Miller stresses that the law represents a huge advance from the status quo. Out-of-pocket spending is capped and the limits are more restrictive for plans sold to low-income households within the exchanges, he notes. “In that way, the law takes a big bite out of the underinsurance problem,” Miller says. And under the law, insurers will be banned from setting a limit on the amount policies pay in a year or over a lifetime.
January Angeles, a policy analyst with the Center on Budget and Policy Priorities, a nonpartisan policy not-for-profit based in Washington, says the expansion of coverage alone will offer protection for some previously without benefits while subsidies will substantially reduce the cost of benefits for those with low incomes.
Of the 24 million expected to find insurance through an exchange, it is estimated that 19 million will be eligible for subsidies to pay for premiums or additional costs paid out of household budgets, known as out-of-pocket costs, such as deductibles, copayments or coinsurance.
Angeles says the law sought to take into account that low-income households must grapple with less discretionary income while at the same time fixed, necessary costs such as rent represent a bigger chunk of income.
Low- and moderate-income consumers inside the exchanges—or those earning below 400%, or $43,320 for 2010, of the federal poverty guideline but too much to enroll in Medicaid—qualify for subsidies that increase as income declines, she says. The subsidies include premium credits for those below 400% of the federal poverty level and the law offers further cost-sharing credits for households earning less than 250%, or $27,075 for 2010, of federal poverty.
Policymakers sought to limit patients' financial risk by using the premium credits to limit the percentage of household income that will be spent on medical care, based on one of four plans—the second least costly option of the four plans—to be offered through the exchange, Angeles says.
For those most financially vulnerable (at 133% to 150% of poverty level, or $14,512 to $16,245 a year for 2010), the law would limit premiums as a share of income to 3% to 4%, according to an outline of the law's exchange provisions by the Center on Budget and Policy Priorities.
Households with paychecks between 300% and 400% of the federal threshold for poverty (from $32,490 to $43,320 in 2010 for an individual) would see the share of income spent on medical costs capped at 9.5%. (Households' medical costs increase should they opt for two more comprehensive options within the exchange, Angeles says.)
But these protections have limits, and for some with chronic conditions who need regular medical care, the law could create a new wave of underinsured.
“Most people are mostly healthy most of the time,” Miller says, and for many newly insured, premiums represent the most significant financial burden. But those whose conditions require more medical care could see healthcare spending more significantly erode household income. The law caps the maximum amount low-income households must pay, but among the poorest, the amount exceeds 5% of income, which the Commonwealth Fund defines as underinsured among those with incomes below 200% of poverty, he says.
Miller stressed that health reform made “very substantial” progress, but says what remains to be done is “also significant.”