If federal agencies follow through on President Donald Trump’s recent executive order intended to expand access to less expensive health insurance than currently offered by the Affordable Care Act, the impact on low- and middle-income families could be significant – both on the up and the down side. Many low-income households already fight to get ahead. More than half (52.5 percent) of households earning less than $40,000 a year say they’re either struggling or just getting by. For renters, it’s even worse: The typical renting household makes just $38,128 a year. And they’re spending an increasingly larger share of that money on rent as prices rise and incomes fail to keep pace: In 24 of the country’s 25 largest metro areas, low-income renters spend more than 45 percent of their incomes on rent. Against that backdrop, the rising cost of health-care premiums can be hard to bear. In Denver, for example, the benchmark premiums for 40-year-old, non-smokers grew 25.2 percent from 2014 through 2017. Over the same period, median rents in Denver grew 19.7 percent. For most of these lower-income households, rising health insurance premiums will be offset by subsidies. But for those with incomes just beyond the threshold for receiving subsidies, or for those that otherwise don’t receive them, the one-two punch of rising premiums and rising housing costs will be felt acutely. The pinch will be even sharper if/when insurance companies further raise premiums on non-subsidized ACA enrollees in the wake of additional actions that cancel federal cost-sharing payments to insurers. Currently, almost 60 percent of households with the highest rent burden could not cover three months’ expenses in the event of a financial emergency. The less-expensive insurance plans for which President Trump’s order seeks to pave the way potentially could save these families money — helping them afford rising rents and possibly build their savings. But for whatever short-term savings these families gain, the unknown is how much they might pay in the long run if they became sick. Lower-cost health care plans generally come with less coverage, which means an expensive visit to the emergency room or the diagnosis of a long-term illness can cost thousands of dollars – depleting any money saved through lower premiums and sometimes leading to bankruptcy and housing insecurity. And unfortunately, in places where people have lower incomes and therefore spend a higher share of their income on rent, more people also report being in poor physical health. Based solely on President Trump’s executive order and any resulting changes in regulation, it’s impossible to calculate how much households that opt for less-robust, less-expensive coverage might save on their insurance premiums. But it is possible to imagine a scenario in which renters save some amount of money in the short-term, only to be hit with tremendous financial hardship in the long-run if they fall ill. It’s also possible that healthy people will gravitate toward newly available, lower-cost insurance, leading potentially sicker or more at-risk people who stay in the current insurance marketplace to pay higher premiums than they otherwise would have. With no alleviation of rent increases in sight, the pressure on vulnerable households caught in one of those scenarios could be devastating. Recommended:
If federal agencies follow through on President Donald Trump’s recent executive order intended to expand access to less expensive health insurance than currently offered by the Affordable Care Act, the impact on low- and middle-income Americans could be significant.