Dear Ryan,
I think you and I agree ideologically on more than you’d suspect, but sometimes the context surrounding issues isn’t framed the same way for you as it is for me, which is why we end up having such different opinions about issues regarding politics.
I saw your Facebook post today about Obamacare and I’m concerned that you are misunderstanding some of the facts about the Affordable Care Act, and that if you did understand the facts more completely, you might have a different opinion than the one you’re sharing with your friends and family.
I’m going to share some components of the ACA with you in an effort to put better context around the news you learned about today, which is that the average monthly insurance premium cost on the healthcare exchanges is $250/month.
I think you misunderstood this news, as you indicated in your Facebook post that the average person in Michigan will pay an average of $250/month. The $250/month average is not for everyone in Michigan to pay. The $250/month average is the average amount a person who signs up for a plan using the insurance exchange will pay per month, and that’s the amount they pay before employer and government subsidies.
Before we discuss the $250/month and who is going to end up paying that, let’s first discuss how many people (like you and me) get healthcare.
You probably already know that a lot of people already have healthcare coverage through their employer, where each employee is charged the same amount each month for insurance with the employer’s group coverage provider.
What you may not know is that your employer subsidizes your monthly healthcare premiums. Here’s what that means: Your employer pays a crapload of money each month for your family’s healthcare premiums. You pay a small portion of the total premium price out of your own pocket, which comes out of each paycheck.
Here’s the math breakdown on that (this is the breakdown of the insurance we get through Andrew’s employer, which I’m using as my example): Andrew pays $218.92 per month for health insurance for his family of three, and that $218.92 is taken out of his paycheck automatically each month. This insurance is not super awesome (we have a $4500 deductible and ridiculously high copays). But, the total cost of our insurance premiums is actually $1094.58 each month. Andrew’s employer pays $875.66 every month toward our health insurance and Andrew pays $218.92.
I suspect that some unionized employees in Michigan may pay even less than $218.92 per month out of their own pocket, thanks to union negotiations for insurance coverage, which means your employer may very well pick up a greater proportion of your family’s insurance tab than Andrew’s employer does. Check with your HR rep to find out the employer contribution to your health plan. I bet they pay more for your insurance than you might have ever suspected!
So back to the Affordable Care Act and the news articles today predicting healthcare premiums will cost an average of $250/month. Please know that if you already have group insurance through your employer, you won't have to pay anything beyond your monthly contribution to your insurance premiums, which typically just comes out of your paycheck. This $250/month average is only for people buying coverage on the insurance exchanges, which most people won’t do.
So you might at this point be wondering...who is going to pay this $250/month average? Well, It’s these people:
- Middle class small business owners who couldn’t afford private health insurance at rates that used to be much higher than $250/month
- People who were previously denied private insurance due to a pre-existing condition like diabetes, asthma, chronic back pain or hypertension - fortunately, the new health care law prevents insurance companies from denying benefits to people with conditions like these. Do you know what a private insurance company used to say to a diabetic who wanted health insurance? They said NO! We won't cover you.
- People who got laid off from a job and are currently paying upwards of $600/month for COBRA ($250 is less than $600). If Andrew were to leave his job right now, we would pay the $1094.58 plus a $5.00 administrative fee per month to continue our current coverage under COBRA.
- People who work full time for an employer that doesn’t provide health insurance because it’s prohibitively expensive, and by prohibitively expensive I mean these two things:
- Group health insurance actually is expensive, and often costs more than $250/month per person
- If a company were to pay for insurance for its employees, that means the company nets less profit, which means salaries and bonuses for top executives won’t be so large. Executives don’t like getting lower salaries and bonuses.
