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Health Insurance & Affordable Care Act

For Some, Affordable Care Act Costs Still Out of Reach

WebMD News from Kaiser Health News

By Julie Appleby

Tue, Sep 24 2013

Michelle La Voie wants health insurance, but as a single mom making $38,000 a year and supporting two teenagers, she's not sure she can afford it -- even with a subsidy through the federal health law known as Obamacare.

When enrollment in new online insurance markets begins next month, La Voie will likely qualify for a subsidy to buy private insurance, but would still have to pay $191 a month, or about 6 percent of her income toward the premium. She could also face as much as $2,000 in potential out-of-pocket costs for hospital care and prescription drugs, if she needs those things.

“What’s the point of having [a policy] if I can’t afford to use it?” asks the 47-year-old librarian in upstate Franklinville, New York, referring to the co-pays and deductibles that she might incur if she sought treatment.

How consumers judge the affordability of the new health plans remains one of the biggest unknowns on the eve of the rollout of the health law’s insurance marketplaces. Those marketplaces, aimed at people without group coverage, are predicted to sign up 7 million enrollees by the end of next March. Will shoppers regard the plans as a good value?  Will they be able to afford the monthly premiums and other out-of-pocket costs built into most plans? 

The answers are likely to depend on factors such as their age, income, health issues -- and perhaps most important, whether they qualify for free or low-cost care through a government program, or for a substantial subsidy to buy private coverage. 

Some may also weigh whether it is simply cheaper to pay the penalty for not having insurance, which is $95 or 1 percent of household income, whichever is greater, rather than buying coverage.

‘Not Much Left Over for Extras’

Experts say that moderate-income Americans like La Voie, who will be eligible for subsidized coverage but who must still pay between 6 to 9.5 percent of their income toward monthly premiums, are likely to have the hardest time affording the policies. 

That’s because the share someone must contribute toward coverage rises with their income, starting at 2 percent for those earning the least and rising to a maximum of 9.5 percent for those earning as much as 400 percent of the poverty level, or up to $78,000 for a family of three.

 “I live paycheck to paycheck,” La Voie said. “It’s not like I take vacations, go out to eat, or buy lots of clothes ... My money goes to rent, gasoline, food, student loans and utility bills almost exclusively. Believe me, there's not much left over for extras. It's very depressing.”

While lower-income people face the same pressure, they will get more help from the government. More than half of the uninsured, for instance, are poor enough to qualify for free or low-cost care through Medicaid, if their states expand the program under the law.  Others will qualify for the most generous subsidies to buy private insurance.

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