Insurance exchanges, the centerpiece of Obamacare, opened last Tuesday, but their debut didn’t get off to a rousing start. Only a dozen applications for health care insurance had been received from Louisiana by Thursday. The online website where people apply was overwhelmed and unable to help most of the 7 million nationwide visitors to www.HealthCare.gov.
Supporters of the law say that’s not unusual and things will get better. Maybe so, but even those who can get through won’t have an easy time making decisions about whether they want to buy health insurance. Young people who are being counted on to subsidize health care for older Americans will probably delay a decision until the last minute or decide to pay a penalty rather than buy coverage.
People have until Dec. 15 to make up their minds in order to be covered on Jan. 1. The law is also giving them until March 31, 2014, to pick a plan before having to pay a penalty. While we’re on that subject, just what is the penalty? It’s $95 per adult in 2014, $47.50 per child, up to $285 for a family or 1 percent of family income, whichever is greater. By 2015, that increases to $325 per adult, $162.50 per child, up to $975 for a family or 2 percent of income, whichever is greater. Beginning in 2016 and from that time forward, the penalty jumps to $695 per adult, $347.50 per child, up to $2,085 for a family or 2.5 percent of family income, whichever is greater.
Jim Donelon, Louisiana commissioner of insurance, talked with The Advocate about those penalties. He said Obamacare caps premiums for older adults at three times what young people pay, even though it costs 12 times as much to insure persons ages 55 to 65 versus a young adult. That was a concession made to satisfy AARP. Donelon said many young people won’t like those odds.
The country’s experience with Social Security makes a good comparison to what we’re talking about. In 1940, there were 40 working Americans supporting every retiree drawing benefits. Now, there are only 3 workers supporting every retiree drawing Social Security, and the situation is getting worse.
The system is expected to be bankrupt by 2042 if it isn’t reformed. That’s a tough nut to crack because recipients don’t want anyone messing with their entitlement programs like Social Security, Medicare and Medicaid.
Premiums under Obamacare are another complex decision facing the uninsured. The four plans available are Bronze, Silver, Gold and Platinum. However, Platinum isn’t available in every state. The Bronze Plan covers 60 percent of the health care costs; Silver, 70 percent; and Gold, 80 percent.
A 60-year-old in Louisiana would pay $422 a month for the cheapest Bronze Plan, $541 under the minimum Silver Plan and $617 a month under the minimum Gold Plan. For a 46-year-old, the costs would range from $233 to $341 per month. A 26-year-old would pay from $159 to nearly $233 a month.
Two other factors figure in the final decision. Applicants have to determine how much they will have to pay out of pocket — the deductible — before their policy starts paying most of the bill. And they will also have to make some co-payments.
If you’re still with us up to this point, one more item comes into play. It’s the federal subsidies — or tax credits — that lower income Americans will get to help them pay their premiums.
Nearly 26 million will be eligible for the tax credits, according to a report by McClatchy newspapers. It said subsidies could range from a few hundred dollars to more than $10,000. The Advocate reports there are 634,000 uninsured people in Louisiana, and 350,000 of those qualify for the subsidies. The Congressional Budget Office estimates the subsidies in 2014 will total $16 billion in direct spending and another $3 billion in indirect costs.
The amount of the subsidies will depend on a person’s income. McClatchy said a 42-year-old man making $28,725 in 2014 would have to pay $5,800 in health care premiums. However, he would get a subsidy totaling $3,488, which reduces his premium to $2,312.
Gov. Bobby Jindal refused to expand the state’s Medicaid program, so there are some 214,000 people in Louisiana who can’t join the federalstate health care program. They make less than 100 percent of the poverty level, which in 2013 is $23,550 for a family of four. They will have to continue using the private hospitals that took over the charity hospital system.
If you aren’t confused by now, you are definitely in the minority. To recap, people interested in using Obamacare have to decide if they want to buy health insurance or pay a penalty, select from one of three or four plans, determine what the out-of-pocket and co-payment costs will be and figure out how much of a subsidy they can get from the federal government.
Navigators are being hired to help citizens get through the maze of decisions, and how competent they will be remains to be seen. One thing we do know after outlining some of what is involved in Obamacare. The complexity of this federal program almost defies the imagination, and it’s just getting started.