The Kaiser Family Foundation has a new report out that examines how people currently in the individual market will be affected by the reforms taking effect in 2014. Premiums will change for variety of reasons. You should read the whole issue brief, or Jon Cohn’s commentary here. As Kaiser acknowledges, premiums will go up for some people and down for others. They go a step further, though, and look at how many people in the current market will benefit from the premium tax subsidies.
About half (48%) of people now buying their own insurance would be eligible for a tax credit that would offset their premium. This does not include over one million adults buying individual insurance today who will be eligible for Medicaid starting in 2014 (i.e., they have family income up to 138% of the poverty level and are living in states that have decided to expand Medicaid under the ACA).
Now, that’s all adults, regardless of age. I was curious, how does that stack up against just young adults? I looked at these numbers a few months ago, but my analysis back then was limited to childless adults. Josh Fangmeier was kind enough recently to rereun the numbers for everyone, with or without kids (more related to that here). A predictable trend holds for those currently on the individual market: younger individuals tend to have lower incomes, so they’re going to benefit more than average from the exchange subsidies offered to those below 400% of the poverty line.
Bottom line? Just over 70% of young adults that hold individual plans today could qualify for subsidies in 2014. Even if you chop off the kiddos under 26—who might not need an individual plan, since they can take advantage of extended dependent coverage—the proportion of subsidy-eligible 26- to 35-year olds is 65%, still well over the 48% attributed to the whole market.
There’s a caveat that opponents have been quick to point out in the past: in some states, young adults near 400% FPL may not receive subsidies. This isn’t a bug—the tax credits are issued to offset premiums that exceed an income-dependent threshold; in some states, premiums are actually coming in below expected rates, and below that threshold for young adults.
That’s not to say that some won’t still see an increase in their rates—many will, because insurers will be required to offer a minimum package of benefits. They’ll also be prohibited from price-discrimination against unhealthy beneficiaries. There is a valid debate that we can have about both of those provisions (it’s worth noting that two-thirds of Americans support guaranteed issue). But if you want to talk rate shock, make sure you also talk about the fact that young adults are more likely to receive subsidies than their older counterparts.