Actuarial value and subsidy level is the core element of the coming fight on Medicare. The delivery mechanism through which that value is transferred is window dressing.
what precisely is the Medicare guarantee?
At present, there’s a pretty specific answer: for 95% of seniors, the federal government will pay about 85% of the premiums for insurance that covers a bit more than 80% of the average user’s medical costs. That’s what traditional Medicare does right now, via Parts A, B and D, for those whose incomes are below $85,000 for a single person or $170,000 for a couple.
Put another way, the federal government pays a bit more than two thirds of the average senior’s total medical costs. Low income beneficiaries have all or part of their premiums and out-of-pocket costs paid by Medicaid, though a variety of programs. High income seniors pay higher shares of their premiums, with the percentage stepped up through several income brackets. …..
For 8.8 million current enrollees in the ACA marketplace (as of June
3130), subsidies cover an average of 73% of the premium for plans with a weighted average actuarial value of 80% (surprise!– thanks to Cost Sharing Reduction (CSR) subsidies, the average AV of plans sold in the marketplace is really that high). On average, then, the ACA marketplace covers about 58% of enrollees’ costs — though that average is very uneven, ranging from over 90% for the lowest-income enrollees to close to zero for the barely subsidy-eligible (and zero for the subsidy-ineligible)*. For another 12 million people whom the ACA rendered eligible for Medicaid, federal and state government cover close to 100% of costs….
Under the charitable assumptions that a typical EPFA(HR2300) subsidy would cover 59% of the premium for a plan with a 60% actuarial value, the premium subsidy would cover 35% of the average enrollee’s medical costs — regardless of whether her income were $17,000 or $17 million.
That is the the essence of the upcoming healthcare fights. Everything else is window dressing or mechanics to shift blame for large benefit cuts.