Obamacare: For Real?

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.

9 thoughts on “Obamacare: For Real?”

  1. It just plain SUCKS.

    NO insurance for one’s health coverage should tally more than $100 per month for a premium. THat’s the facts.

    Tomorrow I am calling Oxford and unelecting my coverage: I can no longer afford the $375 a month it will cost me.

    I had a doc’s visit this AM and I told him I was unelecting. He told me to try Obamacare.

  2. I was having dinner with a young engineer from Chile. He was doing OK in the world: he worked for ruthlessly competent organization, and his bosses thought well enough of him to send him abroad on assignment. When I told him that health insurance for my wife and me cost over $1000/month, he remarked, ‘That’s more than my entire salary.’

    Over the years, the cost of health care has exploded, and for the most part nobody has cared, because insurance will cover it, and after all, ‘one’s health is priceless.’ We could get away with it, in the past, because we were once the most productive country in the world. But we aren’t anymore.

  3. Does anybody here know about the fine that will be levied starting next January, for those of us who do not have health insurance?

    First I have heard of it — is this the same fine they mentioned about a million years ago when this thing with Obamacare was first put together?

    Way back in the Eighties when I elected health insurance myself (I was laid off part time and hand none and I was back in school for classes) my full ride for it paid out of pocket was about $250 a month. Full ride for top of the line everything included health insurance through BCBS.

    Top drawer full ride health insurance should not cost more than $100 or $150 tops.

    The bigshits in the monkey suits that run these clip joints that call themselves health insurance providers were the ones who should have been chased down and made to bring the premiums way down: THAT is what we needed to do. Not provide Obamacare; go after the suits at the HI companies. Nobody wanted to do it.

    1. Seriously, if you have NO income that is documentable by W-2 or 1099, look into Medicaid. Single people without children are really screwed by low-income plans. Colorado allows you to earn a maximum of $150 a month and be eligible as a single person, but as I’ve explained previously, there is a cap of 10,000 single people covered at a time, and when someone leaves Medicaid, the next person is selected by lottery.

      New Jersey is supposed to accept funding for Medicaid expansion, so you may be eligible within a few months.

      1. I don’t know if it will make a difference but in Illinois the only childless who qualify for medicaid are the disabled. Otherwise you can’t get it and that’s the part that scares me because I can’t afford to pay.

        1. The Medicaid expansion, which becomes effective in January 2014, covers people making up to 138% of the federal poverty limit, which would work out to about $15,800 for you.

          http://articles.chicagotribune.com/2013-07-23/business/ct-biz-0723-medicaid-expansion-20130723_1_medicaid-expansion-medicaid-coverage-federal-poverty-line

          There is coverage under Medicaid now for so-called “medically needy” people in Illinois, but I didn’t find a definition. Otherwise, you are correct that only the disabled, elderly, and people with children get coverage.

  4. Under Obamacare, at least 85% of premiums has to be spent on delivering services. This leaves “only” 15% of premiums to pay for administration and profit. In my opinion, this is why we have seen health insurance costs go up in recent years. I’ve been lucky: my plan has gone up only 1-2% per year for the five years or so that I’ve had it.

    There are several ways to drive down health care costs, and few of them are desirable, though some more than others: limit what services that you can get under the plan, limit what providers are paid for the service, and increase copayments so that people are slower to get care. It is also possible to compensate based on outcomes. Another thing that can be done is to limit compensation for medical errors, which would tend to bring down malpractice premiums.

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