State-by-State Estimates of the Number of People Eligible for Premium Tax Credits Under the Affordable Care Act

The analysis uses pooled data from the 2012 and 2013 Current Population Survey (CPS) Annual Social and Economic Supplement (ASEC). The CPS ASEC provides socioeconomic and demographic information that can be used for national and state estimates.

Estimating eligibility for Medicaid, CHIP and premium tax credits for marketplace coverage requires grouping individuals together in different ways to determine their income under the different program rules. Our approach is described here.  We analyzed people without coverage or with nongroup coverage to determine their potential eligibility for premium-tax-credits and as potential marketplace participants. The first step was to remove adults and children with incomes below Medicaid and CHIP eligibility levels in their state.¹ We also removed people who are not legal residents from the pool of potential eligibles. The ASEC does not ask about legal status of non-citizens, so we imputed documentation status as described here. Programming code to create the households and to perform the immigration status imputation is available upon request.

Premium tax credits. We analyzed the sample of remaining uninsured and nongroup people to determine eligibility for premium tax credits based on the income for their tax household and the premiums in the state where they lived. More than 40 percent of the unweighted records in the 2012-2013 CPS have a county identified — so a second lowest silver plan premium for that county was directly merged on to these records.  Other records were assigned a premium based on the within-state average premium for all undisclosed counties, weighted by the Census Bureau’s 2010 Small Area Health Insurance Estimates (SAHIE) of the uninsured population of those counties.  Premiums were adjusted for age based on the age-rating curve in each state.  We assumed that all eligible members of a tax household would enroll in nongroup coverage and calculated their premium as a percent of household income.  This premium percentage was compared to the maximum percentages in the ACA that families in the tax credit range (100 to 400 percent of poverty) must pay toward the cost of the second-lowest cost silver plan where they live. People in families with incomes between 100 and 400 percent of poverty and whose household premium exceeded the maximum ACA percentage were identified as potentially tax credit eligible, subject to one additional adjustment described below.

As a final step, we reduced the number of people eligible for premium tax credits to reflect offers of employer-sponsored coverage.  Under the law, people offered employer-sponsored coverage that meets minimum standards are not eligible to receive premium tax credits, even if they purchase nongroup coverage in a marketplace. The ASEC does not ask whether respondents were offered coverage at work, so we derived offer rates using data from Wave 6 of the 2008 Survey of Income and Program Participation (SIPP).  Wave 6 asks respondents if they were offered health insurance at their main job. We assume that people who live with a spouse or parent that has coverage or an offer of coverage through a job also was offered coverage.  We calculated offer rates for people without insurance and with nongroup insurance, stratified by age and income.  We applied these percentages to the ASEC sample to reduce each state’s count of uninsured and current nongroup individuals potentially eligible for premium tax credits.

Potential Market. As with our estimates for tax-credit eligibles, the estimate for the number of people who might look for coverage in Marketplaces starts with people legally residing in the United States who are uninsured or have nongroup coverage and have incomes above Medicaid and CHIP eligibility levels. We retain all remaining nongroup purchasers, even those with low incomes, as potential Marketplace purchasers because they are purchasing nongroup coverage now. Among the current uninsured, we excluded two groups from potential purchasers. The first group is people with access to employer-based coverage.  As discussed above, we assume that these people would choose coverage through a job rather than nongroup coverage if they want to get insurance. We used information from Wave 6 in SIPP, as described above, to remove them from the number of potential marketplace purchasers. Excluding currently uninsured people with access to employer-sponsored insurance reduces the number of potential purchasers by a little over five million people. The second group we excluded was uninsured people with incomes below poverty, referred to as the gap group. These uninsured adults live in states that elected not to adopt the ACA Medicaid expansion, and are not eligible for financial assistance to help them get coverage in exchanges. We assume that few would have sufficient resources to purchase nongroup coverage. Excluding this gap group reduces the number of potential purchasers by about 4.8 million people.