Many critics argue that Obamacare has not delivered on the “affordable” part of the Affordable Care Act. Even so, the federal government will issue nearly $33 billion in tax credits to enrollees on the exchanges in 2016 to reduce the cost of monthly premiums.
New data from the Kaiser Family Foundation breaks down those tax credits by state, and finds that Florida and California alone account for nearly a third of that spending, with premium tax credits in those states totaling $5.2 billion and $4.6 billion, respectively. Residents of six states -- Florida, California, Texas, North Carolina, Georgia and Virginia -- received more than a billion dollars each in subsidies.
The amount of subsidy received by states largely lined up with each state’s population, but there were some significant outliers. New York, which has the fourth largest population, was in the bottom half of states receiving subsidies. Washington, D.C., which only had 1,200 residents who received a subsidy, had the lowest total.
Seven of the 10 states that received the largest total in tax credits voted for President-elect Donald Trump, who has vowed to eliminate those subsidies as part of his plan to repeal and replace Obamacare.
|Location||2016 Estimated Total Annual Premium Tax Credits Received by Marketplace Enrollees|
|District of Columbia||$2,688,000|
|Notes: Consumers with household incomes between 100% and 400% of the Federal Poverty Level (FPL) may qualify for Advanced Premium Tax Credits (APTCs), which help make their coverage more affordable throughout the year by lowering their share of monthly premium costs. Consumers who qualify for APTCs may choose how much of the tax credit to apply to their premiums each month, up to the maximum amount for which they are eligible. The amount of APTC an enrollee may receive depends on household income and the cost of the second lowest cost silver plan available to enrollees in their local area.
Consumers who receive premium tax credits and who have income up to 250% FPL are also eligible for Cost-Sharing Reductions (CSR) if they enroll in a Silver plan in the marketplace. The CSRs lower the out-of-pocket costs consumers face. In March 2016, nearly 6.4 million marketplace enrollees received CSRs in addition to premium tax credits. The CSRs are not included in the estimates reported here.
|Source: Kaiser Family Foundation analysis of data from [March 31, 2016 Effectuated Enrollment Snapshot], Centers for Medicaid and Medicare Services (CMS), June 30, 2016.|
Consumers who purchase insurance on the exchanges and have an income of less $47,520 (or $97,000 for a family of four) receive a tax credit to offset the cost of premiums to buy health insurance, as mandated by law. Those who receive health insurance through work don’t get a federal subsidy, but their employers typically cover some of the costs.
In addition to premium support, the federal government provides a second kind of subsidy for Obamacare users. Enrollees in silver-level plans also receive subsidies to help cover out-of-pocket expenses, above and beyond monthly premiums. These discounts are automatically applied at the point of service, and the subsidies are paid directly to the insurer. Congress estimates that those subsidies, which are not included in the Kaiser data, will cost roughly $27 billion in 2016.