Cost of ObamaCare: Obama Care Cost
What Does ObamaCare Cost?
What is the cost of ObamaCare? ObamaCare, Obama’s new health care law, has a massive impact on health care costs. ObamaCare’s cost is estimated at up to net cost of $1.1 trillion dollars over the next 10 years. Although Obamacare’s net costs are in the trillions, the law actually reduces the growth in health care spending by tens of billions each year, reduces health care costs for many Americans, helps to insure tens of millions and is estimated to result in an overall net decrease of the deficit.
Obamacare is projected to cut the national deficit by over $200 billion during it’s first 10 years and over $1 trillion over the next two decades. This helps offset the up-front cost of ObamaCare. Please be aware the cost estimates are changed on a regular basis and are often quoted as being between $1 and $2.6 trillion. Our cost estimate is taken directly from the front page of the official CBO report on ObamaCare’s costs. ObamaCare is paid for through collected taxes, penalties, spending cuts and reformations to the health care industry.
What Will ObamaCare Cost Me?
It has been estimated that a basic “bronze” level health care plan is estimated to cost the Average American between $4,500 – $5,800 without cost assistance. Please be aware location, income, smoking status, weight and age all affect the cost of your health insurance premium. The bronze plan covers 60% of out of pocket health care costs and offers basic coverage. Plans range from the basic “Bronze” (60%) to “Silver” (70%) more expensive “Gold” (80%) and “Platinum” (90%) level plans. High-end plans carry a 40% excise tax which helps pay for the program.
(Cost of ObamaCare Image Public Domain)
How Much Does ObamaCare Cost The Average American?
The cost of ObamaCare plans depend on a number of factors including: the market your purchasing insurance in, your health status, the quality of the plan and your income, to name a few. Plans range from bare-bones “Bronze” plans to high-end “Platinum” plans. “Bronze” plans for individuals are expected to cost between $4,500 and $5,800 a year in 2016. But if you make less than 4 times the Federal poverty line ($11,170 in 2012), you’ll pay less by virtue of receiving tax credits. Someone making up to 133% of the FPL will get credits so that his net payment will be only 2% of income, while those making 300% to 400% of FPL will pay 9.5% of FPL.
Please note that while ObamaCare regulates insurance companies, you will still be purchasing private insurance (unless you choose to pay the penalty or are covered under Medicaid/Medicare).
Costs of ObamaCare for Small Businesses
While most people and small businesses in the United States will benefit from Obamacare, Obamacare will cost employers with over 50 employees a penalty if they do not choose to provide their workers with affordable and reliable health care. Individuals will also pay a tax penalty if they choose not to purchase insurance to help offset costs. The tax is $2000 per worker or $3000 if they buy insurance through the exchange.
This system is like the current unemployment tax already in effect, which requires American businesses to pay a modest and fair tax to aid the state run unemployment and workers compensation programs. With ObamaCare, the penalty helps pay for workers who will buy insurance through the exchange or need emergency services, both which will drive the cost of health care up for the rest of us.
Who Qualifies for Help With ObamaCare Insurance Costs?
The following chart will help you to find out who qualifies with help with insurance costs on the health insurance exchanges under The Affordable Care Act.
|Health Insurance Financing||Individual Annual Income||Family of Four Annual Income|
|Medicaid health coverage, if your state decides to offer it||Up to $15,302||Up to $31,155|
|Help to pay your premium, if you buy in your state’s online marketplace||Between $11,505-$46,021||Between $23,425-$93,700|
|Subsidies for out-of-pocket costs, if you buy in your state’s online marketplace||Up to $28,763||Up to $58,564|
Many American families will see a cost reduction under ObamaCare and many more will qualify for Medicare and Medicaid due to the expansion of the program. When the online marketplace opens on OCT 1st, 2013 an easy to use form, cost calculator and an easy to use comparison of insurance options will help you pick the right plan for you and your family.
