Premium and Cost-Sharing Subsidies Under Health Reform

Implications for Coverage, Costs and Affordability

As details on key provisions of health reform legislation are being hammered out, a major task in the effort to craft a final health reform bill is to limit the overall cost of the reform package, while at the same time, making health insurance affordable for low- and middle-income families.

A new report finds that levels of premium and cost-sharing subsidies are crucial in determining how affordable and accessible insurance coverage and medical care would be for families under health reform. The report, funded by the Robert Wood Johnson Foundation and its Changes in Health Care Financing and Organization (HCFO) initiative, concludes that affordability in turn will affect compliance with an individual mandate and that without broad compliance, it will be difficult to maintain insurance reform proposals currently being debated in Congress that depend on broad risk pools.

To compile the report, Urban Institute researchers used their Health Insurance Policy Simulation Model to calculate financial burdens for households under major reform proposals. They found that each reform proposal being considered would greatly reduce the number of uninsured and make health insurance more affordable for millions of Americans. However, they found that differences in premiums and cost sharing levels can have a significant effect on spending for low-income families, particularly those with the highest health care needs.

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