How Affordable Is the Affordable Care Act?

For many Californians, the Affordable Care Act isn’t.

You’re not alone if you can’t afford your health insurance obligations, whether you’re struggling to pay your monthly premium or facing thousands of dollars in out-of-pocket costs.

“There are days when I can’t sleep, thinking ‘How am I going to do this?’” says Maria Chavez, a Whittier resident with a $625 monthly premium for a subsidized Covered California plan for herself, her husband and one of her children.

Chavez is an example of how the cost of health insurance can still be ruinous despite the advent of the “Affordable” Care Act. Today, I’ll be addressing the strain of front-end costs: Premiums.

In my next column I’ll tackle the back end, including those intimidating deductibles that must be paid before insurance actually kicks in.

Q: I have cut my family budget, canceled cable and only buy shoes for my kids when they really need them. But I still can’t afford my premium. What should I do?

A: A recent Kaiser Family Foundation survey of 4,555 Californians found that 44 percent of Covered California plan holders, like Chavez, say it’s “somewhat” or “very” difficult to pay their premiums even though the vast majority of them receive tax credits that subsidize their costs.

Individuals and families who make between 138 and 400 percent of the Federal Poverty Level (FPL) can qualify for Covered California’s sliding-scale tax credits.

For instance, a family of three making between $27,700 and $80,360 would qualify.

Nicole Carr, a Sacramento-area insurance agent, says 5 to 10 percent of her clients canceled their health plans between last year and this year because they couldn’t afford their premiums. They did so even though Obamacare requires most people to have health insurance or face a tax penalty.

“They realized that the tax penalty (for not having insurance) was going to be less than paying the premium – even with the subsidy,” she says.

Chavez, 46, says she can’t cancel her plan because her husband is sick. Chavez receives $121 in monthly tax credits, leaving a premium of $625. She’s trying to modify her home loan to make up the difference.

“Just thinking about it, I stress out. I have a mortgage. I have two kids in college,” she says. “This is more expensive than I expected, but I have to find a way to make it work.”

Of the 88 percent of Covered California plan holders who receive tax credits, about three-quarters pay less than $150 per month on their premiums after the credits are applied, says James Scullary of Covered California.

But he acknowledges that “health care costs are still a challenge for many Covered California consumers.”

One problem, Scullary and others note, is that tax credits are based on a federal standard that doesn’t account for “California’s high cost of housing, transportation and food,” he says.

“Living on $40,000 in San Francisco may not be the same as living on $40,000 in certain places in the Midwest,” says Rachel Garfield, the lead author of the Kaiser Family Foundation report.

That’s also true within California, says Scott Graves, director of research at the California Budget & Policy Center.

In Imperial County on the Mexico border, a single parent with two children would have to spend $748 on a two-bedroom apartment and utilities, he says. In Marin, it’s $2,062.

“The official federal poverty line is not an accurate measure of a family’s economic security,” he says.

But premium affordability isn’t unique to Covered California. Individuals and families whose incomes exceed 400 percent of FPL receive no subsidy if they buy plans from the open market. Premiums are even higher for older people, who are charged more than younger ones.

Kim Zarcone, 54, of Granada Hills spends about $1,000 a month for a plan that covers her and three of her children.

The premium is the family’s biggest bill, bigger than the mortgage. “We’re middle class,” she says. “We never go on vacation. My kids are paying for their own college.”

Last year, Zarcone had to drop coverage for three months because the family couldn’t afford it, all the while praying that everyone stayed healthy.

“I know a lot of people are being helped,” she says. “But the Affordable Care Act is not affordable for us.”

I usually end my columns with multiple pieces of advice, but in this case, I only have two:

1. If you’re buying insurance from Covered California or the open market, seek help from a certified insurance agent or enrollment counselor, whose services are free. They can help you price out the best plans for your situation.
2. Check to see if you’re eligible for Covered California tax credits.

I’ll have more advice next time, when I examine the other challenge to affordability: out-of-pocket costs.

Questions for Emily: AskEmily@usc.edu
Click here to find previous Ask Emily columns. 

 

The CHCF Center for Health Reporting partners with news organizations to cover California health policy. Located at the USC Annenberg School for Communication and Journalism, it is funded by the nonpartisan California HealthCare Foundation.