Thursday September 26, 2013, 8:05 am
Photo Credit: Image by Shutterstock
There are many reasons why signing up for Obamacare is a smart choice, but the biggest one is the last thing its Republican critics want to broadcast: the out-of-pocket monthly cost.
On Wednesday, the White House published the most detailed analysis yet of the cost of Obamacare coverage. The policies will cost anywhere from one-quarter to one-third less than what’s now available on the private insurance market. But that’s not what upwards of 25 million households will end up paying each month. It’s far less. Depending on their income, the cost could drop by another one-third to two-thirds because Obamacare has tax credits—federal subsidies—for household earning up to 400 percent of the federal poverty line that are directly paid to insurers each month.
The subsidies and related administration will cost $19 billion in 2014, the Congressional Budget Office has estimated. About 25.7 million people could be eligible for the income-based discounts, a Families USA study found, which will lower actual coverage costs by many thousands of dollars per policy-holder.
Consider the following two examples from the Health Insurance Marketplace Premiums for 2014 issue brief released Wednesday by the White House and the U.S. Department of Health and Human Services. In 36 mostly red states, HHS will be enrolling people via online applications at healthcare.gov because local Republicans have refused to set up state-run exchanges. For these states and their largest cities, HHS listed premiums and subsidies called a tax credit. The credits go directly to insurers monthly; they are not refunded in a lump sum after filing one’s yearly taxes.
Obamacare offers four levels of health plans, called Bronze, Silver, Gold and Platinum. They respectively cover 60, 70, 80 and 90 percent of medical costs. It also offers a low-cost catastrophic plan for young people, but that does not get the additional subsidy.
In these 36 states, a single 27-year-old would pay an average of $214 a month for the lowest-cost silver plan before the tax credit. After the credit is applied, it would cost $145 a month, which is an additional 33 percent discount. The federal government would pay the difference of $69 a month directly to the insurer, which, is a boon for their business but also saves that 27-year-old $828 a year in out-of-pocket expenses.
For families with children, the savings could be thousands a year. A family of four with an income of $50,000 would find the lowest-cost silver plan averaging $774 a month, the HHS analysis said. But they would receive a $492 monthly credit, which is 64 percent off that price, and end up paying $282 a month. That’s a $5,904 annual subsidy.
The subsidies would be given to housholds earning between 100 percent and 400 percent of the federal poverty level. In 2013, that’s individuals makig $11,490 to $46,000; two-person families earning between $19,530 and $78,120; and four-person families making between $23,550 and $94,200. These thresholds are revised yearly by the government.
AlterNet contacted the HHS press office on Wednesday to verify the way these subsidies would work and the potential savings involved, because so much of the Obamacare media coverage has not mentioned the combination of cheaper policies and additional subsidies. HHS spokeswoman Joanne Peters confirmed the savings and subsidies paid to insurers.
There is a lot that remains to be seen about how Obamacare will unfold, as early analyses of health plans offered by insurers suggest that they will not give policyholders as many options as the plans those same insurers sell to companies for employees. However, these truly dramatic savings—from the government’s negotiated costs and additional income-based subsidy—are behind President Obama’s remarks on Tuesday that young people who enroll would pay less each month than some do for their cellphones.
“The main message we have—and we’re using social media, we’re talking to churches, we’re talking to various civic groups—and what we’re saying to people is, look, just go to the website yourself. Go to healthcare.gov; take a look at whether this is a good deal or not and make your own decision about whether this is good for you,” President Obama said.
These savings explain the GOP’s opposition, the President said at an event with Bill Clinton launching the White House’s PR campaign to get uninsured people to enroll.
“I think the resistence that we’ve seen ramp up, particularly over the last couple of months, is all about the opponents of healthcare reform know [that] they’re going to sign up,” Obama said. “One of the major opponents, when asked, ‘well, why is it that you’d potentially shut down the government at this point just to block Obamacare,’ he basically fessed up. He said, ‘Well, once consumers get hooked on having health insurance and subsidies, then they won’t want to give it up.’”
The Nation’s Top Insurance Salesman
Progressive economists like Dean Baker have written that Obamacare is better than most people think, even if it contains elements that bother progressives, such as not creating a non-profit, public system like many Western democracies, or imposing cost controls.
All that is true: Obamacare expands the nation’s private insurance system, and gives the insurance industry millions of new customers and billions in federal subsidies to deliver the healthcare they need. But it also achieves a range of progressive policy goals that cannot be discounted, and were not forthcoming without a push from government.
On October 1, people without employer-provided coverage will be able to start signing up for Obamacare. Those policies will take effect on January 1. But the law has been on the books since 2010, when Obama signed it, and already has changed health insurance norms. The president described these in an hourlong Q&A with Bill Clinton Tuesday.
