The reason for the passing of the Patient Protection and Affordable Care Act or colloquially termed as Obamacare is to reduce the costs of healthcare in America. Although it focuses more on the low income earners who are in the federal poverty level and qualify to get subsidies and lower premium rates while sets taxes on higher income earners and bigger companies, its benefits are supposed to outweigh the setbacks. The baffling question now is how much does Obamacare really cost?
There are no straightforward answers to how much is the exact cost of Obamacare because there are many areas to look into to get a more accurate calculation. What supporters of the health care reform law believe is that it can lower the expenses of Americans in healthcare. Perhaps, enumerating these factors can help. Here are some relevant factors that affect how much Americans spend on health insurance under Obamacare.
Even with the enactment Affordable Care Act (ACA) as a law wherein insurers cannot reject patients with pre-existing conditions, a concern older age groups might have, age still is a major factor that can have a bearing on how much health insurance applicants have to pay for their premiums. Health insurance providers can still charge higher rates to individual policy holders who are older. Americans who are 64 years of age and older can pay three times higher than policyholders aged 21 under the same policy. In 2014, the states of Connecticut, Rhode Island, Ohio and California have asked for higher premium rates for people age 60. As for persons 26 years old and younger, they can now be included in their parents’ plans under Obamacare and this is also a great factor that can affect costs.
Number of Younger Enrollees
Although it does not seem obvious upfront, enrollee participation, especially of the younger generation can make health care more affordable. Some younger individuals prefer to be uninsured and just pay the individual shared responsibility payment for the reason that for them, the $95 or so fine is cheaper than getting insured. Consequently, there will be lesser young enrollees and exchange plans will have higher rates.
Geographic location is another factor that can affect the cost of healthcare for Americans. Health insurance premiums vary in states where some charge higher than others. There are some states without Medicaid expansion. There are 17 states not expanding Medicaid which means that many Americans with incomes not reaching a certain level will not benefit from free or low-cost health coverage while 4 are considering it. On another note, there are also states like New York and Colorado which impose lower rates young adults can take advantage of. This is why the place of residence of an individual is relevant to his or her health care expenses.
Income and Number of Household
How much a family or an individual earns as well as the number of family members to be insured also cause changes in coverage rates. If a certain family has an income that qualifies for Medicaid, then health care costs can be lower. And even if the insured is only one person yet the income fits the range, premium can be lower as well. Conversely, if an individual or a family earns more, private insurance policies can be bought from the Marketplace and the insured may qualify for tax credit eligibility.
Lifestyle and Health Status
Even before Obamacare, these two already affect the cost of insurance premiums. However, with the provisions that came with the healthcare reform, individuals with existing medical conditions cannot be denied coverage by health insurance companies. Under the Affordable Care Act, tobacco users will have to shell out more money for health insurance as opposed to non-tobacco users. For people with medical conditions who might need surgeries and frequent hospitalizations, their premiums might increase the following enrollment period since they would have used up their coverage and have to pay out-of-pocket expenses. In a nutshell, healthier people are more likely to pay lower premiums
Policyholders can either have subsidized or private plans as well as choose from four different health insurance plans. These will affect how much Obamacare costs for to ensure their health and wellness. It is because subsidized plans are not excluded from premium price hikes although insured individuals may be eligible for tax credits. And as for people opting to buy off-marketplace plans, they are more likely to pay higher premiums and at the same time, they do not have the capacity to offer tax credits.
Another aspect to look into is the types of plans available for grabs. These are the Platinum, Gold, Silver, Bronze and Catastrophic. How much your healthcare costs under Obamacare depend on the cost of the plan and the actuarial value, that is, the amount the plan will cover for the costs of your medical expenses.
Apart from the differences in actuarial values, with the Bronze being the cheapest, a Silver plan is the only eligible plan type for Cost Sharing Reduction subsidies. You can be eligible for premium subsidies if your premiums exceed a certain percentage of your earnings. If your earnings fit between 300% and 400% of the federal poverty level, you can qualify for subsidies. So, for an individual qualifying for CSRs, this is the best plan to invest in. On the other hand, a Catastrophic plan is for individuals who are 30 years old and below and who are healthy. A person with this plan type should expect to spend his or her own money for major but will also be protected.
Calculating how much Obamacare costs depends on many factors. For Americans, this can vary given the different situations. Expenses vary for an individual, a household and the business owner. What is clear, though, is that Obamacare aims to offer affordable healthcare to the public. As for insurers, they will definitely be asking for higher rates each year and this, too, can affect Obamacare costs. By considering all these aspects, it will be easier to have an idea on how much the average American pays for Obamacare.