How affordable is ObamaCare?

posted at 1:36 pm on October 6, 2009 by Ed Morrissey

Barack Obama and his Democratic colleagues on Capitol Hill have tried to sell ObamaCare as a way to make health insurance more affordable for all Americans, but does it deliver?  The AP sounded skeptical on Sunday, when they analyzed the various proposals, noting a number of ways in which costs will escalate for consumers outside of Congressional sales pitches.  The article also links a handy tool from the Kaiser Family Foundation, generally supportive of health-care reform, that allows consumers to get an idea of what ObamaCare will cost them individually and as families:

A family of four headed by a 45-year-old making $63,000 a year is in the middle of the middle class. But that family would pay $7,110 to buy its own health insurance under the plan from the committee chairman, Sen. Max Baucus, D-Mont.

The family would get a tax credit of $3,970 to help pay for a policy worth $11,080. But the balance due — $7,110 — is real money. Maybe it’s less than the rent, but it’s probably more than a car loan payment.

Kaiser’s calculator doesn’t take into account co-payments and deductibles that could add hundreds of dollars, even several thousand, to a family’s total medical expenses. A Congressional Budget Office analysis estimates total expenses could average 20 percent of income for some families by 2016.

The issue of affordability “has been lurking in the background and is nowhere near resolved yet,” said Kaiser’s president, Drew Altman. “It’s tricky because it doesn’t take a lot of people to make affordability a political problem. It just takes some very visible and understandable cases.”

Again, I wrote earlier today that prices will go up on insurance, thanks to new taxes and fees imposed by the federal government, especially in the Baucus plan.  Mandates on coverage will reduce choices that could have allowed consumers to assume more risk and pay less monthly for insurance.  Some insurers will likely leave the industry if they can’t get consumers to buy plans at higher prices, which will further narrow choices, hiking demand on remaining insurers, which will force prices upward even further as the Chairman’s Mark assessment gets split between fewer and fewer insurers.

Kaiser points out something to keep in mind on its website about the subsidies in the exchanges:

Note: Subsidies are only available for people purchasing coverage on their own in the Exchange (not through an employer). All individuals and families with incomes at or below 133% of the federal poverty level will be eligible for Medicaid.  Others with higher incomes may also be eligible, depending on rules that vary by state.

If the exchanges include a public option, we can expect employers to dump their coverage fairly quickly, and the numbers tell why.  The penalty in the ObamaCare bill for employers who don’t supply insurance is an 8% payroll tax, but the average annual premium for a family of four would be over $11,000.  At an income level of $33,000, that amounts to 33% of salary, which means lower-income employers would do much better to dump their employees into the exchanges.  Not until those salaries hit $88,000 does that cost start to equate to the 8% penalty, which is — not coincidentally — when subsidies stop for people in the exchange.

The Kaiser tool also helps quantify the subsidies.  At an annual income of $33,000, for instance, a family of four would get over $10,000 in tax refundables to help pay for their health insurance, only contributing less than $1500 out of their own pocket.  The total tax liability for a family earning $33K per year falls far below $10,000, which means they will not only pay no income taxes but will take away from the general fund.  At $44K, twice the poverty level, the family would pay $3,070 for their insurance and get $8,445 in subsidies, which would likely also far outstrip their tax liability.  We will pay each family earning $66,000 over $3600 a year in subsidies despite the fact that they make far above the median American income.

Try out the Kaiser web site and see for yourself.


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Comments

Ann @ 2:33
I appreciate your post, but I hope you will soon understand that any supposed economic benefit is fleeting and that the damage to our economy will quickly overwhelm any marginal, temporary, benefit to you.

GaltBlvnAtty on October 6, 2009 at 2:46 PM

It is going to happen despite the facts that we do not want it and that it is counter to the freedoms we have lived with up to now. Who knows how people who oppose it will react.

GaltBlvnAtty on October 6, 2009 at 2:13 PM

I hold out hope that this will not pass and that real conservatives will take over the Congress next year.
I also hope for world peace.
And maybe one day big gold coins will grow in my garden.

A girl can dream, right?

MississippiMom on October 6, 2009 at 2:48 PM

Yes, and I hope your dreams come true. You are correct, also, about the need for tort reform, but that is not going to happen so long as Obama is around.

