Update on the Affordable Care Act

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Premiums for employer-based health insurance in the first 5 months of this year are the lowest these premiums have been in the last 16 years.

Anxiety Deterred

There had been anxiety that employer covered amounts might become so costly to maintain but despite that worry, the market does seem to have steadied for now.

Kaiser Family survey

One of the first reassuring sign was the latest survey of over 2000 small and large employers conducted by the Kaiser Family Foundation and the Health Research and Education Trust. Kaiser’s survey focuses on the far larger market where 150 million Americans are covered through their employers.

Premiums 3%

This survey for 2014, with results declared last week, showed that annual premium at work averaged for family coverage $16,834 this year, up a modest 3 percent from 2013. This showed on average the workers paid $4,823 of the cost, while the employer paid on average $12,011. The average premiums for plans that covered the worker only were $6,015, with the employee paying $1,081 of that amount.

Unchanged from 2013

The share of employers healthcare 55 percent and the workers covered 62 percent were unchanged from 2013. Employers were persistent in shifting healthcare costs to the employees by requiring co-payments higher for visits to primary care physician and specialists, a trend that started back in 2006, well before the Affordable Care Act was enacted. Analysts and employers will need to keep a close watch on whether higher cost-sharing keeps the employee from getting the care they need because they can’t afford the co-pay.

Another survey by Kaiser released last week showed that premiums for the so-called silver plans on the exchanges will be declining in over 16 big cities across the country next year. If these trends hold when data from all states are available, the government will benefit by paying less in tax credit.

Example

For individuals, multistate averages would not mean much as there is still a large inequality from one city to another. Here is an example:

Premiums for a 40-year-old nonsmoker in Denver is projected to decline by 15.6 percent to $211 per month in 2015, while premiums in Nashville for someone of the same profile are predicted to rise by 8.7 percent to $205 a month. This difference is for several reasons with each state having different premiums as well as some states refusal to set up exchanges.

Federal subsidies

Because of the Affordable Care Act, tax credit subsidies covered by the federal government – offered for those making up to 400% of the federal poverty line ($95,400 for a family of 4) – are serving to make these policies reasonable and this is cushioning the amount of premium increasing in other cities.