The law already prohibits insurers from imposing lifetime coverage caps. It requires that they spend 80 percent of premiums on healthcare—not on profits. It allows people to stay on their parent’s health plans up to the age of 26. It provides additional discounts to seniors for prescription drugs under Medicare, the government’s health program for the elderly.
Looking ahead, it prohibits insurers from not covering people if they have a pre-existing condition. Because nearly everyone gets sick with something serious by the time they are middle-aged, that industry practice prevented most people who lost their jobs from getting new coverage. Instead, they had to pay 112 percent of the premium cost paid by their ex-employer through a program known as COBRA to keep their healthcare.
That employer-based coverage model trapped people in their jobs. Obamacare ends that dependency because individuals and families can now buy coverage through government-run Obamacare pools. And most people in lower- and middle-income brackets will find policies whose listed price is a quarter to a third lower than their employer paid—and that’s before the income-based subsidies kick in.
“The insurers put in their bids to participate in these marketplaces,” Obama explained in New York on Tuesday. “It turns out that their rates are up to 50 percent lower that what was available previously if you just went on the open market and you tried to get health insurance. Fifty percent lower in this state. California—it’s about 33 percent lower. In my home state of Illinois, they just announced it’s about 25 percent lower.”
There is one big exception to this rosy scenario that will unfairly impact an estimated 5.5 million truly poor people, thanks to Republican governors and the U.S. Supreme Court.
Obamacare expanded Medicaid’s eligibility to all people whose incomes were under the federal poverty line. (Medicaid is the state-run program for the poor and people with disabilities.) The Supreme Court ruled that states could opt out of Obamacare’s Medicaid expansion when it upheld the law. Twenty-two red states have done so, according to the Urban Institute. As a result, there’s a coverage gap in these states because people’s sub-poverty line incomes are still too high to qualify for Medicaid, but not high enough to trigger the tax credits to help them buy policies in the Obamacare marketplaces.
There’s other grumbling about Obamacare that’s been stoked by the GOP. The GOP opposes the individual mandate that everyone has to have a healthcare plan, and they also oppose what they say are new costs for businesses with more than 50 full-time employees, which would be required to provide coverage for their workers.
Obama said Tuesday that everyone has to have a plan for the economics of this reform to pencil out. Healthcare accounts for a sixth of the U.S. economy. The savings that should result from the law—which also tracks costs and benefits in ways that have never been done before—will help bring down the federal debt and fortify other retirement security programs, Obama said. Moreover, he said big employers also would get tax subsidies—on par with what’s given to individuals—for covering workers under the law.
“Up to 35 percent of the premiums for each employee would be a tax benefit—a tax credit,” he said. “But if you still aren’t providing health insurance for your employees after that, then we’re going to go ahead and penalize you for it.”
The next few weeks and months will see President Obama become the nation’s insurance salesman in chief. Looking ahead, there may be gripes about the coverage provided by the private insurance industry’s new plans. But it’s clear that millions of American who lack healthcare and coverage will now have a way to get some.
As Obama concluded Tuesday, “Do we want to to continue to live in a society where we’ve got the most inefficient healthcare system on Earth… I think the answer is no.”
By: Steven Rosenfeld | Alternet |
Steven Rosenfeld covers democracy issues for AlterNet and is the author of "Count My Vote: A Citizen's Guide to Voting" (AlterNet Books, 2008).
Thursday September 26, 2013, 1:18 pm
Here in Florida, the Republicans and the Gov are doing everything they can to keep info about the plans , how to sign up and benefits out of the publics hands. The skunk Rick Scott has even made it unlawful to hand out information about it in Docs offices etc unless a patient asks for it first. However the misinformation spread by the Republicans is everywhere. They are really afraid that if people sign up and are happy they will be on their way out, so they are doing every underhanded thing they can think of to mess things up. That's disgusting, they have no shame.There are 6 million uninsured here who really need the ACA.
Thursday September 26, 2013, 1:35 pm
Here in NC they have shafted the poor by having free clinics close because funding was pulled. Now, because of stupid republican dirty tricks, we have thousands of people who now have no health care and will be forced to use emergency rooms when they get sick and we all know that will cost us all even more.
Thursday September 26, 2013, 2:05 pm
Thank you for this article and the explanation, it is very informative, I also loved all of the comments that I have read so far, you all deserve green stars. I am from Louisiana, and our repulsive, republican tea bag leader and the state house and senate have all tried to keep us from getting this great opportunity, to apply for an affordable insurance and health care plan. Being retired and on Social Security only, I am excited to look into getting a supplement that I can afford, in case I become seriously ill. I do not want to go into assisted living or nursing home, I want to stay in my own home, with my own doctors, my family and I deciding my treatment...period. I am not going to let the money bag koch brois. scare me off. I want to know what I qualify for, and how much will it cost, and what it covers, so I am looking forward to 10/1/13
Not a chance that this will not be under constant and unrelenting attack for years to come. We have have had Social Security since 1937 (?) Medicare since 1965 and every single year the republicans whine and bemoan the fate of the country. Those two programs are darn near flawless, nothing that comes out of Congress is flawless, but the those two are close.
