Opinion: Obamacare Helps Those Without Company-Subsidized Health Insurance

Submitted by gsbaird on July 30, 2013 - 1:00am

The Affordable Care Act seeks to level the playing field for those workers in our society who do not have access to company-subsidized health insurance plans.

The federal government is providing the subsidy not available to those people from their employers. And the Congressional Budget Office recently issued an updated analysis confirming its initial conclusion that the Affordable Care Act will not add to our budget deficit.

I think this law has been grossly misrepresented by opponents and is misunderstood by many who do not have the time to listen to anything but negative sound bites.

Nearly 160 million people under age 65 in America obtain their health coverage through the workplace, according to the Kaiser Family Foundation.  In 2011, the average premium for family coverage was $15,073 of which the employee paid $4129 or 27 percent of the premium. 

Because there is no tax on the premium, the employee saved $1,153 of Social Security and Medicare withholding and another $2,260 of income tax (assuming the 15 percent tax bracket) for a total additional subsidy of $3,413. If the tax savings is subtracted from the employee’s portion of the premium, the employee received coverage for his family for $716 yearly or approximately $60 per month.  The tax subsidy results in less federal tax revenue and, as such, is borne by all U.S. taxpayers for the benefit of the employees participating in company health care plans.

Many small companies do not offer group plans as they cannot afford to subsidize a substantial portion of the insurance premiums. Those who work for these companies must seek coverage in the insurance marketplace.

Some individuals cannot purchase policies even if they have the means to do so because they have pre-existing medical conditions and cannot find a company who will insure them. There are many millions of uninsured people in the U.S. who work hard to earn a decent income and do not spend their money frivolously yet cannot afford to pay the full premium for health insurance or cannot obtain insurance because they have a chronic illness.

To address this problem, the Affordable Care Act was signed into law in March of 2010.

The median household income in the U.S. in 2011 was $49,445. If a family of four with this income receives health insurance coverage under the Affordable Care Act aka "Obamacare," the family’s portion of the premium is estimated to be $3,300 by the subsidy calculator provided on the Kaiser Family Foundation website. (Click here to see the Kaiser calculator) The balance is paid by the federal government.

Premiums are based on age but cannot be increased nor can insurance be denied due to the medical history of the person applying for insurance. To ensure that premiums charged by insurers are not excessive, there needs to be a large pool of healthy individuals who have purchased policies to offset the smaller numbers of people with chronic illnesses.  This is the reason for the requirement that everyone purchase insurance or pay a penalty. 

A family of 4 with the median household income of $49,445 can choose to be insured for $3,307 or to pay a penalty of $290 and not be insured. The penalty increases to $975 in 2015, to $2,085 in 2016 and in subsequent years, increases over the 2016 amount by the cost of living index.

In Massachusetts, the only state where residents are currently required to have coverage or pay a penalty, only about 3 percent of those who are subject to the mandate don’t buy insurance. People need and want health insurance. Without it, one accident or serious illness can take away all hard- earned savings, leading to bankruptcy, loss of dignity and, potentially, death.

Beginning on Oct.1, people will be able to purchase health insurance through the Marketplace provided for under the Affordable Care Act. A website, not yet announced, will be available to enable applicants to shop for the policy that best suits their needs.

Enrollment assistance to help people make their choices will come from Navigators, non-profits funded by federal government grants, as well as from certified application counselors based in hospitals, clinics, community organizations and even pharmacies.  To keep updated on this topic, browse the following website: www.healthcare.gov

Note: Because Texas did not adopt the Medicaid expansion available through the Affordable Care Act, only individuals and families with estimated 2014 incomes at or above the Federal Poverty Level (FPL) will be eligible to apply for health insurance. Examples of the FPL are: one Adult - $11,651; two Adults - $15,727; two Adults and two Children: $23,880. Tragically, adults with incomes below these levels will not be insured in Texas, unless they make less than $13,00 yearly, are disabled or are pregnant.