A middle-class family crunches the Obamacare numbers
Ready or not, Obamacare is finally here. Polls show that most Americans remain highly skeptical of the law’s benefits. According to a new CNN/ORC International survey released October 1, less than one in five Americans say their families will be better off under the new health care law.
Nevertheless, the controversial law’s passionate defenders insist it represents an historic event.
It extends health care coverage to between 10 and 35 million Americans, depending upon how many will actually choose to sign up, and represents the single biggest change in health care financing since the advent of Medicare in the mid-1960s.
More controversial is the claim that Obamacare will reduce costs for most Americans.
Republicans insist that the costs of Obamacare will be enormous and that they will be borne by middle class families who can ill afford them, especially in the current economy.
Democrats, like the president himself, claim that most families will actually save money with Obamacare. Obama himself claimed that the new law would reduce premium costs for the average family by $2,500 a year.
Senate Democratic Whip Dick Durbin (D-Ill.) insists that Republicans are “desperate” to stop the law before it goes into effect so ordinary people can’t learn more about the law’s many benefits.
“That’s why Republicans want to stop Obamacare,” the Illinois liberal said. “They don’t want these exchanges to be announced. They don’t want people to see these options. They know what’s going to happen.”
Well, like many Americans, I decided to run the numbers for our family.
As a self-employed writer, I’ve bought my family’s health insurance for the past 25 years. We’ve been with Blue Cross ever since my wife and I were married. At first, we had fairly low deductibles… but as premium costs escalated over the past 10 years, we, like most business folk, have gradually raised our deductibles and paid more of our health costs out of pocket. I remember paying about $5,000 for every birth, for example.
Our current Blue Cross plan currently costs us $650 a month or $7,800 a year with a $5,000 per person deductible with a maximum out-of-pocket family limit of $15,000. This is the type of plan that the Democrats ridicule as little more than “catastrophe insurance” and “not really health insurance at all.”
And I must admit, when compared to the taxpayer-provided Cadillac plans government workers and teachers get, I suppose that characterization is fair.
The chief advantage of our current insurance, for us, is that it limits the outrageous fees that hospitals and doctors can charge.
For example, a typical visit to a hospital emergency room two years ago – when one of my sons had severe stomach pains and we suspected appendicitis – was billed at around $10,000. Blue Cross disallowed 90% of that as absurd over-billing and we ended up paying $1,000 out of pocket – still a lot for a 3-hour visit, but a lot less than we would have paid.
Nevertheless, we pay enough in out-of-pocket fees each year that I was willing to give Obamacare the benefit of the doubt.
I spend a lot of time in British Columbia and look longingly at BC Medical Services Plan (MSP)’s monthly premium of $128 per family of three or more — with all primary care (excluding dental) covered. My eldest son’s new British wife extols the virtues of the National Health Service (NHS) which will pay 100% of the costs associated with the delivery of their expected first child – albeit delivered by a China-trained midwife and without the benefit of the epidural American women say is a necessity.
So, using MSNBC’s nifty Obamacare calculator, I decided to take a hard look at the numbers. (You can use the calculator yourself by clicking here.)
We are a solidly middle class family – yet, with so many children, we qualify for a substantial tax credit.
Under Obamacare’s Silver Plan (comparable to our current Blue Cross plan) our annual premiums would cost $18,190 – or $1,515 a month.
That’s $865 more than we’re currently paying – an increase of 133%.
With a projected tax credit of $4,890, however, that would lower our annual premiums to $13,300 ($1,108 per month). That’s still $458 more per month (or 70% more) than we currently pay—and we have to, in effect, loan the government money because we actually have to pay the $1,515 per month and only get a tax credit at the end of the year.
But that’s not all.
All this might be worth it if the Obamacare plan provided better benefits or a lower deductible – but it doesn’t!
The law’s defenders ridicule our current plan as mere “catastrophe insurance” because of the high deductibles and out of pocket costs, but the Obamacare plan for our family has an annual cap on out of pocket expenses of $12,700 – or just a little less than the Blue Cross limit of $15,000.
In other words: Obamacare is just as much “catastrophe insurance” as most high-deductible private plans.
As a result, I calculated the costs of three scenarios: (1) we spend 100% of our out-of-pocket limits; (2) we spend 50% of our annual out of pocket limits; and(3) we spend 0% of our annual out-of-pocket limits (basically, never visit a doctor all year).
Under all three scenarios, Obamacare represents a real increase of $3,200 to $5,500 a year for our family.
Finally, the worst aspect of the new law is that, while you pay substantially more for the same coverage you can get privately, your choice of doctors and providers is more limited under Obamacare. Our Blue Cross PPO plan covers pretty much every doctor and clinic in our area. Obamacare is more like a HMO in that limits the doctors and hospitals to which you have access – in some areas, severely so. (See the Heritage Foundation’s analysis here.)
My conclusion: Obamacare doesn’t make any financial sense whatsoever for our family…and is a lousy deal. We will stick with our Blue Cross plan, which I don’t particularly like, because government provided health care costs more and offers less choice, not more.
By the way, on October 1, the U.S. Senate voted to provide massive subsidies to itself and its staff – so the politicians who voted for Obamacare would not themselves have to pay any of the new costs associated with it.
One final note: As a self-employed business person, I’m pragmatic. I think the U.S. is rich enough that it actually could provide a generous, single-payer health care system that eliminates the over-priced and wasteful system we have now. Medicare really is proof of that.
To fund such a system, I propose we eliminate 30% of the do-nothing government jobs we currently pay for – along with the six-figure, retire-at-50 pensions we also pay for – and use that money to fund the single-payer healthcare system the Democrats want so badly.
Let’s make a deal: In exchange for a single payer system, Democrats will agree to eliminate 30% of all government worker jobs (the assistant sub-deputy undersecretary for the Department of Public Money Wasting) along with their fat pensions – to shrink the government back to what it was in, say, 1990.
That would be a deal the country would support, could afford, and which might actually fix the long-term health care crisis.
Robert Hutchinson is a veteran travel writer, author and columnist. He blogs regularly at RobertHutchinson.com.