GaltBlvnAtty on October 6, 2009 at 2:50 PM

MississippiMom on October 6, 2009 at 2:45 PM

I’m allergic to kitties,but I’d rather pet kitties than go to the post office for surgery, tootsie ‘-)

nolapol on October 6, 2009 at 2:51 PM

I hate being re-distributed.
And it happens all the time.
BTW – you’re up next. Whomever you are.

tomg51 on October 6, 2009 at 2:52 PM

God is the only one who can help us.
Badger40 on October 6, 2009 at 2:28 PM

A few others come to mind, namely John Browning, Samuel Colt, and Eliphalet Remington.
Bishop on October 6, 2009 at 2:31 PM

Hey, don’t forget Eugene Stoner and Mikhail Kalashnikov

Juno77 on October 6, 2009 at 2:53 PM

“So, comrade, we hear you have big gold coins in your garden, no?”

The dems would steal the coins and destroy the plants that they grew upon.

justltl on October 6, 2009 at 2:53 PM

The Kaiser Foundation is about as objective as Nostril’s Waxman. I learned a long time ago to completely discount anything that moonbat group prints.

It’s a friggin joke to assume the annual premiums in their bogus study represent anything other than a well placed lie.

David in ATL on October 6, 2009 at 2:54 PM

Sen. Tom Coburn, M.D., and Sen. John Barrassso, M.D., host “The Senate Doctors Show” today at 5 pm ET. They’ll talk about practical ways to lower costs and not have a Washington takeover of health care. Check it out.

Sean Hackbarth
Senate Republican Conference

seanhackbarth on October 6, 2009 at 2:54 PM

Say what you will about these figures and the exchanges, but the premium costs shown are probably what an individual/family policy would now cost for most people (not those with pre-existing conditions or similar risk groups) if they couldn’t get coverage through an employer.

Jimbo3 on October 6, 2009 at 2:14 PM

Of course my employer contributes to the total of my health care coverage…it’s pointed out to me dollar for dollar on my paycheck stub every month. They offer this health care coverage as a BENEFIT, an untaxed BENEFIT. It’s what makes people work for peanuts as opposed to getting a decent wage. They figure they make it up in BENEFITS. If this boondoggle comes to pass, people could lose their BENEFITS. Not because the organization took them away, but because the government created a system where no one gets benefits because the penalty for not providing them is cheaper than the benefit. How is that fair?

scalleywag on October 6, 2009 at 2:55 PM

This is a good piece Ed.

I note this …

All individuals and families with incomes at or below 133% of the federal poverty level will be eligible for Medicaid.

I’ve heard that Baucus is using Medicaid as a delivery vehicle for the public option. From what I’ve heard, state participation in Medicaid is voluntary. I guess it’s too much to ask for some brave state out there to terminate their participation because of this.

HondaV65 on October 6, 2009 at 2:56 PM

Hold on, tell me again what is my incentive for working hard to get ahead? It looks like I need to just give up this silly pipe dream of making things better for the next generation, chuck this job and go to work at a fast food drive thru window screwing up burger orders. They’ll pay my health insurance, no income tax, and if I play my cards right get an additional rebate on top of it.

What a way to kill the American Dream. It will be a race to the bottom and then what are they going to do to pay for all of their wonderful social engineering programs?

Just A Grunt on October 6, 2009 at 2:15 PM

That is something that liberals just do not comprehend.

I heard these two young women at the G20 protest say that no one should make more than $800,000 a year; that no one needs more than that. They said if we took all money made over that amount in this country and gave it to the poor, that every person could get $44,000.
Okay, so, do that this year and what happens next year? People who actually do things to make money will stop once they reach $800 grand…why should they continue to bust their butt when it will just be taken away? Then what? Where does the money come from then to pay for an ever expanding govt?
And what about the immorality of those who would just sit ildly by and let someone else pay their way? Why doesn’t anyone in DC ever talk about THAT?

MississippiMom on October 6, 2009 at 2:59 PM

“So, comrade, we hear you have big gold coins in your garden, no?”

The dems would steal the coins and destroy the plants that they grew upon.

justltl on October 6, 2009 at 2:53 PM

And tax me for having the plants, even after they destroyed them.

