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How we pay for those subsidized Affordable Care Act health plans

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In this simple explainer, the $1 trillion that federal Medicaid is expected to pay over 10 years to provide healthcare subsidies for lower-income Americans breaks down like this, according to NPR:

To avoid increasing the deficit, the ACA offset about half of its costs with savings in the payments insurers and hospitals receive from Medicare, says MIT economist Jonathan Gruber.

A tax on medical device manufacturers and drug companies offsets another 25 percent of the ACA's cost.

The wealthiest Americans, with incomes above  $250,000 a year, will pay more in Medicare payroll taxes to reduce the ACA's cost even more.

Together, these measures create a net positive for the federal budget, according to the nonpartisan Congressional Budget Office, says NPR. So the ACA is actually projected to reduce the deficit in the long-term, by as much as $1 trillion in the next two decades. See how the Washington Post rates ACA deficit reduction claims.

There's one more way we contribute to the ACA's healthcare subsidies. It's by paying into health plans that offer something for everyone, like maternity benefits, even if you're a guy. It's the same idea as employer health insurance, where a pool of men and women of all ages get the same benefits, Gruber explains to NPR. Younger, usually healthier, people pay into the system, which subsidizes older people who tend to need more benefits, and so on, in a circle of insurance and life. Read the story.

 

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