the taxpayers? The Los Angeles Times reports that subsidies for health coverage bought on the federal exchange could end up costing the government $11 billion. And that’s not counting any subsidies for enrollees in states that operated their own exchanges. The Times estimates that the total subsidies for enrollees who qualified for tax credits could top $16.5 billion if the percentage of those who bought coverage on state-operated exchanges received government assistance comparable to the percentage who qualified for tax credits on the federal exchange.

What is driving these numbers? Experts say that the factors influencing premium include the cost of health care in a particular state as well as the amount of competition from insurers who sold plans in the marketplace. States in which relatively few insurers offered to sell coverage on the exchange saw higher premiums.

In addition, health insurance companies now must spend at least 80 cents of every premium dollar on health care or improvements to care, or provide a refund. In 2012, 8.5 million consumers received half a billion dollars in refunds – with the average consumer receiving a refund of around $100 per family.

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Susan Rupe is assistant editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Connect with Susan →

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