The Patient Protection and Affordable Care Act, better known as Obamacare, has brought on a lot of confusion among the millions of Americans seeking health-insurance coverage under the law. With newly available health-insurance exchanges now offering information on the various policies people can choose, people are finally finding out whether Obamacare subsidies will make their health insurance more affordable.
A recent report from the Kaiser Family Foundation found that more than 17 million Americans will qualify for Obamacare subsidies in the form of insurance-premium tax credits. But five states are key recipients of Obamacare subsidies, with their share of tax-credit recipients topping the totals of 40 other jurisdictions combined. Let's look at these five states and how subsidies under the Affordable Care Act will affect them.
In Pennsylvania, Kaiser found that 715,000 residents are eligible for Obamacare subsidies. Yet according to Kaiser's methodology, which looks at those who aren't eligible for other forms of subsidies like Medicaid or the Children's Health Insurance Program, about 1,276,000 Pennsylvania residents are likely to look for coverage under the state's health-insurance exchange. That number represents a 56% eligibility rate, which is actually below the national average of about 60%. Subsidies recently raised controversy when Rep. Mike Doyle (D-Pa.) said he thought his 33-year-old son would qualify for Obamacare subsidies, raising the question of whether high-paid lawmakers should benefit indirectly from the program.
4. New York
A total of 779,000 New York residents qualify for tax credits under Obamacare, representing almost 62% of the 1,264,000 individuals that the Kaiser Family Foundation projected might look for coverage in the state's health-insurance exchange. Early reports show that New York has had greater success than many states with the Obamacare rollout because it has its own website, which hasn't suffered the same problems as the national Healthcare.gov site. The state's budget estimates that New York will also subsidize 5.7 million residents under Medicaid, leading to subsidies for at least part of coverage for a third of New Yorkers.
Florida has a big jump in numbers eligible for Obamacare subsidies, with 1,587,000 qualifying out of a potential market of 2,545,000. Although the state's large population is a big part of the reason why it ranks so highly, Florida also has a relatively high number of small businesses, many of which don't offer insurance coverage or offer only limited policies to their workers. The state doesn't have its own exchange, and therefore residents have had to rely on the federal government's website and its sluggish performance so far.
On any population-based study, California is bound to show up near the top, but the state's 1,903,000 subsidy-eligible residents represents less than 58% of its top-ranking 3,291,000 potential market size. California has its own state exchange to help enroll its residents, but the home of many major technology and Internet-based companies has been particularly critical of the problems that the federal website has encountered. Even Rep. Jackie Speier (D-Calif.) acknowledged that the government "probably didn't have the brightest minds on the planet working on it to begin with," citing Silicon Valley's role in potentially fixing the problems.
Texas topped the list, with 2,049,000 people eligible for Obamacare subsidies, or 65% out of the state's potential market of 3,143,000 seeking coverage under the Affordable Care Act. Much of the debate in Texas has centered on vocal Obamacare opponent Sen. Ted Cruz, who has commented that he turns down his government eligibility for health insurance in favor of family coverage under a Goldman Sachs (NYSE:GS) provided policy that his wife, who works for Goldman, has. In addition, individuals and businesses from Texas and several other states brought a lawsuit against Obamacare subsidies, arguing that they're not legal because Texas hasn't set up its own health-insurance exchange.
One of the key goals of the Affordable Care Act is to encourage uninsured people to get the health-insurance coverage they need. Obamacare subsidies will be a key part of accomplishing that mission, especially as major health-insurance companies UnitedHealth Group (NYSE:UNH) and WellPoint (NYSE:ANTM) all count on these and other key markets to drive their profitable businesses. These five states in particular will need to see substantial participation if Obamacare is to be successful.