Employers with under 25 full time employees may qualify for tax credits and tax breaks.
In order to ease the burden of Obama Care’s, cost 19 million Americans will receive tax credits to help pay for healthcare.
If you are making over 400% of the poverty line, you can expect to pay just about what you do now, but receive better coverage. If your income is below the poverty line you will most likely save on health insurance costs. Individuals making between $50k and $75k annual gross income(9% of Americans) who don’t want insurance and will have to pay the 2.5% penalty (by 2016) will most likely be hit the hardest.
See our page on Calculating Premium Tax Credits for detailed information on how the process of calculating credits works.
Cost Assistance for Insurance Purchased on the ObamaCare Health Insurance Exchange
Americans will be able to purchase 4 tiers of health insurance on the health insurance exchanges. Plans range from a “Bronze plan” with 60% of medical costs paid by the health insurance company, “Silver” 70%, “Gold” 80%, “Platinum” 90%. Those between 133% of the federal poverty level and 400% will be eligible for cost assistance. The following chart will give you an idea of what type of cost assistance is available for an average family of four on the “Silver plan”.
|Income % of federal poverty level||Premium Cap as a Share of Income||Income $ (family of 4)||Max Annual Out-of-Pocket Premium||Premium Savings||Additional Cost-Sharing Subsidy|
|133%||3% of income||$31,900||$992||$10,345||$5,040|
|150%||4% of income||$33,075||$1,323||$9,918||$5,040|
|200%||6.3% of income||$44,100||$2,778||$8,366||$4,000|
|250%||8.05% of income||$55,125||$4,438||$6,597||$1,930|
|300%||9.5% of income||$66,150||$6,284||$4,628||$1,480|
|350%||9.5% of income||$77,175||$7,332||$3,512||$1,480|
|400%||9.5% of income||$88,200||$8,379||$2,395||$1,480|
|In 2016, the FPL is projected to equal about $11,800 for a single person and about $24,000 for family of four. Use the Kaiser ObamaCare Cost Calculator for more information. DHHS and CBO estimate the average annual premium cost in 2014 to be $11,328 for family of 4 without the reform. Source: Wikipedia|
ObamaCare Cost for the Average Family
No one truly knows what ObamaCare will cost. Common estimates for an average family of 4 range from around $7,000 a year to $30,000 a year depending on factors such as age, health status and region. To get a more in depth look please refer to our sections on the Health Insurance Exchanges, ObamaCare Premiums, ObamaCare Taxes and our study of the recent IRS report on ObamaCare.
Cost of ObamaCare: What is Considered Affordable Health Insurance?
Currently, the average American family pays 20% of their income for health insurance. ObamaCare deems insurance that costs 8% of a family’s income as “affordable”. The average family’s costs are projected to decrease between 7 and 9% due to ObamaCare. We have seen costs range from free to an excess of $30,000 for an older, high-risk, high- income family of 5 in a state with high regional costs.
Graph represents combined health care costs for employees and employers. Employer Based Health care costs for a family of four have doubled in less than a decade from $9,235 in 2002 to over $19,000 in 2011.
ObamaCare Cost Calculator
Use this ObamaCare Cost Calculator from the Kaiser Foundation to get an idea of the estimated cost of ObamaCare for you and your family after subsidies. Please be aware this is a basic estimate for the cost of a “Silver plan” (the second tier plan, as opposed to the basic “Bronze plan” on the Exchange). Also note, the total cost is greatly affected by “regional cost factor” (increasing or decreasing the premium by 20%). Further subsidies may be available depending on a number of other factors.
Please note that the ObamaCare Cost Calculator uses modified adjusted gross income and not total gross income or net income to figure out cost assistance and insurance cost estimates of the “Silver plan”
Also note that as little as a $1 difference in income can exclude you from receiving a subsidy.
Check out the CBO’s report on the effects on direct spending and revenues for health care programs to understand how ObamaCare helps to reduce the growth in health care spending by tens of billions each year.
