The future of health insurance for uninsured Americans (Survey)

Allie Johnson

June 11, 2013 - InsuranceQuotes

The deadline for uninsured Americans to buy health insurance under the new federal health care reform law is quickly approaching. But a new survey shows almost two-thirds of uninsured Americans still aren’t sure whether they’ll comply – and many are confused about whether they’ll be eligible for tax credits to help pay premiums.

This information comes from a new survey, conducted on behalf of InsuranceQuotes.com by Princeton Survey Research Associates International. The survey reveals that 64 percent of the uninsured say they haven’t decided whether they will buy health insurance by Jan. 1, 2014, as required by the Affordable Care Act (ACA), which is also known as Obamacare.

Only 19 percent said they will get coverage by the deadline, while 10 percent said they plan to stay uninsured and pay the penalty, which in 2014 is the greater of $95 or one percent of income for an adult.  For children under 18, the penalty is half the adult amount. The penalty increases each year, up to the greater of $695 or 2.5 percent of household income for an adult in 2016. And a family would pay a maximum of the greater of $2,085 or 2.5 percent of income then, according to the Kaiser Family Foundation.

“Many people are taking a wait-and-see attitude,” says Amy Bach, executive director of the insurance consumer advocacy group United Policyholders. “People are still in the dark about what their options are going to be – and they’re skeptical that the penalty for not buying insurance is going to be enforced, at least in the first couple of years.”

How does Obamacare help uninsured Americans?

Many Americans are uninformed in general about what health care reform means for them, the survey shows, especially when it comes to their wallets.

In fact, 61 percent of uninsured respondents said the main reason they haven’t purchased health insurance is because they can’t afford it. But many of these consumers aren’t clear whether that will change as a result of reform.

To make coverage easier to afford, the Affordable Care Act offers subsidies in the form of tax credits to individuals and families with household incomes up to 400 percent of the federal poverty level or $94,200 for a family of four in 2013.

Those who are eligible for a subsidy will be able to claim their credit in advance, instead of having to wait for a refund after filing taxes. Subsidies generally will be paid directly to health insurance companies to reduce the amount of premiums.

Who will benefit the most from Obamacare?

But many consumers aren’t clear on eligibility requirements for these health care subsidies. In fact, the survey showed that 58 percent of Americans aren’t sure if they’ll qualify for help with their health insurance premiums.

The individuals most likely to get financial assistance also were more likely than higher earners to be confused about their own eligibility: 68 percent of respondents making $30,000 or less per year said they didn’t know if they’d be able to get a tax credit, according to the survey.

“The tax credits are really hard for people to understand,” says Christine Barber, a senior policy analyst for Community Catalyst, an affordable health care advocacy organization. In addition to difficulty figuring out whether they qualify, many consumers have trouble crunching the numbers to see exactly how the credits would work within their family budgets, she says.

Will Obamacare increase the cost of health insurance?

Many worry that health care reform will be a hit to their budgets. In fact, 61 percent of consumers, according to the InsuranceQuotes.com survey, think that health care costs will go up as a result of reform.

That’s a legitimate worry for some and certain consumers are likely to see increases, especially those who don’t qualify for subsidies, are generally healthy and have large families, according to Bach.

“There’s definitely going to be some pain with this change,” Bach says.

How will health care reform affect Medicaid?

Despite worries about cost, low and middle-income consumers and people who have been unable to get affordable coverage due to preexisting conditions stand to benefit the most from health care reform, experts say.

Tax credits will be available mostly to individuals and families with household incomes from 138 percent to 400 percent of the federal poverty level, though in some cases those who make less than 138 percent of the federal poverty level and cannot get Medicaid will be eligible too, according to a report from Families USA.

The amount of the subsidy depends on income and number of people in the household.

For instance, according to the Kaiser Family Foundation, plans and premiums will vary by region.

For example, a 33- and 35-year-old couple, with two children who make $85,000 a year, might pay $8,075 a year or 9.5 percent of their income for a family plan. This could be the net cost after receiving a subsidy of $3,062.

The maximum percentage of income that can be spent on premiums varies on a sliding scale ranging from two percent of household income for those making 133 percent of the federal poverty level or less, up to 9.5 percent of income for those making 350 to 400 percent of the federal poverty level.

Subsidies will help many consumers afford private health insurance plans, but large numbers of low-income individuals and families will qualify for coverage through Medicaid based solely on their income in states that expand Medicaid, says Sara Collins, vice-president for affordable health insurance at the non-profit Commonwealth Fund, a health care policy foundation.

The ACA opens Medicaid to anyone with a household income of less than 133 percent of the federal poverty level – which in 2013 is $15,282 for one person and $31,322 for a family of four.

But a 2012 Supreme Court decision allows states to opt out of expansion. In states that don’t expand Medicaid by 2014, many consumers who are eligible based on ACA income guidelines won’t be able to get Medicaid, Collins says.

In states that don’t expand Medicaid, consumers with incomes of 100 percent of the federal poverty level and higher will be eligible for subsidies in the exchanges, Collins says.

However, those who earn less are not eligible for subsidies due to the way the ACA is written, according to Collins. Lawmakers had assumed that those individuals and families would get Medicaid, she says.

“States that don’t expand Medicaid are leaving out their poorest residents,” she says. And, Barber adds, many of those consumers simply won’t be able to afford health insurance and might need to rely on charity for care.

Will Obamacare help the uninsured?

Overall, the ACA should help many consumers who were going without insurance because they can’t afford it, especially those with preexisting conditions, experts say. Many uninsured consumers who now go to emergency rooms for care, which is the most expensive way to obtain health services, will have coverage starting in 2014, Bach says.

“The hope is that this will be a more cost-efficient way of having a safety net under every American,” Bach says.