Thursday September 26, 2013, 4:49 pm
I hope Obamacare works I always comment that USA healthcare is a disgrace
This sounds like it can work but I do not know enough about it
if it does work it most certainly should remain Obamacare
Thursday September 26, 2013, 5:23 pm
For those of you in states making it hard to get information, go to:
or call 1-800-318-2596 for more information (from Senator Carol Levin)
There is no reason for it not to work. If you teach you probably have a cafeteria type of insurance, they offer some companies you choose the one that fits your needs. Many companies now offer the same thing. Obama care is not that much different. More people selecting and various types of insurance to meet your needs and price range. I just do not see what all fuss is about.
Thursday September 26, 2013, 7:25 pm
Kit, it does not work that way now!!! I don't work. No income. I was given ONLY one choice out of every plan available to people from both major insurnace companies .... ONE PLAN ONLY was available to me. I fought and foughgt because this made no0 sense at all. ONE PLQN ONLY...NO CHOICE FOR ME. Unemployed, the popular plan most got was if they even worked a week in the past year and that was the one that was based on your income and from $250-$350 a month. It's called Healthy NY for people in NY state. I DID NOT FIT ANY PLAN EXCEPT ONE> I had no choices what so ever and it costs over $13,000 yearly with the worst coverage. NO ONE believes there were no other choices including me. there always were choices of at least 3/4 plans.not many for me but 3/4 usually. THERE is no selcting or has not been any options for me for 1 year now!!! I don't even believe this obamacare will be available to me until I speak to them next week on OCT 1st . People are not informed of this past year and how the insurance companies here in NY state have worked. I'm not even going to be able to handle talking to the 'Echananges" on Oct 1st. I wont have a roof over my head in 1 1/2 years due to medical insurnace and the worst coverage /plan there is. There were NO choices for me KIT!! of course I am responding and a mess over the heaslth care situation and NO money to live. PLease Kit do not think i am mad or talking to you specifically. I saw that you said it's like now how we choose what ploan we want or suits us best.... NO CHOICE FOR ME! Actually ,my health car and the medical insurance is killing me in a literally painful way. Literally ,healthwise they are killing me. I wont go into that detail. I never heard of No choices in my life with major medical companies. I wont even probably be able to handle it next week. The fuss is I have had no choice in any plan at all... that's what I saw you posted and of course there should have been choices even if 3 choices.
Thursday September 26, 2013, 9:25 pm
" I just do not see what all fuss is about. "
Kit, I will tell you what the fuss is about - loss of liberty.
Mandating participation is a move toward socialism, communism, totalitarianism. This country is supposed to be about individual freedom and responsibility. If you want to create a group to take care of one another - great, go ahead. The idea you can force everyone else to join the commune is what is so troubling. That, and people feeling entitled to the fruits of others' labor - this is stealing, not "getting your fair share." A peaceful society is a voluntary one. Obamacare is not voluntary, and therefore it is not peaceful.
Friday September 27, 2013, 4:10 am
Your right Kit, many people will benefit. But then again, that money has to come from somewhere, it's probably not going to be the wealthy so that leaves the middle class. Now the question is how will that affect the US economy. I'm not against change, but I also don't think all change is good (and I am a consultant).
Friday September 27, 2013, 7:46 am
Thanks Kit for this much needed information. Luckily, my husband and I are insured under Medicare and through his union with an indemnity plan. Thus far, besides our monthly premium, we pay nothing for any medical visit or procedure. This may debunk the rhetoric of how horrible unions are by companies like Wal-Mart who refuse to pay their employees a living wage.
For those without health insurance Obamacare is a wonderful thing, I am fully behind it. How can we as a nation sit back knowing people can't afford to see the doctor or take needed medication? The GOP doesn't care, they have no plan other than "health savings accounts" which are when you put your own money into a account to help defray medical costs. That is not a good idea for the millions who don't make enough money to have a health savings account. The R's don't want because they cannot stand for anything Obama puts through to work, they failed at making him a one time President and still are wallowing in their own stew of lies and propaganda.
Friday September 27, 2013, 8:05 am
If you have a car insurance is required in most states so your costs are not pushed onto others--this is not really different in keeping people from making others pay for their costs. Helmet laws are based on the same premise--you do not have the right to make others pay for your choice on putting yourself at risk. Personal freedom always ends at the point where you infringe on others' rights.
