How the ACA will Affect Health Insurance in the Individual Market

FamiliesUSAlogoPublic debate over the Affordable Care Act (ACA) has focused recently on recipients of private, individual (non-group) insurance whose health plans are being terminated and who fear they may need to pay more for new coverage.

A recent report published by Families USA offers a new perspective on this issue: It estimates the number of consumers who will become eligible for premium tax credits, and it looks at the percentage of people in the individual market who stay in that market for more than one year.

Conversely, the number of those at risk of not keeping their current individual health insurance and who will also not be eligible for tax credits under the ACA is less than 1% of the non-elderly population.

The study found that, currently, only 5.7% of non-elderly Americans receiving their coverage in the individual market. 71% of those enrolled in plans on the individual market under the age of 65 have incomes at or below 400% of the FPL and are eligible for financial assistance for purchasing new health or Medicaid plans.

The average duration of coverage in the individual market before the implementation of the ACA was eight months, with individual plans often bridging the gap between periods of job-based coverage. Altogether, 64.5% of all consumers with individual insurance kept their plan for less than a year – a result not affected by income.

Approximately 29% of those individually insured have incomes above 400% FPL and do not qualify for financial assistance when purchasing plans on the insurance exchanges. Of that 29%, historically 35.5% — just 0.6% of all non-elderly Americans – retain their individual coverage for more than a year.

The individual market before the ACA was a transitory source of insurance with high out-of-pocket costs and fewer consumer protections. Many plans in this market left consumers with high unpaid medical bills, especially consumers who developed serious or chronic health issues.

Under the ACA, only 0.6% of Americans under the age of 65 will be at risk of losing their current individual plan and will not be eligible for financial assistance, the study finds. Of the 297 million that will be covered under the ACA for financial assistance in purchasing qualified health plans or Medicaid plans, just over 1.7 million will be at risk of losing their current coverage.

Even among this 0.6%, some individuals have insurers who will not or cannot cancel their plans on the individual market. Others will decide that they will be better off with higher-value plans available through the ACA in the new insurance marketplaces.

More information on the study can be found here.