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Young People Currently On the Individual Market Would Pay More Under the BCRA

The Congressional Budget Office (CBO) just published their analysis of the Better Care Reconciliation Act, Senate Republicans’ proposal to replace Obamacare. The CBO’s analysis projects that the uninsurance rate for 19- to 29-year-olds earning less than 200 percent of the federal poverty line (FPL) would double under the proposal. The increase in the rate of uninsurance for those earning more than 200 percent of the FPL would increase at almost the same rate.

Setting aside deep, harmful cuts to Medicaid included in the bill driving much of those coverage losses, the proposal also raises premium costs for many young people currently relying on the individual market for coverage. Despite the changes the BCRA makes to age rating, adjustments it makes to premium tax credits makes it harder for lower income young people to purchase insurance, while making it slightly easier for higher income earners to purchase (likely less comprehensive) insurance.

Specifically, the CBO estimates that a single 21-year-old with an income of $26,500 would pay $400 more for a bronze plan and $500 more for a silver plan in 2026 (highlighted in yellow below).

So how does that 21-year-old compare to a typical young person on the individual market?

According to the U.S. Census Bureau, the median income of a single, 21-year-old who currently buys health insurance on the individual market is $17,000, or about 141% FPL – earning slightly less than the CBO’s example. Under the BCRA, individuals earning between 133 FPL and 150 FPL would not have to pay more than 2.5%-4% of income. Assuming a smooth sliding scale, an individual at 141% FPL would be eligible for tax credits such that their health insurance premiums equal 3.21% of their total income, or $546. An individual then receives a tax credit to cover the rest of the cost of the plan above that $546 threshold. However, unlike, the ACA, an enrollee under BCRA receives a tax credit to cover the rest of the cost of a bronze (lower quality, cheaper) plan, giving an enrollee a $2,654 subsidy, and leaving that person to pay $1,446 for a silver plan.

Compare this to current law, where the individual has to pay 3.67% of their income, or $593 (according to the Kaiser Family Foundation’s Health Insurance Marketplace calculator). Under the ACA, a consumer would get a tax credit to cover the rest of the cost of a silver plan, which is a more generous, higher cost plan and thus results in a larger tax credit. This translates to a $4,476 subsidy. Under the ACA, the consumer could either purchase the silver plan for that $593, or apply the entire subsidy to a bronze plan and pay nothing.

And while many people assume that young people want the cheapest plan, they’re wrong. Most young people currently enroll in silver plans, so by lowering the benchmark for a tax credit to a bronze plan, most of today’s young enrollees would either 1) pay much more for a worse plan; or 2) more for the same plan. When compared to current law, the typical 21-year-old can expect to see their net premium cost increase $546 more for a bronze plan, and $853 more for a silver plan under the BCRA. That’s a 144 percent increase in net premium cost for the typical young marketplace shopper selecting a silver plan.

This analysis also does not take into account the elimination of cost-sharing reductions; that typical young enrollee, often currently enrolled in a silver plan, is also receiving subsidies that substantially reduce out of pocket costs.

In other words, the myth that the BCRA is good for young people currently in the individual market just doesn’t hold water.