The Affordable Care Act (ACA) is now much better, much more affordable for more than 5.1 million people, about 2.8 million of them children who have been priced out. As of next year, the family glitch is history — a fix more than eight years in the making.
When lawmakers were writing the law, they found what they thought might be a relatively harmless saving—people who had access to healthcare through their jobs that was too expensive could get subsidies to help pay for ACA coverage, but only for themselves and not their families. That cut millions of family members out of affordable coverage.
Employers are generally pretty generous when it comes to providing coverage for individuals, paying about 83% of the cost of insurance for them. But they only, on average, pick up 73% of the cost for families. What could cost an individual $7,470 per pocket annually could cost $21,342 for the average family, and the ACA couldn’t help.
That’s done now. The IRS has finalized the rule change to make sure that affordability — what percentage of the paycheck would have to go to coverage — is based on family premiums as necessary.
In 2022, the threshold for “affordability” of employer-sponsored coverage is 9.61% of household income—if insurance costs ate up more than that, then you would qualify for a subsidy under the ACA. It’s going to drop to 9.12% in 2023—and will apply to whole family coverage instead of individual. The White House, in announcing the intent of fix the glitch, estimated that about 200,000 currently uninsured people would gain coverage with the fix.
The IRS, in the final rule was cautious in its estimates. It predicts anywhere form 600,000 to 2.3 million newly-eligible people would enroll in new ACA coverage, and between 80,000 and 700,000 currently uninsured could gain coverage, which is a pretty big variable. The White House’s decision to land in the low middle range of that estimate was probably a good bet.
This is not sexy stuff — wonky and boring to talk about — and it is neither universal coverage nor universal care. But it really, really matters to the millions of people who fell through that one specific crack: a crack that has been filled, and which helps fulfill President Biden’s promise to make Obamacare better.
Which is absolutely fine by Mr. Obama: “When President Biden said he was not going to just celebrate the ACA but also announce actions that would make it even better, I had to show up.”