- People who work part-time for an employer like Wal-mart, which doesn’t provide insurance to its employees(under the guise of needing only “part time” workers) and pays workers so little they have to go on taxpayer-funded Medicaid if they get sick and want to stay alive. This causes taxpayers to effectively subsidize Wal-mart’s low prices. Isn’t that weird? We take advantage of Wal-mart’s low prices, not realizing that their prices are so low because they treat their employees like crap, which is actually driving my tax bill higher because Wal-mart won’t behave themselves as an employer. I’d much rather pay LESS in taxes and higher prices for Wal-mart stuff, because at least I have a choice if I’m gonna be spending my money on Wal-mart stuff. I don’t have a choice if I’m paying taxes.
- People who have a job, but don’t have health insurance and can’t afford health insurance but actually want health insurance, so they can see a doctor and feel better and stay alive - these folks, while paying the average of $250/month, are the people who will be getting government subsidies. These are the folks who work at Wal Mart. See bullet above. Dear Wal Mart: Here’s some of my tax money so you can have healthy employees working for peanuts in your stores so that you can, in turn, pass those savings onto me in the form of lower prices. You’re welcome for the subsidy. Love, Kara
- People who don’t have health insurance and don’t want health insurance. This is a group that very few people actually fall into, but it’s the group that’s being represented voraciously by those politicians and pundits who are opposed to the Affordable Care Act.
Now, I realize also that if you currently have group health insurance, you might, at the beginning of your insurance year (January for most people), discover that your premiums have increased. This is because of two reasons:
1. Insurance premiums often go up based on the insurance company’s evaluation of the total cost of health care for your Employer. Your employer, instead of absorbing the higher cost, may (and typically does) choose to pass that increase into you.
2. Employers (especially anti-Obama employers) may choose to increase your share of the insurance premium because they are politically motivated. Your employer may say, “Because of Obamacare, you have to pay more.” Which is, in most cases, actually true. Obamacare exists. Your employer hates Obama. Your employer raises the amount you pay for insurance because he/she is angry at Obama. You, in turn, blame the President for this and choose to side politically with your employer. And around and around you go.
In short, if you already have healthcare insurance through your employer, you either won’t be affected at all by the ACA, or you’ll only be mildly affected with a slight increase in premium costs for the reasons described above. I hope this helps frame your understanding of the $250 projected average cost of health insurance premiums on the exchange and who is actually going to end up paying that.
And in case you’ve been watching or reading Anti-Obamacare news (such as Fox News, Drudge Report or Breitbart), here are some other properties of the new law that you may find interesting, which are not typically discussed by Anti-Obama news outlets:
- ACA creates a health insurance marketplace, where people who couldn’t get insurance before (individuals, families and small businesses) can now go buy insurance for $250/month.
- ACA says that health insurance companies can’t sentence a person to illness or death by denying them an insurance plan, benefits or treatment due to a preexisting condition.
- ACA makes it illegal for insurance companies to cancel your insurance just because you get sick. Insurance companies used to do this a lot.
- ACA says it’s illegal for insurance companies to sue you or refuse to treat your illness because you made a small mistake on your application
- ACA says that insurance companies can’t put a cap on lifetime limits. What this means: if Obamacare had been in place a long time ago, a lot of people who died from illnesses like cancer would still be alive today (Sorry dude. This is your last round of Chemo. You have hit your lifetime chemo limit. You can go ahead and die. Thanks, bye). And now, thanks to the ACA, if you get cancer, you can’t be denied treatment simply because you reached your insurance companies treatment limit.
- The 80/20 rule (this is my favorite part!). Previously, insurance companies could charge you whatever they wanted for insurance, earn ridiculous income, and use that income to pay huge salaries and bonuses, have lavish and expensive conference at fancy hotels and engage in other frivolous activities with all the money the insurance company had leftover from price gouging. Basically, Obamacare says that no matter how much an insurance company charges people for insurance premiums, they have to spend 80% of that income on actually providing healthcare for people. Only 20% can be used for non-healthcare related things.
Anyhow, I know that most of this information is not well-known, especially in anti-Obama news circles. I can’t and won’t argue that President Obama is the greatest president ever, but I cannot accept the idea that people who want to stay healthy would've been better off if the ACA had never been effected.
Much Love,
Your Favorite Cousin Ever Kara Weez
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