Nearly 200,000 residents in southwest Ohio would be eligible for premium tax credits to help pay for coverage on Ohio’s new health insurance marketplace being set up under President Barack Obama’s health care reform law, according to a report Thursday from Families USA, a national nonprofit advocacy organization.
Statewide, about 916,000 Buckeyes would qualify for the tax credits, which would be paid directly to insurers to help offset the total cost of plan premiums in the marketplace, beginning next year when the health care overhaul takes full effect.
“This is not like somebody has to pay out of their own pocket the entire premium and then go to the IRS and seek some kind of refund that is commensurate with the tax credit subsidy,” said Ron Pollack, executive director of FamiliesUSA. “The tax credit subsidy will be provided as insurance is purchased. Nobody will have to make these payments in advance out of their own pocket.”
Enrollment in the health marketplaces begins in October, and the tax credits will be determined on an income-based sliding scale, which means enrollees with the lowest incomes would receive the largest subsidies down to a certain income level.
Those with incomes below that level would qualify for Medicaid, the state-federal health plan for the poor which is under consideration for expansion in Ohio and is part of a two-pronged approach under the health care law to provide coverage for millions of uninsured Americans, including an estimated 1.5 million uninsured Ohioans.
About 60 percent of Ohio’s population is already covered by an employer sponsored health plan, and those age 65 and older qualify for Medicare.
The tax credits would be available to anyone seeking health coverage on the exchanges with an annual income less than 400 percent of the federal poverty level, or roughly $46,000 for an individual or $94,200 for a family of four, according to the report. That would include 42,590 residents in Montgomery County, and 60,950 in Hamilton County — the two largest counties in southwest Ohio.
The new marketplaces would allow residents to select private insurance from a range of plans in four different coverage levels identified with precious metal badges: bronze, sliver, gold and platinum.
The plans offering the most comprehensive coverage would carry the highest premiums, but the tax credits will be set so that an individual or family would not have to spend more than a certain percentage of their income on premiums.
The FamiliesUSA report offered the example of a family of four with annual income of $47,100 who would not have to pay more than 6.3 percent of their income toward premiums for a silver plan that costs about $12,500 a year. The family would receive a tax credit of $9,530, and, therefore, would have to pay no more than $247 a month for the plan.
“The tax credit subsidies are a game-changer,” Pollack said. “They will make health coverage affordable for huge numbers of uninsured families who would have been priced out of the health coverage and care that they need.”
But subsidized coverage is not necessarily affordable coverage, said John Bowblis, a Miami University economics professor who specializes in health care.
“What we know is that for lower-income families there is a tax subsidy, and that will lower the cost of the monthly premium,” Bowblis said. “But what we don’t know is what those monthly premiums will be, and that means we don’t know how affordable they will be for those lower-income families at this point.”
Excluding the subsidies, individual health insurance premiums could rise anywhere from 55-85 percent above current market averages by 2017 under the auspices of the Patient Protection and Affordable Care Act, according to a report commissioned by the Ohio Department of Insurance.
The report attributed the premium hikes primarily to mandated benefits required in all plans sold in and out of the health marketplaces, and the expansion of health coverage to sick individuals with costly and chronic health conditions who can no longer be discriminated against under the law.
The Families USA report coincides with a study released Tuesday by the Society of Actuaries that found health insurers in Ohio will have to pay an average of 80 percent more for medical claims on individual health policies under the health care law, which is likely to drive up premiums for most Americans.
“Both reports are correct in some way,” Bowblis said. “The ACA is going to drive up costs, and the tax subsidies are going to help lower costs. But we won’t know by how much until we actually see the plans.”