Obamacare’s subsidies may not reach the level the law intended, which could discourage many young people from buying health insurance, according to a study released Monday by the National Center for Public Policy Research.
Obamacare provides a federal subsidy for everyone who buys insurance on the federal exchanges and who makes between 100 (or 138 in some states) and 400 percent of the federal poverty level—between $11,940 and $45,960 per year. This subsidy is graduated so that people earning more receive a smaller subsidy than those earning less.
However, the new study found that many people making well below 400 percent of the poverty line will not receive any subsidy because of the way in which the subsidy’s amount will be calculated.
This will hit younger people harder than older people, said David Hogberg, a health care policy analyst at the National Center for Public Policy Research and a coauthor of the report. Hogberg wrote the report with Sean Parnell, president of the public policy research group Impact Policy Management.
The subsidy is calculated in two steps.
First, the federal government determines how much an individual should contribute toward health insurance based on a federally set “applicable percentage.” Then, this amount is subtracted from the cost of the “silver level” insurance plan (insurance plans are grouped into four tiers, with silver being the second lowest). The remaining amount is the size of the subsidy.
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