Most Americans do not realize that their health care is subsidized. This lack of understanding has led to a basic misperception on how various health care plans are funded and unnecessary stigma associated with some plans. A Vox survey* on different types of plans and how those plans are actually funded demonstrates how inaccurate people’s perceptions are. The survey indicated that “Most people think the government doesn’t subsidize their health care.” The question was asked “Do you receive a government subsidy to help you pay for health insurance?” Responses were:
The truth is that almost everyone who has health insurance in the United States gets help from the government to afford it. For the elderly, it’s Medicare. For those with disabilities and the poor, it’s Medicaid. For full time workers, it’s the tax subsidy for employer-provided health insurance. Here is a more detailed explanation of how different types of plans are funded and how this helps families.
Many families have insurance from their employers. What they don’t realize is that most have contributions from their employer. Simply put, “When your boss pays you in health insurance, you do not have to pay income taxes on it. That makes it efficient for bosses to pay employees, in part, by buying health insurance for them.” This also means that private insurance is government-subsidized!
Other families have been getting insurance on a state or federal exchange called the Marketplace. The ACA (Affordable Care Act) offers various ways to help reduce costs for families. These include premium tax credits to help pay for coverage, lower premiums or out-of-pocket costs. In fact 8 out of 10 families who applied for Marketplace plans received extra help.** Even after open enrollment is over, there are allowances for special circumstances, exemptions from the penalty, and extended enrollment for families who didn’t realize they would have to pay a fee (see Resources below.)
According to the poll on insurance subsidies, families also do not comprehend how public insurance is funded. For the elderly, the coverage is through Medicare. However, “older Americans either don't know what Medicare is or mistakenly believe they have ‘paid for’ their benefits with earlier taxes.” In fact, it is a government benefits program that heavily subsidizes health insurance for the elderly. Medicaid is public insurance that is funded by the government for low income families or people with disabilities. Medicaid is jointly funded by states and there are matching funds from the federal government using the Federal Medical Assistance Percentage (FMAP.) Despite the stigma associated with Medicaid, there are actually better benefits under the EPSDT (Early Periodic Screening Diagnostic and Treatment) provision for children in Medicaid than the benefits in traditional indemnity plans (see http://mchb.hrsa.gov/epsdt/overview.html.)
An important note to families who didn’t realize until after the 2/15 enrollment deadline that they’d have to pay a penalty: The special enrollment period began on March 15 and ends on April 30.
Families who get insurance from either an employer or through the Marketplace, whether state or federal, need to realize “[a]lmost everyone who has health insurance in the United States gets help from the government to afford it.” *
“Americans are making a big mistake about health care” (insurance subsidy poll results): http://www.vox.com/2015/3/1/8125785/insurance-subsidy-poll
* Yglesias, Matthew. “Americans are making a big mistake about health care.” Vox Media.
http://www.vox.com/2015/3/1/8125785/insurance-subsidy-poll retrieved 4/8/2015.
**Misra, Arpit and Thomas Tsai. “Health Insurance Marketplace 2015: Average Premiums After Advance Premium Tax Credits Through January 30 In 37 States Using The Healthcare.Gov Platform.” http://aspe.hhs.gov/health/reports/2015/MarketPlaceEnrollment/APTC/ib_APTC.pdf retrieved 4/8/2015.
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