An estimated 3.5 million Californians would be eligible for federal tax credits to slash the cost of their health coverage when they begin buying policies through a new statewide insurance marketplace in 2014, a study released Tuesday found.
Under the nation’s healthcare overhaul, tax credits will be available to low- and middle-income people once insurers begin selling policies through state-based insurance exchanges like the one being set up in California.
The federal law requires most Americans to have insurance starting in 2014. The credits that help pay insurance costs will go directly to insurers, lowering premiums for those who are uninsured or do not have coverage through jobs.
In California, working families stand to gain most from the tax credits, analysts from the consumer group Families USA concluded. The researchers said that 94% of those who qualify would come from families that have at least one employed person.
The tax credits, the group said, would be worth an estimated $13.8 billion in 2014.
“These premium tax cuts will enable many hard-working Californians to afford health insurance,” said Kathleen Stoll, the group’s deputy executive director. “They put significant extra cash into Californians’ pocketbooks and provide real, concrete relief.”
An insurance industry spokesman agreed that the tax credits would help lower insurance premiums but said the subsidies would do nothing to stem the fundamental problem of rising healthcare expenses.
“Premiums are going up because medical costs continue to soar,” said Robert Zirkelbach of America’s Health Insurance Plans, the industry’s lobbying arm in Washington.
“If underlying costs are allowed to continue to increase, it’s going to require significantly larger tax credits to afford coverage. By addressing medical costs, it’s possible to make coverage more affordable and reduce the financial burden on the government.”