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Health care: What the Supreme Court's ruling means for US consumers

The US Supreme Court ruling to uphold Obama's health-care reform law affects households across America. Millions without insurance are on track to get it. But costs are an unresolved issue.

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One large group of Americans will be exempt because of their income. The law won't ask people to buy insurance if it will cost more than 8 percent of their earnings. Subsidies will keep many families below this "unaffordable" level, but the federal aid is phased out as household income rises. A family of four with $60,000 in income might be eligible for a federal subsidy under the ACA to buy insurance, and yet be exempt from the individual mandate.

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High-earning Americans will be subject to the mandate, because the insurance costs will amount to less than 8 percent of their income.

Fines for the uninsured

If you are subject to the mandate and don't buy insurance, fines will be assessed through the tax code. By 2016, after two years of the mandate, the fines will be either $695 per person (up to $2,085 per family) or 2.5 percent of income, whichever is larger. (The fines are set at lower levels for the first two years. For example, in 2014 it's $95 per person or 1 percent of income.)

Subsidies for those buying insurance

If you need to shop for yourself, the ACA will offer subsidies of two kinds. First, premium credits will help households with incomes of four times the poverty level or less. The second main subsidy would reduce the amount of medical copayments owed by insured individuals or families.

A "health reform subsidy calculator" from the Kaiser Family Foundation can help you chart the likely impact. As noted above, the subsidies phase out as incomes rise. And for low-income households, remember that the court ruling leaves it unclear whether all states will join in the law's expansion of Medicaid. So many people with incomes below 1.33 times the poverty level may be forced to look toward the subsidies, rather than toward Medicaid, to gain coverage.

Health-care costs

The ACA seeks to make health care more affordable in a host of ways.

One core strategy is essentially a grand bargain between the government and the health insurance industry. The industry agrees to insure more people, regardless of their health condition. But in return, the individual mandate guarantees that many of the newly insured will be young and healthy – people who might not buy coverage if such a purchase were not mandated. The premiums they pay into the system will help subsidize the cost of people who use more medical care.

The law also seeks to squeeze new savings out of the Medicare program for seniors. It gives consumers rebates if their insurer spends more than an allowed amount on administrative overhead. And it includes other vehicles including various pilot projects designed to "bend the curve" of cost growth downward.

A "community rating" feature of the ACA means that when families shop for insurance on an exchange, older people can't be charged more than three times what a young person pays. Obama, in remarks praising the court's ruling, added that insurers "won’t be able to charge you more just because you’re a woman."

But even fans of the law, who are optimistic that the law may tame medical costs more than it fuels them, don't see the ACA as a full fix to the problem. And insurance would still cost more for individual shoppers than for large employers covering their workers.

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