The Post in recent days has shined a glaring spotlight on the hurt New Yorkers will feel from looming tax hikes, absent a fiscal-cliff deal. But just a year later, they’ll get another round of sticker shock when they see the high price of “free” health insurance under ObamaCare.
Here are a couple of examples of what New York families would have to pay for coverage when the program starts in 2014:
- A young family of four earning $35,000 a year would be at the lower end of the income level of those eligible for subsidies for private health insurance and therefore would receive a relatively large subsidy — $10,742 a year.That would be subtracted from the estimated cost of their $12,130 policy, resulting in $1,388-a-year premiums. The family would also be responsible for out-of-pocket costs of up to $4,167 a year for co-payments and deductibles that won’t be covered by the insurance. That’s a total health care bill of up to $5,555 for ObamaCare insurance for a family earning just $35,000.
- A slightly older family making $85,000 a year would be at the higher end of the income scale for subsidies but still receive help. This family would pay $8,075 a year in premiums for a $15,116 policy and be responsible for up to $8,333 more in out-of-pocket costs.The taxpayer would foot $7,041 of the health-insurance bill. But the family, earning just $85,000 a year, could face total health costs of up to $16,408 a year.
These are steep costs, and few people are prepared for them. Clearly, the promise of “affordable” insurance will miss the mark by even more than the president’s promise of “universal coverage.”
Subsidies for private insurance will come from state health-insurance exchanges. New York has agreed to set up its own exchange. One of the roles of an exchange is to determine who is eligible for subsidies and their amounts, based on which of four cookie-cutter ObamaCare health plans a citizen chooses: platinum, gold, silver or bronze.
A generous, comprehensive list of health benefits must be covered by each of the plans, as determined by Health and Human Services Department regulations. The calculations for the examples above are based on an assumption that each family buys a mid-range “silver” plan, covering 70 percent of the actuarial value of HHS’ required “essential health benefits” package. (The platinum plan will cover 90 percent of the average expected cost; gold pays 80 percent, and bronze 60 percent.)
While virtually everyone must have insurance in 2014 to satisfy ObamaCare’s individual mandate, people will have the option of paying a fine — or “tax,” according to the Supreme Court. The tax starts at $95 a year for individuals, based on income, rising to $695 a year by 2016. About 6 million people are expected to decline insurance and pay the penalty instead.Once they experience the sticker shock, of course, that number will likely soar.
Moreover, families can purchase a health-insurance policy after getting sick at basically the same price they would have paid if they had bought it earlier. So they’ll have little incentive to pay premiums when they are well.
The insurance industry is rightly concerned that the market will implode as more and more young, healthy people decline insurance, leaving more older and sicker people in the pools. But that will only further drive up costs, which, in turn, will discourage more folks from buying insurance.
With what surely will be citizen outrage over the high cost of the new mandatory health-insurance coverage, the president may find it expedient to delay full implementation and focus on real help for those with lower incomes and greater need.
Published in the New York Post, December 27, 2012.