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Rural Residents Face Especially Big Cuts in Premium Help Under House Plan

March 13, 2017 at 3:15 PM

The House Republican proposal to replace the Affordable Care Act’s (ACA) tax credit with a flat credit would disproportionately hurt marketplace enrollees in rural areas, as our new paper shows.

Unlike the ACA’s credit, which is tied to the cost of an available marketplace plan where an individual lives, the House credit wouldn’t adjust for geographic differences in premiums. That would especially hurt consumers in high-premium states, many of which are rural states. Premiums tend to be higher in rural areas because their low population density often raises medical costs and they generally have a limited array of providers and little competition among insurers.

In 12 of the 15 states that would face the steepest percentage declines in the value of the tax credits, rural residents make up at least one-quarter of marketplace enrollees today (see map). For example, in Wyoming, which has the highest rural share of marketplace enrollees (79 percent), the average enrollee would get $4,100 less in tax credits under the House plan than under current law, a drop of almost 60 percent.

Even within a given state, rural consumers would often fare worse than urban ones, county-level data from the Kaiser Family Foundation show. In urban Memphis (Shelby County), Tennessee, a 40-year-old earning $30,000 would get a $3,000 tax credit under the House plan, or $450 less than under current law. But in the rural counties to the north, like Gibson or Madison County, that $3,000 credit would be $3,300 less than the ACA would provide — a 52 percent drop.

Non-metropolitan areas saw a dramatic 25 percent reduction in their uninsured rate between 2013 and 2015 under the ACA, but there’s a significant risk that those gains will disappear under the House plan.

House Republican Health Plan, Compared to Affordable Care Act (ACA):
12 of the 15 Hardest Hit States Have Significant Rural Populations
  Share of Marketplace Consumers Living in Rural Areas Average Tax Credit for Marketplace Consumers, 2020 Loss Compared to ACA
ACA House Dollars Percent
Alaska 51% $13,120 $2,878 -$10,243 -78%
North Carolina 25% $8,242 $2,881 -$5,360 -65%
Oklahoma 37% $7,508 $2,866 -$4,642 -62%
Alabama 29% $7,228 $2,935 -$4,293 -59%
Nebraska 51% $7,019 $2,795 -$4,224 -60%
Wyoming 79% $6,989 $2,856 -$4,133 -59%
West Virginia 41% $7,285 $3,103 -$4,183 -57%
Tennessee 26% $6,835 $2,955 -$3,880 -57%
Arizona 10% $6,401 $2,853 -$3,548 -55%
South Dakota 64% $6,277 $2,810 -$3,467 -55%
Montana 74% $6,110 $2,950 -$3,160 -52%
South Carolina 19% $5,792 $2,932 -$2,860 -49%
Louisiana 16% $5,658 $2,913 -$2,744 -49%
Maine 57% $5,519 $2,970 -$2,549 -46%
Iowa 46% $5,526 $3,015 -$2,512 -45%
Average in 39 HealthCare.gov states 18% $5,002 $2,942 -$2,060 -41%
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