Think of subsidies as akin to the help workers get from their employers who pay some portion of their premiums. Subsidies will be available to those with incomes less than 400 percent of the federal poverty level this year—$94,200 for a family of four and $45,960 for a single person this year. If people have too much income or too many assets, they are over the line, and there’s no government assistance. The 40 percent who are over the line will have to pay the full cost (though they can still shop in the exchanges).

Whether premiums will be affordable for someone in the 60 percent group depends on the amount of their subsidy. The less income a family has the larger the subsidy.

For some, subsidies may indeed be substantial, and make insurance much more affordable. Those at the upper ends of the income eligibility spectrum, on the other hand, will get smaller subsidies. And it’s possible that subsidies won’t be large enough for some people to make premiums affordable at all. A study by the Congressional Budget Office notes that a family of four buying a silver plan—a plan that pays 80 70 percent of a policyholder’s medical expenses—with income between 139-149 percent of the poverty level, would get a subsidy covering about 96 percent of the policy’s cost. The same family with an income between 300 and 349 percent of poverty would get a subsidy covering roughly 44 percent of the premium; and a family whose income came to 350 to 399 percent would get a subsidy of only about 35 percent, meaning they have to pay two-thirds of the premium out of pocket.

If subsidies are not adequate, supporters of the law fear that some families will simply take the penalty for not having insurance, rather than buy something they can’t afford. In the end, it will come down to a matter of a family’s budget and its spending priorities.

A piece published awhile back by The Associated Press offered readers a glimpse of what insurance affordability looks like in dollars and cents. It presented five scenarios, using different families buying insurance in the individual market, and showed how the law might affect their pocketbooks. The AP’s examples also show that the subsidies are hardly a one-size-fits-all affair.

When people apply for coverage in an exchange and pick a policy, the exchange will automatically generate the amount of the subsidy. A family of four, for instance, with a 40-year-old policyholder and a family income of $50,000—near the median of $51,400—could get a government subsidy of $8,745 for a policy costing $12,130. The family would have to pay $3,385, an amount that may or may not be affordable.

The AP also showed what a single adult age 30 might face. Assuming an income of $30,000 and an annual premium of $3,440, the government subsidy would only be $932, while the person’s share would be $2,509.


Softening the price wallop

The insurers’ game is to grab as much market share as possible, as fast as possible. To do that, they need to entice customers with low premiums. The White House euphemistically calls low-cost policies “more efficient”—words that tend to obscure the trade-offs and choices that shoppers will have to make.

A low premium means that a consumer may have to take a policy that requires high deductibles, high coinsurance (a percentage of a bill they have to pay), or high copayments (a set amount for a particular service). Shoppers in the exchanges will also have to make other trade-offs depending on the strategies insurers use to fashion a premium that sells in the marketplace.

One strategy some carriers are considering is a narrow network of providers; in other words, fewer choices of doctors and hospitals. For example, some specialty hospitals may not be included. If an insurer goes that route, it will allow in the network only providers who agree to discounts on the price of their services. Discounts could be higher—depending on who has the leverage in a given market. If doctors and hospitals have the leverage, discounts will be lower, because they have the power to keep their prices as high as possible. If insurers have the upper hand in a market, they can demand higher discounts from providers and, at least theoretically, charge lower premiums.

It’s possible carriers will take their narrow networks one step further by choosing providers who offer what they consider value. Perhaps they give better care, more coordinated care, or have higher quality or satisfaction scores on a variety of measures. The trade-off for policyholders: more choice and a higher premium versus less choice— and maybe better care and a lower premium.


Some tips for reporters

Trudy Lieberman is a fellow at the Center for Advancing Health and a longtime contributing editor to the Columbia Journalism Review. She is the lead writer for The Second Opinion, CJR’s healthcare desk, which is part of our United States Project on the coverage of politics and policy. Follow her on Twitter @Trudy_Lieberman.