How affordable is ObamaCare?

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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