The Difference Between Affordable Health Care & Subsidized Health Care

injured hand filling out insurance form.
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Thanks to the Affordable Care Act, millions of Americans that were previously uninsured now have health insurance. However, if the goal of the Affordable Care Act was to facilitate near universal health insurance coverage in the United States by making health insurance affordable for all Americans, we’re nowhere close. At the crux of the issue lies the difference between affordable health care and subsidized health care.

To me, affordable health care means health care or health insurance that the vast majority of United States residents can afford to purchase using their own money. If I can’t afford to buy something using my own money, then I cannot afford it.

Using that definition, the subsidized health insurance offered by the Affordable Care Act’s premium tax credit and cost-sharing reduction subsidies does not equate to affordable health care. That so many people need subsidies to help them pay for health insurance is evidence that this health care is not affordable for them. If it was affordable, they wouldn’t need the subsidy to help them pay for it; they would be able to pay for it themselves.

Let’s look at just how many people need help paying for health insurance. In 2015, the Department of Health & Human Services reported that 11.7 million people across the nation signed up for health insurance through Affordable Care Act health insurance exchanges.

Fully 87% of the people who signed up using got a subsidy to help them pay for their health insurance because the legislators who wrote the Affordable Care Act believed that they would be unable to afford health insurance if they had to pay for it themselves.

The average premium tax credit subsidy for those using in 2015 was $263 per month.

However, some of the people who received the premium tax credit subsidy also received the cost-sharing reduction subsidy. This subsidy lowers the health insurance deductibles, copayments, and coinsurance for recipients because the authors of the Affordable Care Act realized that, even if these recipients had help buying health insurance, they would be unable to afford to use it. For these people, not only was the health insurance not affordable, but the health care costs they were expected to pay as fully insured health plan members were also unaffordable.

Now, let’s add two more groups of people to the list of those who need help paying for health insurance. First are Medicaid recipients. Those who qualify for Medicaid do so because their incomes are too low to be able to pay for health insurance coverage or pay cost-sharing expenses without it. Medicaid is not affordable health care, it’s a social welfare system set up specifically because health care is so unaffordable.

Most people who get their health insurance through their job as an employee benefit are also getting subsidized health insurance.

Their employer pays part of their monthly health insurance premium; the other part is take out of their paycheck each month. This doesn’t necessarily mean that health insurance is unaffordable for those employees. I’m sure some employed people would be able to pay the full cost of their health insurance premiums without the subsidy their employer pays on a monthly basis. However, health insurance is such a popular and valuable employee benefit specifically because it’s so expensive.

If we’re talking about fixing a broken system, let’s make sure that we’re clear on one thing. Subsidizing health insurance so that more people are able to get it doesn’t that mean you’ve fixed the root problem. Subsidizing health insurance doesnt make health care more affordable, it just shuffles around who pays for it.

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