Reports are showing that consumer spending is down, but subsidies could free up more cash.
According to some of the latest reports – including those released by the largest retailer in the world, Walmart and the largest online retailer, Amazon – lower and middle income families have been cutting down on their spending, but at the same time, the changes made by the health care reforms could, in theory, help to use California insurance to boost the economy in the state.
The reason is that the amount being paid for coverage by these families will actually be reduced.
The average individual in the state is earning $30,000 per year. Since the government is now paying for half of the California insurance purchased through the exchange, this means that when all is said and done, those subsidies will give half of the price previously paid by an individual or family back to them. This means that these families will have a number of new financial opportunities open to them.
The California insurance subsidies for health coverage could increase disposable income.
Since individuals and families within the lower and middle income brackets will have subsidies cutting the amount that they pay in premiums in half, this could mean that they will have money to spend elsewhere. This could include purchasing merchandise, paying off consumer debt more quickly, or even adding to savings for the future.
Though for any given individual or family, this is only a little bit of extra at a time, considering the number of affected people and that this will continue over the long term, it could be said that this may have a positive and growing benefit as time passes. This could help to give a meaningful boost to the economy in the state.
Equally, while it could be said that not everyone previously had coverage and that many lower and middle income families will now be taking on new premiums, this will also mean that these same people will have one steady subsidized expense, instead of the continual threat of personal bankruptcy in case injury or illness should ever occur. California insurance could help consumers to gain more confidence in their future and feel more welcome to make purchases that they may not have otherwise done.