ObamaCare Cost for The Federal Government
Obamacare’s net cost is estimated to be $1.1 trillion. This number is an updated estimate by the Congressional Budget Office (CBO) 2012. However, a number of factors including taxes, fees and penalties will reduce the federal deficits by $210 billion over the 2012-2021 period.
Gross additional costs of ObamaCare include $1.5 trillion for Medicaid, the Children’s Health Insurance Program (CHIP), as well as tax credits and other subsidies for the ObamaCare exchanges and small businesses, among other things. These costs are offset by penalty payments, health care cost cuts, new health care industry taxes, and a new excise tax on high-premium insurance plans.
If you want to know more about the cost of ObamaCare check out the CBO Budget 2013-2014 or our resources page for more official documents detailing ObamaCare’s costs and how they fit into the US budget..
How Do We Pay For ObamaCare Costs?
Many sections of the Affordable Health Care Act cover the cost of Obamacare and how we will pay for national healthcare reform over the next decade. Here are some of the measures that will help pay for the Obama’s healthcare reform:
First, in order to help pay for the cost of Obamacare businesses and families will pay an additional .9% tax on taxable income and 3.8% capital gains exceeding $200k / $250k.
ObamaCare also cuts $716 billion from Medicare and invests it back into Medicaid, Medicare and the healthcare system, so a lot of the money is coming from cutting waste, not just in Medicare, but in the health care industry as a whole.
There is also a $63 dollar fee on insurance plans (it decreases every month until 2017) that covers high-risk pools for pre-existing conditions.
Most of the other funding for ObamaCare comes from taxes on the healthcare industry including a tax on companies who manufacturer non-generic drugs and some medical device manufacturers. Read the complete list of ObamaCare taxes and their costs.
Most American families, those making under $250k will see up to a $4k reduction in their healthcare costs after tax credits. Of course, the more you make the less you save. The quality of your healthcare and the security of knowing you can’t be dropped for being sick or denied for a pre-existing condition is a protection most Americans couldn’t rely on before ObamaCare.
If you choose not to purchase insurance (and can afford it) there is a 1% tax in 2014, it raises to a 2.5% tax in 2016 and adjusts for inflation. This tax is the “income tax” you may hear about, and is the only income tax hike in ObamaCare and the only tax most Americans will pay.
In order to ease the burden of Obama Care’s cost, 19 million Americans will receive tax credits to help pay for healthcare.
The Cost of Not Having ObamaCare
The cost of not having ObamaCare?: In a study by FamiliesUSA reported that each week 502 Americans die due to a lack of health insurance. That is 2,175 Americans dead each month. The true cost of Obamacare isn’t in healthcare costs and taxes, it’s in the lives of Americans like you and me.
The same study showed that between 2005 and 2010 that the number of people who died prematurely due to a lack of health coverage a year rose from 20,350 to 26,100.
(These figures are from 2010, Obamacare was signed on Oct. 1, 2010 and made its first steps toward providing quality affordable health insurance to individuals and families struggling with rising health care costs.)
So while there are costs, it is both economic reform and healthcare reform that will decrease payments of many Americans and only impact those who can afford to pay a little more.
The cost of not having ObamaCare isn’t just a human issue. ObamaCare helps to reduce health care spending. Currently the $2.8 trillion U.S. healthcare system costs nearly $9,000 a year for every man, woman and child. Growth in health care spending has long outpaced inflation by wide margins, and following the U.S. recession of 2008 and 2009 has contributed to weak job creation, low expansion of wages and a high level of personal bankruptcies.
The True Cost of ObamaCare Health Care Reform
So what is the true cost of ObamaCare? ObamaCare costs what people can afford. For many Americans this means better coverage for less money. For many it means coverage over no or poor coverage. For others it means paying a little more to ensure healthcare for millions of uninsured Americans. Let us know what ObamaCare costs you and we’ll share your story.