Healthcare Reform

Introduction:

The price elasticity for insurance is high, and people find it difficult to search for coverage on their own. To address the price issue, the ACA provides income-based subsidies to low- and middleincome individuals to purchase coverage. Families with an income below 133 percent of the federal poverty line (about $30,000 in 2010) will pay 2 percent of their income for health insurance. Subsidies phase out when an income of 400 percent of the federal poverty line (about $88,000 in 2010) is reached. To make insurance accessible, the ACA creates a set of regional health insurance exchanges for individuals and small businesses, modeled after those operating in Massachusetts and Utah.

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