cardiogram-pulse-trace-1461880398nt8-300x200-8058917Insurance tax credits in the U.S. Senate GOP’s health plan would have a mixed effect on New Yorkers, reducing net premiums for some young, low-income consumers shopping in the non-group market, but raising costs for older ones.

Overall, the credits are less generous than those in the Affordable Care Act. They cut off at 350 percent of poverty rather than 400 percent, and they’re intended to purchase plans with higher deductibles and copayments.

While the ACA’s tax credits are based on income, and the House GOP’s are based on age, the Senate’s tax credits combine the two approaches.

Like the ACA, the Senate plan caps the net premium cost for low-income consumers as a percentage of income, a ceiling that increases with higher pay. Above 150 percent of the federal poverty level, the Senate’s cap would also increase with age. Older consumers would be expected to pay as much as 16.2 percent of their income for coverage, compared to a maximum of 9.5 percent under current law. Credit-eligible consumers under 29 would pay no more than 6.5 percent of income.

The higher costs for older consumers would reflect their higher medical costs and, in most states, their higher premiums. New York, however, is one of two states, along with Vermont, that have banned individual and small-group insurers from charging higher premiums based on age. The Senate’s Better Care Reconciliation Act would effectively override that policy for New Yorkers using the credits.

The charts below illustrate the impact of the proposed changes in the Senate and House health plans for various age and income groups. They do not attempt to project actual premiums. Instead, they start with a hypothetical premium of $5,000 per year for individual coverage, and show how different tax credits would affect net cost for different consumers. The charts do not factor in the possibility that changes to other parts of federal law, such as coverage regulations or taxation, would increase or decrease the hypothetical $5,000 premium.

screen-shot-2017-06-29-at-11-21-54-am-7112801

The group of New Yorkers with the most to lose are enrollees in the Essential Plan, which is government-operated and costs no more than $20 a month for people up to 200 percent of the federal poverty level. Both the House and Senate plans would reduce available federal funding for the program, and the Cuomo administration has said it would be unlikely to continue. The alternative for most enrollees would using tax credits to buy commercial insurance. The Senate’s credits would offset most of the premium, especially for younger consumers, but net costs would still be substantially higher than the Essential Plan.

screen-shot-2017-06-29-at-11-23-23-am-8281504

Among individuals with income of $30,150, or 250 percent of the poverty level, the impact would be mixed. Young consumers would pay less under the Senate plan than under current law, while older consumers would pay more and middle-aged consumers would be relatively unaffected.

screen-shot-2017-06-29-at-11-24-25-am-9222904

Among individuals with income of $42,210, or 350 percent of the poverty level, young consumers would still see savings with the Senate plan, but middle-aged and older consumers would pay more. Above 350 percent of poverty, consumers would no longer be eligible for tax credits and would pay the full premium.

As mentioned above, the Senate plan would tie tax credits to less generous coverage – with minimum actuarial value of 58 percent instead of 70 percent under current law. That is expected to lower premiums – or at least slow their growth – but would also translate into substantially higher deductibles and copayments.

The Senate plan, like the House plan, would repeal Obamacare’s individual mandate, replacing it with a six-month waiting period to buy insurance for people who let their coverage lapse for more than 63 days in a year.

Analysts at the Congressional Budget Office project that the combined effect of changes in the Senate plan would both reduce the incentive for people to buy insurance and make it less affordable for many – resulting in a net drop in commercial coverage of 7 million over the next decade. The CBO projects that another 15 million would not have coverage due to cutbacks in Medicaid.

About the Author

Bill Hammond

As the Empire Center’s senior fellow for health policy, Bill Hammond tracks fast-moving developments in New York’s massive health care industry, with a focus on how decisions made in Albany and Washington affect the well-being of patients, providers, taxpayers and the state’s economy.

Read more by Bill Hammond

You may also like

Hochul’s Emergency Order Imposes Insurer Restrictions Sought by Hospital Group

Buried in Governor Hochul's emergency order on health-care staffing is a temporary bar against insurance companies challenging claims submitted by hospitals–and an influential hospital association is taking credit. Read More

Home Care Agencies Project Widespread Staffing Shortages in the Next Phase of New York’s Vaccine Mandate

Agencies providing home-based care to elderly and disabled New Yorkers face a large-scale loss of employees when the next phase of the state's vaccine mandate takes effect on Oct. 7, according to a newly released industry s Read More

New York’s health benefits remain the second-costliest in the U.S.

New York's health benefit costs increased faster than the national average in 2020, leaving it with the second-least affordable coverage in the U.S. The state's average total cost f Read More

The Health Department’s FOIL Responses Signal an Indefinite Wait for Pandemic Data

The quest for comprehensive data on New York's coronavirus pandemic hit a bureaucratic roadblock this week Read More

Health Research Inc. Turns Over its Payroll Records Despite Claiming To Be Exempt from FOIL

The full payroll records of more than 2,400 de facto state employees are available to the public for the first time after being released by Health Research Inc. Read More

New York’s Medicaid Rolls Kept Pace with a Nationwide Surge During the Pandemic

New York's Medicaid and Child Health Plus programs added three-quarters of a million enrollees during the coronavirus pandemic, roughly matching the pace of a national surge in sign-ups. Read More

New York’s State Share of Medicaid Spending is Due to Jump 22 Percent This Fiscal Year

The state share of Medicaid spending is projected to jump 22 percent under the recently approved state budget, an unusually steep one-year jump for what is already one of New York's biggest expenditures. Read More

New York’s Hospital Industry Ranks Near the Bottom of Two Quality Report Cards

New York's hospitals remain near the bottom of two quality report cards. The state's hospitals received the lowest rate of any state except Nevada and DC. Read More

Subscribe

Sign up to receive updates about Empire Center research, news and events in your email.

CONTACT INFORMATION

Empire Center for Public Policy
30 South Pearl St.
Suite 1210
Albany, NY 12207

Phone: 518-434-3100

General Inquiries: Info@EmpireCenter.org

Press Inquiries: Press@EmpireCenter.org

About

The Empire Center is an independent, non-partisan, non-profit think tank located in Albany, New York. Our mission is to make New York a better place to live and work by promoting public policy reforms grounded in free-market principles, personal responsibility, and the ideals of effective and accountable government.

Empire Center Logo Enjoying our work? Sign up for email alerts on our latest news and research.
Together, we can make New York a better place to live and work!