Health Care is Local: Impact of Income and Geography on Premiums and Premium Support

The American Health Care Act (AHCA) proposes a significant change in how and to whom premium tax credits are dispersed, proposing a flat rate adjusted only by age. The Affordable Care Act (ACA) bases its premium tax credit calculation on three factors: age, income and local cost of insurance premiums. While there has been extensive discussion of the impact of eliminating premium support based on consumers’ income, there has been relatively little on what happens when credits are not adjusted based on where a consumer lives. By failing to account for local variation, a premium tax credit structure could lead to significant increases in premiums and out-of-pocket costs paid by consumers while also potentially reducing plan availability for those who live in relatively high cost and rural areas of each state.

This issue brief provides an overview of the context and potential impact of changing the health insurance premium tax credit structure from one that factors for age, income, and local premium costs to one that considers only age.

See also:
State fact sheets: Estimated AHCA and ACA Premiums and Tax Credits by State, Income, Age, and Select Counties.
Map: County-by-county Premium Variation