MississippiMom on October 6, 2009 at 3:01 PM

ThackerAgency on October 6, 2009 at 2:33 PM

I want to thank you ThackerAgency for the link. Your link has provided some very eye opening information and I hope others in the insurance industry will also spread this information.

moonsbreath on October 6, 2009 at 3:02 PM

Holy you know what! Our bill would increase $600 A MONTH!!! We’re 35! If I put our age at 45 our bill goes up $750!!!

txhsmom on October 6, 2009 at 3:21 PM

Ed, thank you so much for reporting on this.

Lisa Graas

gocatholic on October 6, 2009 at 3:23 PM

yeah, well you can have all the tools you want, but what does the premiums buy you?

anyone would compare the benefits from one plan to another and then choose (oops, there’s that dirty word again)

the benes are TBD

r keller on October 6, 2009 at 3:30 PM

We will pay each family earning $66,000 over $3600 a year in subsidies despite the fact that they make far above the median American income.

The good news is we won’t do it for long . . . because after a few years of this fiscal insanity, we’ll be even more massively broke than we are now, and at some point our creditors will pull the trigger.

AZCoyote on October 6, 2009 at 3:51 PM

“So, comrade, we hear you have big gold coins in your garden, no?”

The dems would steal the coins and destroy the plants that they grew upon.

justltl on October 6, 2009 at 2:53 PM

Why bother? They’d just collectivize the garden.

VelvetElvis on October 6, 2009 at 3:52 PM

The way to crush the bourgeoisie is to grind them between the millstones of taxation and inflation. -—Vladimir Ilyich Lenin

lovingmyUSA on October 6, 2009 at 3:55 PM

That tool is godawful.

DaveS on October 6, 2009 at 3:55 PM

I’ve heard that Baucus is using Medicaid as a delivery vehicle for the public option. From what I’ve heard, state participation in Medicaid is voluntary. I guess it’s too much to ask for some brave state out there to terminate their participation because of this.

HondaV65 on October 6, 2009 at 2:56 PM

Stick around the shows just startin’.

Blacksmith8 on October 6, 2009 at 4:01 PM

No matter how you look at it, this Democrat “health care bill” is an unmitigated disaster.

It would cost everyone more…at every age…and every income level. I have been self-employed for over 30 years, and any of the plans now under consideration would cost more than I ever actually paid for my high-priced, no-benefit-from-any-group, insurance plans!

It would destroy hundreds of thousands, if not millions of jobs, as potential employers would simply not be able to afford to hire anyone. For evidence of this, check the situation in Hawaii, where employer-provided health insurance is mandatory (and employers have to continue carrying insurance on a terminated employee until someone else hires him). Everyone is an “independent contractor”!!! The Hawaii state mandate managed to wipe out nearly every employment opportunity!

If the Obamacrats were really interested in saving money, they would be doing things like:

1. Tort reform. They keep claiming that this comprises “only 2% of healthcare costs, but this is a lie because it counts only jury awards and ignores the total actual costs to doctors and hospitals for excess malpractice insurance necessitated by the lack of tort reform.

2. Reform Medicare D: Medicare D wastes money by making people carry insurance for every $4.00 prescription: this is outrageously wasteful. Coverage of small items should be eliminated (you don’t buy homeowners’ insurance to repair broken windows), and Medicare D should be re-formulated to START providing coverage when annual drug expense reaches
something like $2500-$5000, a level where the administrative cost and paperwork associated with claims processing might be justified. For the most part, WalMart has single-handedly solved the “prescription drug problem,” so government involvement is completely unnecessary.

3. Put the patient back “in the loop”. Require the same kind of price disclosure which was required of funeral directors during the push for funeral industry reform. Eliminate practices which keep patients from seeing each and every bill: you can’t fix a problem until you can measure it, and the patient is your best auditor.

4. Eliminate mandates by allowing purchase of health insurance across state lines…and even across national boundaries. The existence of restrictions on where one can buy insurance does not help anybody: it only forces costs up by making everyone buy coverage which they do not need.

