Kevin Drum beat me to the proper response to concern about this headline which has been worrying people.
IRS: Cheapest Obamacare Plan Will Be $20,000 Per Family
Since I follow health care policy, I really didnt understand what people were concerned about. Drum addresses the concern.
It turns out that the IRS published some final regs related to Obamacare recently, and in an effort to be helpful they provided some worked-out examples that include some assumptions about how much health coverage is likely to cost for various kinds of families. In one example, they assume that a worker can buy coverage for himself for $5,000 and coverage for his entire family of four for $20,000. They then work out the tax implications of all this.
So is this unusual? Not really. The average cost of healthcare coverage for a family is currently about $16,000, and by 2015 (the base year for the IRS examples) that will probably be around $18,000 or so. And that’s for employer-sponsored plans. Individual plans are generally steeper, so $20,000 isn’t a bad guess. It might be a little high, but not by much. And the family in question will, of course, be eligible for generous subsidies that bring this cost down substantially, thanks to the Affordable Care Act. They won’t actually pay $20,000 per year.
If health insurance costs went up 5% per year, it would cost about $18,000 in 2015. At 6% per year, $19,000. Health care costs have been rising a bit slower with this slow economy, but they have generally increased well over 6% per year. What the IRS has told us is that health insurance costs a lot. They are projecting costs to be about the same as if we did not have the ACA. Which is the weakness of the bill. While it makes insurance available to many more people who could not afford it before, It did not do enough to reduce costs. We need a second round of health care reform that will concentrate on costs. It does not bode well for its success that so many people are unaware of the current costs of insurance and how quickly costs have been rising.