Despite great progress under the ACA, many Californians in the individual market still struggle to afford coverage and care. To help illustrate these issues, meet Curtis, Carmen, and Sam — fictional characters who represent real-life scenarios faced by consumers in the individual market.
|Curtis, age 30, lives in Oakland and earns $18,210 (150% of the federal poverty level [FPL]). Curtis works part-time as a home health aide while he goes to community college to become a nurse. Under the ACA, he is eligible for premium subsidies and cost-sharing reductions (CSRs) that limit both his premium and out-of-pocket costs. Absent premium subsidies, he would pay more than 20% of his income for monthly premiums and still be responsible for high out-of-pocket costs. Under the ACA, he can enroll in an enhanced silver plan with CSRs and pay $37/month in premiums (2.4% of his income). The plan provides office visits with a $5 copayment, emergency care at $50, and caps his annual out-of-pocket spending at $1,000. For Curtis, the affordability benefits of the ACA are dramatic.
However, Curtis doesn’t earn a lot and may be tempted to enroll in a bronze plan with a $1 monthly premium. If he does, he risks incurring much higher out-of-pocket costs when he obtains health care. In a bronze plan, his first three office visits would cost $75 per office visit. But if Curtis is hospitalized and needs many additional services, he could be responsible for paying as much as $6,300, the bronze plan deductible.
|Carmen, age 44, lives in Fresno and earns $33,385 (275% FPL). She works from home as a freelance bookkeeper. Enrolled in a silver plan, she qualifies for subsidies that reduce her monthly premium by more than half, from $412 to $205 (7% of her income). ACA premium subsidies help Carmen, but not to the same extent they assist Curtis.
She has several chronic conditions, including diabetes and kidney disease. She chose her plan because its network includes the doctors and hospital she wants. Her premium alone represents 7% of her income; in the worst-case scenario, if she incurs out-of-pocket costs up to the $7,550 maximum, her total spending on premium and care could reach 30% of her income.
Carmen earns too much to qualify for cost-sharing reductions. She can choose bronze and pay a lower premium, or higher-premium silver or gold options that limit her initial out-of-pocket costs. No matter which of these three metal tiers she chooses, if she is repeatedly hospitalized and uses many additional services, her combined premium and out-of-pocket spending could impose a high annual spending burden (26% of income under bronze coverage and 31% of income under gold).
|Sam, age 62, lives in Sacramento. Last year he earned $49,167, just over the 400% FPL threshold for premium subsidies under the ACA. Sam is a real estate agent and has always had to buy his own coverage. He is happy that he can’t lose his coverage just because he gets sick, but as he’s gotten older, his premiums have risen a lot. He bears the full cost of market premiums and could incur high out-of-pocket costs as well. Although he has chosen the lowest-cost bronze plan, its $794 monthly premium nevertheless consumes 19% ($9,527) of his yearly earnings. (To show how much Sam’s age matters, consider that his 24-year-old neighbor can buy the same unsubsidized bronze plan for a monthly premium of just $276.) The plan has a $6,300 deductible, and while Sam doesn’t have a lot of health problems now, at his age he worries that a serious health episode could arise anytime.
An alternative option for Sam, a gold plan with a monthly premium of $1,154 (28% of income) would require lower OOP cost sharing; for example, the plan has no deductible. But even so, in the unlikely event that Sam requires several hospitalizations, regular outpatient care, and many expensive prescriptions, Sam could end up devoting up to 43% ($21,000) of his income to premiums and cost of care. Sam can choose lower premiums with higher cost sharing, or higher premiums with less exposure to initial out-of-pocket costs. None of his options feel affordable.