New health law frustrates many in the middle class

They are not poor enough for financial help, but not rich enough to be indifferent to cost.

NEW YORK TIMES NEWS SERVICEDecember 21, 2013 

Ginger Chapman and her husband, Doug, are sitting on the health care cliff.

The cheapest insurance plan they can find through the new federal marketplace in New Hampshire will cost their family of four about $1,000 a month, 12 percent of their annual income of around $100,000 and more than they have ever paid before.

Even more striking, for the Chapmans, is this fact: If they made just a few thousand dollars less a year — below $94,200 — their costs would be cut in half, because a family like theirs could qualify for federal subsidies.

The Chapmans acknowledge that they are better off than many people, but they represent a little-understood reality of the Affordable Care Act. While the act clearly benefits those at the low end of the income scale — and rich people can continue to afford even the most generous plans — people like the Chapmans are caught in the uncomfortable middle.

“We are just right over that line,” said Ginger Chapman, who is 54 and does administrative work for a small wealth management firm. Because their plan is being canceled, she is looking for new coverage for her family, which includes her husband, 55, a retired fireman who works on a friend’s farm, and her two sons.

“That’s an insane amount of money,” she said of their new premium. “How are you supposed to pay that?”

An analysis by The New York Times shows the cost of premiums for people who just miss qualifying for subsidies varies widely across the country and rises rapidly for people in their 50s and 60s. In some places, prices can quickly approach 20 percent of a person’s income.

Experts consider health insurance unaffordable once it exceeds 10 percent of annual income. By that measure, a 50-year-old making $50,000 a year, or just above the qualifying limit for assistance, would find the cheapest available plan to be unaffordable in more than 170 counties around the country, ranging from Anchorage, Alaska, to Jackson, Miss.

A 60-year-old living in Polk County, in northwestern Wisconsin, and earning $50,000 a year, for example, would have to spend more than 19 percent of his income, or $9,801 annually, to buy one of the cheapest plans available there. A person earning $45,000, meanwhile, would qualify for subsidies and would pay about 5 percent of his income, or $2,228, for an inexpensive plan.

While the number of people who just miss qualifying for subsidies is unclear, many of them have made their frustration known, helping fuel criticism of the law in recent weeks. Like the Chapmans, hundreds of thousands of people have received notices that their existing plans are being canceled and that they must pay more for new coverage.

In an effort to address that frustration, the Obama administration announced Thursday that it would permit people whose plans had been canceled to buy bare-bones catastrophic plans, which are less expensive but offer minimal coverage.

Those plans have always been available to people under 30 and to those who can prove that the least expensive plan in their area is not affordable. But the announcement does not address the concerns of those who would like to buy better coverage yet find premiums in their area too expensive.

David Oscar, an insurance broker in New Jersey, said many of his clients had been disappointed to learn how much premiums were.

“They’re frustrated,” he said. “Everybody was thinking that Obamacare was going to come in with more affordable rates. Well, they’re not more affordable.”

Many of the biggest provisions of the Affordable Care Act are aimed at the poorest of Americans. Under the law, states have the option of expanding Medicaid to a larger pool of people with the lowest incomes. To those earning more, the law provides subsidies to people earning up to four times the federal poverty level, or $45,960 for an individual and $62,040 for a couple.

Ninety percent of the country’s uninsured population have incomes that fall below that level, according to one recent analysis.

As a result, the subsidies “are well targeted for people who are uninsured or underinsured,” said Sara Collins, an executive with the Commonwealth Fund, a private foundation that finances health policy research. “That is really where the firepower of the law is focused.”

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