Under the Affordable Care Act, people between 133 and 400 percent of the federal poverty line and insured individuals who have to spend more than 9.5 percent of their household incomes on their employer sponsored plans qualify for subsidized coverage within the exchanges. Last month, the Obama administration decided that the government would only provide subsidies to individuals whose single employer plans exceed the 9.5 percent threshold, preventing far larger numbers of families who pay more than 9.5 for group policies from receiving federal assistance. Now, First Focus, a child advocacy organization, is expressing concerns about the regulation:
Conversely, we are profoundly disappointed with the preliminary rules from the Treasury Department related to the cost of family coverage and how affordability will be assessed for subsidies. The proposed rule would make the cost of individual employer-offered coverage the basis for determining affordability for a whole family. This would exclude millions of families from eligibility for subsidies in the exchange and reduce the number of children currently covered under family plans. This interpretation of the law is a serious concern and would disproportionately harm children and women. We urge the Treasury Department to reconsider this preliminary rule.
On this, it seems that the federal government had a choice between increasing government spending on federal subsidies (since more families would become eligible) or staying within the cost estimates and keeping families off the rolls. It’s certainly a tough decision given the political climate, but one that may put a damper on coverage rates as families choose to pay the mandate penalty over maintaining their expensive insurance coverage. [H/T: Politico Pulse]