The Obama administration is boasting that 7 million people signed up for an Affordable Care Act (ACA) plan; or what some call Obamacare. My wife and I signed up late last week for a Bronze Plan which is one before the bottom in the 5-rung system of Catastrophic, Bronze, Silver, Gold and Platinum health plans available in New York.
Since we cannot afford healthcare, we enrolled in one of the cheapest plans within the Bronze category. Many hospitals, excluding local community hospitals, do not accept this plan. It apparently fails to cover many procedures, and the plan has annual $12,700 deductibles and co-pays if we actually need care.
The premium for this junk plan is $665.78 a month or $7,989.36 for the year. This plan is just for my wife and me. It does not include the kids.
Due to our income level of recent months, we are eligible for healthcare subsidies which reduces our premiums to only $2,025.36 for all of 2014. Paying $2K for a plan that covers two adults seems a great relief, but here are the problems:
1) The plan provides very limited preventative care, but because our plan kicks in only in May, I dont know if those services come with co-pays. I have not seen my plan yet and certainly not paid the first premium. But even if preventative care does not have Co-pays, it would be cheaper to pay for preventative care directly to the doctor and pharmacy than spending $2,000 on premiums.
2) God forbid if either of the two on the plan need serious medical care, we will get hit with up to $6,000 in deductibles and another $6,700 in co-pays. This is strange because if the ACA system understands that we cannot afford $8K in premiums (hence the large subsidy), why does the system assume that we can afford up to $12,700 in co-pays and deductibles in case either of us turn sick?
Basically, If we are healthy, it’s cheaper for us to pay preventative care directly on our own. But if we do need serious care, we can anyway not afford it despite “being covered” so why bother having this plan in the first place?
It gets worse. If my income starts to rise later in the year or if I have a windfall profit in December, the IRS will collect back some or most of the healthcare subsidies when I file my 2014 taxes. This means, my premiums for this weak, essentially worthless plan will cost us much more than the $2K I am slated to pay. Esentially, not only would we pay more and a higher percent of our income in tax, we will be hit double by retroactively paying thousands more for this plan which brings very limited value.
Buying a catastrophic plan was not an option because it is not eligible for subsidies and it would cost about $4,000 in annual premiums; money we could not commit ourselves to paying. Buying a Silver or Platinum plan was certainly out of the question because while it comes with lower deductibles and copays, it costs too much in premiums.
But after sleeping on our Bronze plan-in-waiting for a few nights, we may decide not to actually buy it (first premium is due at the end of April). Instead we will need to pay the Obamacare penalty for the sin of not having enough money to buy health insurance whose cost spiked due to the same law which will panelize me for not affording insurance. (The statistics showing a slow-down in healthcare cost in recent years started in 2008 thanks to the economic pullback which left many people without employer health insurance.)
My story and the story of many others illustrates that there is nothing to boast about the 7 million private plan signups. Many people signed up simply to be in compliance with the law. Others signed up not grasping what level of co-pays and deductibles awaits them mid-year, and that they may be hit with a subsidy chargeback during tax season at the end of the year.
So what is the solution?
Democrats claim no one should “profit” from care. Using this thinking, the (Federal) government should give up the hundreds of billions of dollars it profits from the medical industry in form of tax collections. Doing so (i.e. letting the medical industry operate without a tax burden), would instantly reduce medical cost by huge numbers. But instead of reducing tax burdens on companies in exchange for reducing prices, Obamacare added tax liabilities on the medical industry. Hence a junk Bronze plan for two people costs $8,000 a year!
Democrats also claim that healthcare should be a “right” for every American. Using this thinking, the (Federal) government should remove FICA/Income tax liabilities – dollar for dollar – if people show that they spent the money on their healthcare “right” instead. These two steps would make healthcare affordable and encourage people to buy plans on their own will instead of buying plans with a threat of a penalty.