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ACA subsidy may pay half of individual health premiums

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The Affordable Care Act premium tax credit subsidy may provide about half of U.S. health insurers’ commercial health insurance premium revenue, and it’s an especially powerful force in Florida.

Analysts at the Menlo Park, California-based Henry J. Kaiser Family Foundation have published data showing just how important is in the Florida market in a new premium tax credit data table.

Drafters of the ACA created premium tax credit subsidy to help low-income and moderate-income people buy individual health coverage from the ACA public exchange system. ACA drafters also hoped to make offering individual coverage to sick people on a guaranteed-issue, standard-price basis mathematically possible, by encouraging healthy people who are low on cash to pay something for health coverage, even when they feel fine and do not expect to go to the doctor.

Related: ACA stuns many early Colorado exchange subsidy users

Managers of the ACA premium tax credit program send the cash to the insurers, not to the people with the coverage.

The program will probably pay issuers of individual major medical coverage about $33 billion this year, or an average of about $291 per month on behalf of each of the 9.4 million tax credit users, according to the Kaiser data.

In 2015, insurers generated a total of about $58 billion in individual major medical premium revenue, according to separate data from the Kansas City, Missouri-based National Association of Insurance Commissioners. If insurers get about $33 billion in premium tax credit money this year, and take in 10 percent more total individual major medical premium revenue this year than in 2015, then the tax credit cash could account for about half of insurers’ individual major medical premium revenue for 2016.

ACA exchange plan enrollment has been especially high in Florida. In the United States as a whole, only about 4.9 percent of all 321 million U.S. residents have exchange plan coverage, and only 4.1 percent of all U.S. residents are using ACA premium tax credit subsidies, according to federal government exchange plan enrollment data.

In Florida, ACA exchange sales have been very strong. About 8.5 percent of the 20 million residents have exchange plan coverage, and 1.6 million, or 7 percent, have been using exchange plan premium tax credit subsidies.

Related: 10 ZIP codes that love PPACA exchange plans

The insurers covering those people could get about $5.2 billion in premium tax credit cash this year. Only 6.2 percent of U.S. residents live in Florida, but 15 percent of the ACA premium tax credit users are Florida residents. Because Florida residents who use the subsidies get slightly more help than the national average, the insurers that cover them could collect 16 percent of the ACA premium tax credit money.

Sen. Marco Rubio, R-Fla., recently joined with other Republicans to introduce S. 3481, the HHS Slush Fund Elimination Act bill, which is supposed to prevent the U.S. Department of Health and Human Services from using any source of cash other than payments from health insurers in the ACA public exchange program to fund the struggling ACA risk corridors program.

But Rubio might face pressure to come up with a source of relief for Florida residents who would be affected by a sudden cancellation of the ACA premium tax credit program, and those residents’ coverage providers.

Some of the other states with insurers on track to get large amounts of premium tax credit revenue include California, Texas, North Carolina and Pennsylvania.


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