A few weeks ago we saw how even the best intentions for health care reform may sometimes just not be enough.
I’m referring to the Administration’s ruling on health care subsidies and the employer-sponsored health insurance market. Under ACA, if your employer offers you “affordable” coverage (“affordable” being defined as premiums costing less than 9.5% of income), you are not eligible for financial help - the idea being, since your employer is paying part of your health care costs, you’re already receiving help. Sounds logical. However, according to the recently announced regulation, the 9.5% maximum pay out applies to the cost of individual coverage for the employee. The additional cost to insure dependents would not be considered in the formula. So if your employer’s-offered policy charges a lot more in premiums when dependents are added, the real cost of insurance for the entire family could exceed the 9.5% maximum yet the family will not be eligible for a subsidy. The result is some low-income families will be left with the same options they had before the reform that being either pay the high premiums or go without insurance.
Although I’ve not seen anything written so far to back this up, there may be another option available to these dependents. That is, they could go to their state exchange and buy health insurance in the individual market where they may be eligible for assistance if the family income does not exceed 400 % above the Federal poverty level. I don’t know if this scenario will work but it seems a possibility.
In any event, “relative to the tens of millions of Americans” Obamacare will help the group of people affected by this ruling is small in comparison. Even so, covering everyone is the reform’s goal and efforts to avert this problem were considered. As was stated in Jonathan Cohn’s article, “Not-So-Universal Health Care Slipping through the Cracks of Obamacare,” the Government Accounting Office recommendation to the Administration was to consider making dependents eligible for subsidies but critics protested with legal and policy objections. Cost was also an issue, as one analysis suggested it would cost the government tens of billions of dollars each year. Later this figure was seen as an exaggeration. Nonetheless finding even a few more billion to allocate would have been difficult so trying was not pursued. However, if the previously mentioned option for dependents buying insurance in their state exchange is valid, the government may in fact wind up paying out more than they have anticipated anyway. We’ll see.
So what does all this say? Something supporters of the health care reform have known all along – that more work needs to be done in the design of the reform. I think Senator Tom Harkin, the retiring Chairman of the Health, Education, Labor and Pensions Committee, said it most aptly when he compared the reform to a “starter home”—with a solid foundation, a sturdy roof, and room for expansion. The recent regulation is a good reminder to us all that Obamacare is not the final but the first step toward building a health care system that works for everyone.