US health coverage and costs

Health programs are unusual in a tax-benefit model because they often create both a benefit value and a household-paid cost. A CHIP enrollee receives health coverage, but the household may also pay a premium. A Marketplace enrollee may receive a premium tax credit, but still pay a net plan premium. The model needs to keep those concepts separate.

This page describes the current US health-cost architecture and the next pieces the documentation should expose through generated reference.

Resource concepts

PolicyEngine uses different resource concepts for different questions:

Concept	Purpose
Tax liability and credits	Federal and state tax calculation
Health benefit value	Value of public or subsidized health coverage
Household health costs	Household-paid health costs that should reduce resources when health benefits are counted
SPM medical out-of-pocket expenses	Medical expenses subtracted from Supplemental Poverty Measure resources

Keeping these concepts separate avoids double-counting. A premium tax credit is not the same thing as a premium paid after the credit, and a public health benefit is not the same thing as the household’s out-of-pocket cost.

Current release behavior

The current pinned US model includes these health-cost pieces:

Component	Variables	Current treatment
Imputed medical spending	medical_out_of_pocket_expenses	Person-level CPS-imputed medical spending remains available unchanged
Medicare Part B	medicare_part_b_premiums, income_adjusted_part_b_premium	SPM resources subtract imputed Part B and add rules-based Part B
CHIP premiums	chip_premium	Added to SPM medical out-of-pocket expenses and to household_health_costs
Medicaid premiums	medicaid_premium	Added to SPM medical out-of-pocket expenses
Marketplace net premiums	marketplace_net_premium	Computed as a tax-unit variable; fuller resource integration depends on the data residualization and selected-plan assumptions described below

In the current release, household_health_costs is controlled by the parameter list at gov.household.household_health_costs; the pinned US model includes chip_premium in that list. The household-health-cost aggregate only affects net income when gov.simulation.include_health_benefits_in_net_income is enabled, so health benefits and health costs are added symmetrically.

SPM medical out-of-pocket decomposition

The SPM-unit medical out-of-pocket variable currently follows this structure:

spm_unit_medical_out_of_pocket_expenses
    = imputed medical out-of-pocket expenses
    - imputed Medicare Part B premiums
    + computed Medicare Part B premiums
    + computed CHIP premiums
    + computed Medicaid premiums

This keeps person-level imputed medical spending available for rules that consume it directly, while making SPM resources more responsive to reforms that change rules-based premiums.

The longer-run target is a residualized structure:

resource medical costs
    = imputed residual
    + computed public-program premiums
    + computed Marketplace net premiums

where the imputed residual is the survey-reported medical-cost total after subtracting baseline computed premiums during data construction.

Marketplace premiums

Marketplace modeling has three distinct quantities:

Quantity	Meaning
slcsp	Gross second-lowest-cost silver plan premium, used as the PTC benchmark
aca_ptc	Premium tax credit calculated from the benchmark and required household contribution
marketplace_net_premium	Selected-plan premium paid after applying the used PTC

The current release includes marketplace_net_premium, defined as the selected-plan premium proxy minus the PTC actually used. The selected-plan premium proxy is based on the SLCSP and a selected-plan-to-benchmark ratio.

Two modeling details should be documented clearly as this area evolves:

• Gross Marketplace premiums should not be gated only on PTC eligibility. A household can be ineligible for the PTC and still buy an unsubsidized Marketplace plan.
• Resource integration should avoid double-counting against CPS private-premium imputations. Marketplace premiums need data-side residualization before they can be cleanly layered into every resource concept.

Those details belong in methodology pages; the exact variable graph and parameter values belong in generated reference pages.

Program pages

Program pages should describe how each health program enters the model:

• eligibility
• benefit value
• household-paid premiums or cost sharing
• resource and poverty treatment
• open limitations

The first program page in this structure is US CHIP.