It’s not unusual to hear opponents of the Affordable Care Act claim that premiums under the new law won’t be affordable. But one of the first and broadest nonpartisan studies strongly suggests that once federal tax subsidies are factored in, premiums will be well within reach for those with moderate incomes.
The highly respected Kaiser Family Foundation compared rates for so-called bronze (basic) and silver (good) plans in the largest cities in the 17 states, plus the District of Columbia, where information on insurance premiums is already available. The foundation used as its point of comparison the cost of the second-cheapest silver plan and the lowest-cost bronze plan for a single 25-year-old, a single 40-year-old, and a single 60-year-old, assuming each was making $28,725 a year.
First the 25-year-old. When tax subsidies are included, that silver plan would cost $158 a month, in Portland, Ore., $167 in Albuquerque, and $179 in Baltimore. Nowhere would the young insurance purchaser pay more than $193 a month; that's because the law caps individual premiums at approximately 6 to 8 percent of income for those in that earnings range. The bronze plan, with subsidies, would cost $111 a month in New York City, $115 in Baltimore, $117 in Hartford. It would be $130 in Portland, Ore.; $138 in Seattle; $140 in Los Angeles. It would cost $138 or less a month in 12 of those cities. The high: $173 in Sioux Falls, S.D.
For the 40-year-olds, silver plan costs, with subsidies, would be $193 in all of the 18 cities surveyed. The bronze plan premiums would range from $97 in Hartford to $125 in Los Angeles to a high of $168 in Sioux Falls.
The same silver plan pattern obtains for 60-year-olds. They would pay the basic $193 in each city. But the price of the bronze plans would be considerably lower. The premiums would be entirely covered by the tax credits in Hartford; that plan would only cost $16 monthly in Richmond and Providence, and only $19 in Baltimore. With the tax subsidies, monthly premiums would be under $75 in 12 of the cities. The high: $140 in, yes, Sioux Falls. (South Dakota is served by only three insurers.)
Whether someone at that income level, who would likely have $1,500 to $1,700 a month in after-tax income, will consider those premiums conveniently budgetable depends very much on their other expenses. But this much is clear: Those premiums are not exorbitant. They give the lie to the idea that Obamacare will saddle millions of people with a insurance requirement that is simply unaffordable.