Extending Marketplace Tax Credits Would Make Coverage More Affordable for Middle-Income Adults

Published in: The Commonwealth Fund (July 2017)

Posted on RAND.org on August 24, 2018

by Jodi L. Liu, Christine Eibner

Read More

Access further information on this document at www.commonwealthfund.org

This article was published outside of RAND. The full text of the article can be found at the link above.


Affordability of health coverage is a growing challenge for Americans facing rising premiums, deductibles, and copayments. The Affordable Care Act's tax credits make marketplace insurance more affordable for eligible lower-income individuals. However, individuals lose tax credits when their income exceeds 400 percent of the federal poverty level, creating a steep cliff.


To analyze the effects of extending eligibility for tax credits to individuals with incomes above 400 percent of the federal poverty level.


We used RAND's COMPARE microsimulation model to examine changes in insurance coverage and health care spending.

Key Findings and Conclusions

Extending tax-credit eligibility increases insurance enrollment by 1.2 million, at a total federal cost of $6.0 billion. Those who would benefit from the tax-credit extension are mostly middle-income adults ages 50 to 64. These new enrollees would be healthier than current enrollees their age, which would improve the risk pool and lower premiums. Eliminating the cliff at 400 percent of the federal poverty level is one policy option that may be considered to increase affordability of insurance.

This report is part of the RAND Corporation External publication series. Many RAND studies are published in peer-reviewed scholarly journals, as chapters in commercial books, or as documents published by other organizations.

The RAND Corporation is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.