By Susan Yoo, YTT Contributor
How affordable is Obamacare?

     Federal and state health insurances exchanges, a new marketplace for purchasing coverage from private insurers, are being activated Tuesday under the Affordable Care Act, or Obamacare. 

     After three years of contentious debate since the law was passed in 2010, we may finally know if the ACA will provide health insurance that is “affordable.”
     Affordability is a combination of how much you are paying for something and how that expense hits your pocketbook. When it comes to purchasing health care, there are two ways to look at affordability: Can an individual afford it? Can the nation afford it?
Health care costs are not affordable to most people without health insurance, and the Affordable Care Act addresses several criticisms of the existing system.
     Under the new law, insurers cannot deny coverage for pre-existing conditions, nor can they charge higher premiums on the basis of pre-existing conditions or gender. Additionally, insurers cannot drop policyholders because they get sick. Those provisions offer assistance to the entire population, even people who have employer-provided health insurance.
     The ACA requires people who are uninsured to buy a health policy or pay a tax penalty. The penalty will be phased in, beginning in 2014, when the uninsured will pay the greater of $95 per adult or 1 percent of taxable income. In 2015, it will be either $325 or 2 percent of taxable income.
     In 2016, it reaches $695 per year for an individual and a maximum of $2,085 for a family, or 2.5 percent of household income, whichever is greater, up to specified limitsAfter 2016, the penalty increases annually with cost-of-living adjustments.
     People who would rather buy insurance than pay the tax can go to a website operated by their state, the federal government or a partnership between the two.  Those sites, the home of the health insurance exchanges, will provide brokerlike services, showing comparisons of different options from private insurance companies. No government-run health plans are in the exchanges.
     Individuals and families covered by employer-provided plans probably will have no need to visit the exchanges.
     The exchange marketplace will offer five levels of coverage: bronze, silver, gold, platinum and catastrophic. The bronze plan comes with the lowest premiums and the lowest coverage of the first four categories—60 percent of expenses, with an out-of-pocket maximum of about $6,000 for individuals and $12,000 for families. The platinum plan offers the highest amount of coverage—90  percent, with the same out-of-pocket limit—but charges the highest premiums.
     The catastrophic plan costs little but pays for very few medical services until your expenses reach the $6,000 limit. It functions much like high-deductible health insurance plans currently on the market and is available only to individuals up to 30 years of age.
     The federal government will provide subsidies for individuals who need financial help to buy health insurance.
     Take, for instance, a woman who works full time at a minimum-wage job. Her annual salary is $15,080. If she enrolled in a silver-tier plan and didn’t receive a subsidy, she would have an annual premium of $4,096, about $340 per month. But she would qualify for a $3,796 tax credit, dropping her annual premium to $300, about $25 a month. 

     Can the nation afford the ACA?
     Current estimates from the Congressional Budget Office put the budgetary impact – or cost—of  the ACA at $1.4 trillion over the 10-year period from 2014 to 2023. The law, however, includes measures expected to decrease government spending and reduce the federal deficit.
     These measures include higher Medicare taxes on the wealthy, annual fees for health insurers and taxes on others in the health care industry, including a 2.3 percent sales tax on some medical devices, which has been targeted for repeal by Republicans. There is also a 40 percent tax on expensive, often benefit-rich “Cadillac” health-insurance policies. The law reduces Medicare reimbursements to health care providers that provide substandard levels of efficiency and care.
     A 2011 CBO report forecast that the ACA would cut the deficit by more than$200 billion in the 10 years between 2012 and 2021.
In a 2010 report, the CBO projected a $1.2 trillion deficit reduction for the ACA’s second decade, although it cautioned that the long-term forecast cannot take into account possibilities such as policy changes or other legislative modifications.
     In the larger picture of the evolution of government, the ACA is groundbreaking in two significant ways. First, the federal government is taking advantage of the Internet to create a centralized, regulated marketplace – for health insurance, in this case. Second, this foray into online governing creates a national venue for communication with the nation’s citizens regarding health care policies, including, possibly, standards, cost and quality of care.

     What it means to you:
     To determine how much an individual or family would pay for health insurance under the ACA, use the Kaiser Family Foundation’s subsidy calculator.


     Obamacare marketplace on road to recovery?