The National Center for Health Statistics (NCHS) reported on January 28th 2014 that healthcare costs are a crushing burden on about a quarter of US families. Perhaps the “1 in 4” quantification is the main value in the report, because acknowledging healthcare as a financial burden is too obvious.
NCHS chose not to highlight the doubling of premiums resulting from the Affordable Care Act (ACA). That’s too bad, because it hits all of us and the data are in plain view.
In 2010, the Kaiser Family Foundation published a public tool for estimating premiums and subsidies that Americans would face under the ACA. Using that tool on US Census data for family spending patterns, we find that ACA’s post-subsidy premiums will increase for the “average” family by between 86% and 128%.
American families earning $47,265 were at the midpoint of the incomes (the third of five quintiles) in 2012. The average family size was 1.9 adults and 0.6 children. In 2012, they spent an average of $1,969 on medical premiums, $747 on medical services, $531 on drugs, and $116 on supplies. Some spent more and some less. HHS suggests that in recent years about one quarter of Americans spent nothing on health care. But under ACA, frugality is not allowed. Spending “nothing” will make IRS collect a penalty from you.
An average quintile family who signs up for ACA coverage will experience sticker shock. The Silver plan will cost a childless couple $4,490 in yearly premium (less $128 in subsidy), plus up to $12,700 in out of pocket costs. That post-subsidy premium will cost $2,391 more than the 2012 average premium of $1,969 – an increase of 122% under ACA. If the average quintile family elects a lower premium “Bronze” plan, the premium is $3,892, but no subsidy applies and that results in a 98% increase above pre-ACA health premiums. (Bronze plans merely pay less of the medical costs than do Silver plans).
For families with children, things are marginally better. Two adults and a child face an ACA Silver plan premium of $6,084 (less a subsidy of $2,412), plus an out of pocket burden of $10,400. This 3 person family faces a post-subsidy ACA premium of $3,672, an 86% boost over pre-ACA costs. Likewise, a family with 2 children faces a $3,673 post-subsidy premium, also 86% higher than before ACA. The 2-child family could drop the post-subsidy premium to $2,695 by choosing a Bronze plan, but out of pocket costs it faces would accumulate much faster toward the $12,700 cap.
The ACA is devolving into a political monument that will double health care premiums for average American families, and not the special cases shown in ACA promotional adverts. We know ACA will not let families keep the low priced health plans they liked. Whether it can deliver good medical care remains to be seen.
Alan Daley is a retired businessman who writes for The American Consumer Institute Center for Citizen Research