5. Stop cheating health care providers. If a contract says that $100 should be paid, pay $100…not $95…not $80.
The result of trying to cheat health care providers is the creation and promotion of organized billing fraud which providers are forced to support in order to survive. So “squeezing” providers is counter-productive: fraud simply causes more fraud. Instead of cheating providers, have everyone publish prices. If a given insurance company will only pay so much for a certain procedure, publish the price and put it in the insurance policy (where it belongs)!! Let the patient decide, via co-pays, whether a certain provider is chosen and whether a given expense is justified.

Most of the current “health care bills” now under consideration in Congress have more to do with government taking control of our lives…and very little to do with the efficient and effective delivery of healthcare.

We shouldn’t have to give up our medical and financial privacy, subsidize illegal aliens, subsidize ACORN, be forced to pay for things we don’t need, or subject our doctors to control by distant political appointees in order to obtain healthcare.

landlines on October 6, 2009 at 4:01 PM

Others with higher incomes may also be eligible, depending on rules that vary by state.

So some state like TEXAS could raise the qualifying income level to say $800,000 per year. Just about any state that wanted to maximize enrollment could just pick a number out of thin air. How would that work?
 
Everybody in, it’s the All American swim.
 
This is not going to end well. The producer states (horses) are not going to pay in blood or sweat for the user states (pigs) for even one term. Glenn Beck said it “We surround them”.

Blacksmith8 on October 6, 2009 at 4:10 PM

So the Administration wants to cut Medicare and then these bills want to put more people into it? Gee, might be a few problems with that…

And under any bill I get to go from being marginally over the poverty line to under it once I ‘spread the wealth around’… so lovely that the government wants to impoverish me to help the poor! But, of course, in theory I get some money back for being poor… but then I shouldn’t have such taxes in the first place… so maybe I won’t get anything back because I started non-poor and only became poor to help everyone else out by ‘spreading my wealth around’ until I was made poor so I couldn’t have any money to take care of my own health. And my costs for THAT go up… way up. And then some of these plans want to tax my medications, durable medical equipment, and so on ad infinitum to make me poorer. With all this ‘help’ I’m giving out I will soon be needing food donations.

Tell you what: cut my taxes and let me decide how to invest for my own health care, because I WILL invest for it, strange to say, so that my future costs are helped by my investments. Because I can do very well at the margins WITHOUT the damned ‘help’, but the ‘help’ will kill me.

Thanks, but no.

I intend to get an extension on paying my taxes next year. And will keep re-filing for those as long as I can so I can survive, tyvm. No more blood for these vampires in DC. Time for the stake, garlic, holy water, sunlight and silver bullets. Tar and feathers are too good for them.

ajacksonian on October 6, 2009 at 4:40 PM

And what about the immorality of those who would just sit ildly by and let someone else pay their way? Why doesn’t anyone in DC ever talk about THAT?

MississippiMom on October 6, 2009 at 2:59 PM

I’m not sure, but I’m guessing it’s because they don’t see it as immoral. They define morality how they wish, regardless of fact, and aren’t the least bit fazed at their massive conflict of interest. Witness the BO08 himself, just makin’ $#!+ up as he goes along.

mr.blacksheep on October 6, 2009 at 4:43 PM

Hey,ajacksonian, why not shut down Congress. our employees are out of control, so we shut down the Capitol as they did in Tennessee in 1999 when the legislature and the governor tried to enact a state income tax.

amr on October 6, 2009 at 9:49 PM

Hey,ajacksonian, why not shut down Congress
amr on October 6, 2009 at 9:49 PM

We can shut down the entire govt. by a massive tax protest. If the people get mad enough, the clowns in Congress will have to arrest everybody! We can also pull our kids out of public school — they are indoctrinating them anyway — just say NO. Refuse to buy health insurance if they so mandate it. Sounds extreme, but may be the price we have to pay to avoid going socialist. Oh and any massive protest better be done before Americorp, you know, the “civilian force as strong and as well funded as our military” (quote – Barack Hussain Obama) is in place. (Why do I get the feeling their training is ongoing currently?)

Christian Conservative on October 6, 2009 at 10:31 PM

Hey,ajacksonian, why not shut down Congress. our employees are out of control, so we shut down the Capitol as they did in Tennessee in 1999 when the legislature and the governor tried to enact a state income tax.

amr on October 6, 2009 at 9:49 PM

I was part of that effort in Tennessee. It worked and they learned some much needed lessons.

flyfisher on October 7, 2009 at 10:40 AM