People mistakenly believe that since the formal title of ObamaCare has the word “affordable” in it, they will be able to purchase insurance that fits their pocketbooks. The truth is that there is no guarantee for “affordable insurance” in the law. There is no defining of the word “affordable” just a couple of formulas that determine what is “affordable.”
For example, ObamaCare states that “affordable insurance” means paying no more than 8% of your annual income or 9.5% of family income if insurance is obtained through an employer. 8% is a big slice of a person’s income. The annual income is a person’s adjusted gross income which would be line 37 on a tax return.
Another formula pertains to the federal poverty level. If you are not eligible for employer or other public assisted healthcare (such as Medicaid or Medicare), you can receive premium subsidies to help you purchase health insurance through your State’s Health Insurance Marketplace. It is a matter of income. The law pegs everything at 400% of the federal poverty level. People who qualify for ObamaCare premiums and subsidies must earn below the 400% of the federal poverty level. This doesn’t include everybody because some people may be so poor that they qualify for Medicaid instead of ObamaCare.
The concept of “affordable” health insurance is good; however, ObamaCare is not “affordable” as millions of people are discovering even with subsidies. Any and all insurance plans that start after 2014 must include the Ten Essential Benefits. (See my past blog listing the ten essentials.) It doesn’t matter if you need or want the ten essentials. You must have them in a health insurance plan. For example, women who are beyond the age of having babies must still pay for maternity care. They are really paying for the women who still are of baby bearing age. This drives costs up not down because it is a “one size fits all” situation.
ObamaCare depends heavily on millions signing up for health insurance. Numbers are important. If people opt to pay the penalty rather than get insurance, ObamaCare will be in serious trouble.
It is also imperative that young, healthy adults sign up because they are the least likely to use health care services. This saves money to pay the medical bills of those who are older and sicker.
If either of these situations doesn’t develop, then expenditures to pay medical bills will be more than the revenues collected. Insurance companies will have to increase premiums, co-pays and deductibles or a combination of all three. The law allows the insurance companies to do this as long as they don’t raise insurance 10% or more a year. So in the future, insurance companies could increase premiums, co-pays and deductibles 9% year after year and still be within ObamaCare’s legal guidelines. Once in the system, how will people be able to get out of it?
What people ignore is the simple fact that all federal government entitlements are in trouble financially. Anybody who thinks costs will be contained by ObamaCare is delusional. The government cannot even run the Post Office in a cost effective manner. Why should ObamaCare be any different?