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Little hope seen for millions priced out of health overhaul

U.S. President Barack Obama speaks about strengthening the economy for the middle class and measures to combat gun violence during a visit t
U.S. President Barack Obama speaks about strengthening the economy for the middle class and measures to combat gun violence during a visit t

By Tom Brown

MIAMI (Reuters) - Millions of Americans will be priced out of health insurance under President Barack Obama's healthcare overhaul because of a glitch in the law that adversely affects people with modest incomes who cannot afford family coverage offered by their employers, a leading healthcare advocacy group said on Tuesday.

Tax credits are a key component of the law and the White House has said the credits, averaging about $4,000 apiece, will help about 18 million individuals and families pay for health insurance once the Affordable Care Act takes full effect, beginning in January 2014.

The tax credits are geared toward low and middle-income Americans who do not have access to affordable health insurance coverage through an employer. The law specifies that employer-sponsored insurance is affordable so long as a worker's share of the premium does not exceed 9.5 percent of the worker's household income.

In its rule making, or final interpretation of the law, the IRS said affordability should be based strictly on individual coverage costs, however.

That means that, even if family coverage through an employer-based plan far exceeds the 9.5 percent cutoff, workers would not be eligible for the tax credits to help buy insurance for children or non-working dependents.

"It's an issue. It needs to be fixed," Ron Pollack, executive director of Families USA, an influential healthcare advocacy group said on Tuesday, referring to what he called "the family glitch problem."

He spoke on a teleconference calling attention to a report, released by his organization on Tuesday, that said more than 1.7 million Floridians will be eligible for the new premium tax credits next year.

'TEA PARTY INFUSION'

"The tax credit subsidies are a game changer. They will help make health coverage affordable for huge numbers of uninsured families in Florida who would have been priced out of the health coverage and care they need," Pollack said.

He had no estimate for the number of people in Florida affected by the affordability question and IRS policy. But he said there was little hope for a legislative fix in Congress, where the House is controlled by Republicans still bent on repealing Obamacare.

The problem comes on top of another more contentious healthcare issue in Florida, where the state legislature has opposed Republican Governor Rick Scott's endorsement of an expansion of Medicaid. Without the expansion, envisioned under Obama's 2010 reforms, Pollack said about 1.8 million Floridians would be left without healthcare coverage.

"It would mean that the poorest of the poor really would be left out in the cold," he said.

Pollack was joined on the teleconference by Florida Representative Debbie Wasserman Schultz, a congressional champion of healthcare reform who also chairs the Democratic National Committee.

"I think one only has to look at the budget the Republicans crammed through the House last week, with the repeal of the Affordable Care Act attached to it, to know that the odds of adding coverage and improving coverage in Obamacare in this Tea Party-infused House of Representatives is very unlikely," she said.

"The way to improve this law and to address concerns that have come up with it is not to repeal it, not to throw it out, but to simply make modifications to it. It would be wonderful if we had Republican colleagues in our chamber, on the other side of the aisle, who were willing to sit down and do that."

Speaking after the call, Families USA health policy director Kathleen Stoll told Reuters recent studies showed that anywhere between 2 million and 4 million people across the United States would be adversely affected by the federal rule limiting aid and the IRS interpretation of whether an employer's health plan is affordable.

"We'd like to see it fixed because it clearly doesn't reflect what Congress intended," Stoll said.

"It could mean the difference between being able to move in to purchasing private insurance and not purchasing private insurance. Hopefully within the next couple of years there will be room to fix it."

(Reporting by Tom Brown. Editing by Andre Grenon)

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