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.
“They are projecting costs to be about the same as if we did not have the ACA. Which is the weakness of the bill. ”
Obama’s promise was that Obamacare would cut the insurance cost (by 3000%), and cut federal spending on medical care. It appears that Obamacare broke all the promises…
“We need a second round of health care reform that will concentrate on costs. ”
Obama tried this with Obamacare, and he failed. I propose something better – given that Obamacare is a failure, let’s get rid of it. That would be our second round – clean up after the first round.
” let’s get rid of it.”
The right still has no plan for health care reform.
Steve
I have a plan: GET THE GOVERNMENT THE HECK OUT OF THE HEALTH INSURANCE AND THE HEALTH CARE DELIVERY BUSINESS.
Also – please explain how the present system – charging high prices to those who can pay to cover the cost of those who cannot – is different from the ACA – which charges high prices to those who can pay to SUBSIDIZE a policy for those who cannot afford the cost. What am I missing here?
Sure. In the first case, there is actually a lot less cost shifting than you seem to think. There is a large body of research on this. What cost shifting does occur pays towards emergent care. Those who cannot pay do not obtain follow up care. They have more morbidities and die at higher rates. In the case of the ACA, subsidies will pay for more comprehensive care.
Steve
What’s your plan, Steve? Rubber stamp everything Obama does? I’ve never seen anyone more in the tank than you. Are you sure you’re not a journalist?
I have said here and elsewhere many times that I would have preferred a plan along the lines of Wyden-Bennett. One of the biggest shortcomings in the ACA was not separating insurance from employment. The ACA encourages the selling of insurance across state lines, something wanted by the GOP, but it doesnt do anything to make that work. Just sell insurance across state lines and docs will double their incomes. What you need to do is eliminate or reduce the state mandates that actually drive up costs. The ACA encourages competitive bidding. We should expand that into Medicare. The ACA promotes transparency, but not enough. That needs to be increased. The ACA allows states to experiment with plans outside of the ACA. Any of those red states that believe in markets (LOL) could try a plan (as if). The ACA should go beyond this and design market based plans that would cover a region of 3 or 4 states, then offer it to the states that might be interested, at least by rhetoric.
Heck, we could even revive the PCA (remember that? I do. I read it, did you?) and integrate some of its ideas into the ACA. What we cannot do is assume that the GOP will act on reform. They have shown no inclination to do so, just buy votes with large unfunded spending bills.
Steve
Oops, forgot about the SGR. They did pass that. Of course they keep voting against using it. I kind of think that doesnt count either. YMMV.
Let’s don’t forget, that’s $20,000 for the cheapest plan under Obamacare. Or forget that Federal employees, certain unions and certain others are exempt from Obamacare. Or, that Steve doesn’t care about the rest of us. As a doctor, he’s got all the coverage and money he’ll ever need, screw the peons.
But is having no plan worse than having Obamacare? Comrade Obama proudly claimed that cutting the federal cost of health care and cutting the cost of insurance premiums are two primary goals for his plan. Even you, the strong supporter of Obamacare is not forced to concede that Obamacare failed to deliver – and in fact may have made things worse. The cost of health care to the federal budget goes up, and the premiums are getting more costly. Clearly, Obama made things worse for most of Americans. So, let’s get rid of it, before it gets even worse.
From the outset, the ACA’s primary goal was increased access. In every country with first world quality and lower costs than we have (they all have lower costs), getting everyone insured first was necessary before costs could be addressed.
“The cost of health care to the federal budget goes up, and the premiums are getting more costly.”
Actually, as I show above, we are heading to where prices would be if the ACA was not enacted, but that is an IRS guess. Also, the parts of the ACA that might bring down costs are not in effect yet. Why not keep the ACA and modify it to lower costs? WC wants catastrophic insurance. It is already in the ACA, but is limited after age 30. Add it in. There are a lot of good reasons why it wont probably wont work, but who knows. Give it a try.
Steve
Obamacare makes the cost problem far worse by banning cost-effective solutions like catastrophic insurance, and adding expensive mandates.
It was written by lobbyists for big pharma and other deep pocket industries.
Can you cite some evidence that catastrophic insurance has reduced costs somewhere? If not, and you choose to make an economic argument, please make sure you understand the demographics of health care spending.
Steve
The burden of proof is on the command-and-control, one-size-fits-all authoritarians who think they can make health care decisions better than patients and doctors.
Ummm, isn’t Steve a doctor?
“Given that Obomacare is a failure, lets get rid of it.” It hasn’t even gone into effect yet!! Stop your rabid crying about everything (Hyphenated-American)and offer real live solutions (and not that the perfect utopia was the US “about 100 years ago”.)
Slammer, even staunch Obamacare cheeleaders like Steve are forced to concede that Obamacare failed to fullfill its promise, and most likely, the cost of healthcare to the federal budget will be higher because of it, while the cost of premiums will not be lowered. Now, given this, why would anyone in the right mind support the failed Obamacare?
P.S. If you can read, then you would notice that I never claimed that US was a perfect utopia 100 years ago. People had much more liberty than today, and US economy was growing fast, but there were undeniable issues (Jim Crow) to deal with. Obamacare though, instad of cutting federal cost of medical care and private insurances, made things worse. Or, put it differently, Obamacare is not a solution – it’s the anti-solution. So, why would anyone who cares about America support it?
“People had much more liberty than today”
Women? Life expectancy in 1910 was 48 for a male. You had the liberty to die a lot sooner. AFAICT, the main increase in liberty you would have had in 1910 was lower taxes. Do you think people living then would be willing to pay higher taxes in return for 30 years increase in life expectancy?
Steve
Steve, this is a pretty confused answer…. For example, the life expectancy at birth in 1860 was 41.8 and in 1910 (50 years later) it was 53.1 years – an increase of 11.3 years – all somehow achieved through the civil war (which was bloodier for US than WW2) and without any government inteference. In the next 50 years, the life expectancy went up by 16.6 years (1960). But after the welfare state was built in the 1960ies, Medicare, Medicaid, welfare – the life expectancy in the next 50 years (2012) went up by 8.3 years, even though US did not experience any major conflicts (no WW2, let alone civil war).
So by your own logic, liberty means faster rates for improvement of the duration of our lives, and when we give up liberty, we do give up life. Pure statistics, comrade.
Anyway, I am wondering how you could be claiming that taxes prolong life if data clearly contradict this conclusion. I am not sure I would want to be your patient, seems like you are careless with facts.