The ACA in effect adopts both absolute and relative standards for affordability as families with incomes above the official poverty threshold are often living on incomes with little room for spending beyond daily living costs and relatively low payments for health insurance. For the population under age 65, the ACA expands eligibility for Medicaid with full premium support and nominal cost-sharing to individuals and families with incomes up to 133 percent of poverty (including single and childless adults) in an effort to reduce both the burden and the risk of medical costs driving the near-poor into poverty or competing with other necessities for those already poor (see Figure 2-3). Above 133 percent of poverty, the ACA sets income-related thresholds for premiums and insurance benefits that ask families to pay more as a share of income as incomes increase. The premium tax credit provisions seek to hold premiums to under 5 percent of income for incomes below 150 percent of poverty and to 6 percent to a maximum of 9.5 percent of income for incomes ranging from 200 to 400 percent of poverty. The ACA also substantially lowers out-of-pocket limits and provides enhanced actuarial value (lower cost-sharing) for those with incomes below 200 percent of poverty to guard against families being unable to afford essential medical care although insured.

In Gruber and Perry’s analysis (2011) of the potential of these provisions to make health insurance and health care affordable, they conclude that the provisions appear relatively well targeted, based on current expen-

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FIGURE 2-3 Percentage of households that may not have room in budget for health care costs, after full ACA implementation.
SOURCE: Gruber and Perry (2011).



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