Next week, the Obamacare health care exchanges will open up, enabling Americans to buy health insurance at allegedly reduced premiums. An op-ed piece in the Daily News urged people to look up how much health insurance would cost before complaining.
OK, I’m game.
For comparison, the health insurance I buy for my company has a premium of $575/month for a single person.
Under Obamacare, there are four grades of coverage: ‘platinum,’ ‘gold,’ ‘silver,’ and ‘bronze.’ The grades are defined in terms of what fraction of the aggregate medical costs of the covered population they will pay: ‘bronze’ pays 60%, up to ‘platinum,’ which pays 90%. I don’t have any information about how this resolves into practical details like co-payments, or how much one will have to pay for a hospital visit, and I don’t have a real basis for comparison with my current insurance. (I asked my insurance agent for a figure for comparison, but didn’t get an answer. I suspect, though, that my current insurance is somewhere between ‘gold’ and ‘platinum.’) There’s also a ‘catastrophic’ level, which is only available to people under 30.
There are nine insurance providers offering Obamacare policies in Brooklyn; for the purposes of this table I took the median premium as a middle-of-the-road value.
| Level | Full Premium/month (median) | Net cost after subsidy/month | |
| $40k/year income | $25k/year income | ||
| Platinum | 577 | 529 | 356 |
| Gold | 486 | 438 | 265 |
| Silver | 419 | 371 | 198 |
| Bronze | 340 | 291 | 118 |
| Catastrophic | 218 | 218 | 218 |
In fairness, many of the provisions of Obamacare that will drive up premiums in other places (no exclusion for pre-existing conditions, equal premiums for men and women) were already law in New York State. So I wasn’t expecting much change from the status quo, and I was right.
What about not carrying insurance? In 2014, the penalty will be $95 or 1% of income, whichever is greater. For an individual with an income of $40,000/year, that works out to $33/month, well below even the ‘catastrophic’ plan. In 2016, the penalty will be $695 or 2.5% of income, or $83/month for a $40,000/year income: still cheaper than real insurance.
The one good thing that I can see, for where I live, is that an individual can buy comprehensive health insurance for a premium that is comparable to an employer’s group plan. (A while back, when I was between policies, I asked about the premium for an individual health insurance plan for myself and my wife. The agent was ashamed to tell me. “Be brave,” I told her. Her shame was justified: the premium was $2500/month.)
But even with subsidies, it’s still God-awful expensive. And I still don’t understand how making everyone pay for it–mobilizing more dollars to pay for the same finite resource–will not raise costs through simple supply and demand.