Friday September 27, 2013, 8:35 am
Dear Kit ; I came back today to see what kind of response you were getting from the members. It appears that most members are understanding that this insurance is just like, car, home, or flood insurance it is something you need and it will not be that expensive, but just like everything else regarding the republican;s hatred for our President. There will be some that refuse to be helped. I love the way you answer all of their doubts and questions. Keep up the good work, We can only make good decisions with good information. I hereby award you a green star for outstanding reporting.
Thank you, Kay. I'm not an expert on insurance or the insurance exchanges, but I try to find the information to help others learn as I learn. J L is also working on the same idea, to help others get as much information as we each can offer from the web-sites.
Now to address Sara V and John S, and I hope this answers or addresses your concerns:
Obamacare is projected to cut the national deficit by over $200 billion during it's first 10 years and over $1 trillion over the next two decades. This helps offset the up-front cost of ObamaCare. Please be aware the cost estimates are changed on a regular basis and are often quoted as being between $1 and $2.6 trillion. Our cost estimate is taken directly from the front page of the official CBO report on ObamaCare's costs. ObamaCare is paid for through collected taxes, penalties, spending cuts and reformations to the health care industry.
What Will ObamaCare Cost Me?
ObamaCare will cost most of us between 3% and 9.5% of our income after cost assistance. Cost assistance is give to low-to-middle income Americans who shop on the Health Insurance Marketplace (an online marketplace for insurance that is established by ObamaCare. See our guide to learn more about signing up for ObamaCare).
Here are some quick bullet points on the cost of ObamaCare:
• ObamaCare is slang for our new health care law the Affordable Care Act or ACA for short. The law doesn't sell health insurance, it just creates a marketplace for Americans to buy regulated, subsidized private insurance.
• Everyone has to obtain health insurance by January 1st, 2014 or pay a Shared Responsibility Fee
• If you don't have coverage, you can use the new Health Insurance Marketplace to buy a private insurance plan.
• Many Americans will qualify for lower costs on monthly premiums and out-of-pocket costs through the marketplace.
• Cost assistance is based on income.
• Most young people and low-income Americans can get free or very low cost quality health insurance through the marketplace.
• You can only get cost assistance from the Health Insurance Marketplace!
• The average American will pay between 3% - 9.5% of their income on insurance after cost assistance.
• Insurance costing 8% of your income is considered affordable insurance for individuals. 9.5% is considered affordable for job based insurance.
• If you cannot find affordable insurance, after cost assistance, you may be exempt from the fee.
• ObamaCare says health insurance companies can price your insurance based on location, age, weight and smoking status, but not on health status or gender.
A recent study showed the price for a 21-year-old buying a mid-range policy will average about $270 a month before cost assistance. With cost assistance that 21-year-old could pay much less. Over 80% of 21 year olds in the US will be eligible for cost assistance, meaning they will be paying up to 1/10th of that $270 cost per month for quality health insurance and many may even get it for free.
Still have more questions about Obama care? --- Call toll FREE -- The helpline, 800-318-2596, is available 24/7 and can provide assistance in 150 languages. There is also a new live-chat feature on HealthCare.gov.
Please do go to this site or call the 800 number for your own needs:
Friday September 27, 2013, 9:44 am
If this is socialism, we could use a little socialism in this country. The top 1% certainly has good health insurance because they can afford it. Of course, among these 1% are also those who have made much money off other people's troubles - and who have taken large "donations" from insurance companies and drug companies - and who know nothing about choosing between your medicine or your house payment. Not having to worry about health care seems very peaceful to me.
Socialism seems to be peachy keen if that socialism is MORE subsidies for the wealthiest and corporations, and redistribution is also okay, as long as that redistribution is from the poor and workers up to the wealthy.
Friday September 27, 2013, 12:24 pm
Maybe so, but I am still not satisfied with anything less than a public option and would prefer single payer or universal coverage our health care system is barbaric and leaves out the poor and sick.
Friday September 27, 2013, 5:44 pm
S & N, thanks, my friend. Obamacare is a good plan. Can it be better? Yes, but at the time, there was no help at all from Rs in the Senate. They fought every word, without ever, and still have never even read the Bill. Even though it was online for them to read it. It took 7 months to get the Bill passed. When there are more Dems in congress, more can be done with the Health Care Bill. It will even be possible to get Medicare for all, but not with the Tbaggers in congress. So be sure to Vote The Republibaggers out if you want a better Bill.
Saturday September 28, 2013, 5:59 pm
EVERYONE will be better off with THE ACA--- it will benefit our whole society. Best thing to come along in a long time. Since Medicare/medicaid & Social Security !!!