Affordability in the ACA Marketplace Under a Proposal Like Joe Biden's Health Plan

We analyzed data from the 2020 Individual Market Medical files to determine premiums and the benchmark amounts to calculate premium tax credits for the scenarios presented. These files are available at data.healthcare.gov. Premiums for state-based Marketplaces are from KFF analysis of data received from Massachusetts Health Connector, Covered CA, and KFF analysis of data published by HIX Compare from the Robert Wood Johnson Foundation. This analysis only includes on-exchange plans. Off-exchange plans generally have similar premiums to on-exchange plans with the exception of silver plans, which often include an additional premium load on-exchange only to account for cost-sharing reductions insurers must provide to some exchange enrollees.

All averages are weighted by county-level 2019 plan selections. 2019 plan selections come from the 2019 Marketplace Open Enrollment Period County-Level Public Use file provided by CMS, available here. In states running their own exchanges, we gathered county-level plan selection data where possible and otherwise estimated county plan selections based on the county population in the 2010 Census and total state plan selections in the 2019 OEP State-Level Public Use File provided by CMS, available here.

The premium caps used to model Biden’s proposal are shown in Table 3.

Table 3: Premium Cap, by Income
Income % Poverty	Premium Cap
	Current Law, 2020 (% of income for 2nd lowest cost silver plan)	Biden’s Proposal (% of income for 2nd lowest cost gold plan)
Under 100%	No Cap	0% (in public option)
100% – 138%	2.06%	0% (in public option)
138% – 150%	3.09% – 4.12%	1% – 2%
150% – 200%	4.12% – 6.49%	2% – 4%
200% – 250%	6.49% – 8.29%	4% – 6%
250% – 300%	8.29% – 9.78%	6% – 7%
300% – 400%	9.78%	7% – 8.5%
Over 400%	No Cap	8.5%
Note: Note that tax credits for the 2020 benefit year are calculated using 2019 federal poverty guidelines. Source: Kaiser Family Foundation

This analysis has some limitations. While Biden also supports a new public option, the premium payments shown in this paper do not account for the public option. The Biden plan does not specify two details about the public plan that we would need to know to estimate how the public plan could impact Marketplace subsidies and, in particular, an individual’s net cost for a non-benchmark plan. First, the Biden plan, does not specify how much lower public plan provider payments might be compared to those paid by commercial insurers today. To the extent a public option negotiates lower payment rates for doctors and hospitals, the premium for the public option would be lower and might also lead competing private health insurance plans to lower their premiums. In addition, the Biden plan does not explain how the public option would be factored into the benchmark plan calculations. If the public plan is counted in determining the second-lowest-cost gold plan, and if the public plan premium is cheaper than the second-lowest-cost commercial gold plan, then the amount of premium tax credit dollars would be reduced for everyone. This would not affect what people pay for the benchmark plan – that amount is always equal to a sliding-scale percentage of household income. But it could increase what people pay for plans other than the benchmark plan because an individual’s payment for all other plans equals the plan’s actual premium minus the premium tax credit for that individual. Because we did not take into account effects of a new public plan offering, the figures in this analysis could overstate the cost of a bronze plan in some cases.

We used data from the 2019 Current Population Survey to estimate the number of people with employer-based insurance who are paying a higher share of their income on premiums now than they would be if they switched to a Marketplace plan under premium caps comparable to what Biden has proposed. To do so, we aggregated income and premium payments at the tax unit level. To reflect 2020 values, we adjusted tax unit income for inflation and adjusted tax unit premium payments using the average growth in employer sponsored premiums from KFF’s Employer Health Benefits Survey, depending on whether the tax unit had single or family coverage. We then deflated tax unit premiums to reflect the tax unit’s current after-tax premium based on the unit’s marginal tax rate and payroll tax liability. We used this adjusted premium value to calculate the share of the unit’s income that was going towards premiums, and compared that percentage to the premium caps that would apply to the unit as outlined in HR. 1884 (Appendix Table 3).