Kaiser Study Reveals the True Cost of Obamacare

In less than a month insurance marketplaces open and shortly after that the Affordable Care Act, aka Obamacare, will begin to hit actual American pocketbooks. The good news, according to a study by the Kaiser Family Foundation is that the pain will probably be less than you think. Whether Obamacare is affordable as far as you are concerned, is a more difficult question to answer.

For the study, Kaiser analyzed details of insurance plans and pricing for 17 states and the District of Columbia. The Affordable Care Act mandates four levels of coverage, bronze, silver, gold, and platinum (from lowest coverage and least expensive to highest coverage and most expensive).

While the Kaiser study is the most thorough to date, it doesn’t do everything. For example, it does not compare Obamacare rates with current rates. This is mostly because changes in health care law, including the fact that insurers can no longer deny coverage due to preexisting conditions make such comparisons extremely difficult.

The study does include several charts listing specific “list” prices for various plans in a number of different cities, along with the price you would pay, based on your income level.

As an example, one chart in the Kaiser study provides a detailed breakdown of the cost of both silver and bronze coverage (expected to be two of the more popular options) for a single 40-year-old making $28,725 per year, which represents 250 percent of the poverty level.

Silver coverage pays about 70 percent of medical costs. Bronze coverage pays 60 percent. Gold coverage would pay 80 percent and Platinum would take care of 90 percent of medical costs.

The chart referenced above makes it clear that the price you pay for coverage doesn’t just depend on your income. It also depends on where you live. The differences are more striking before subsidies kick in. For those who qualify for subsidies, prices are uniform.

The lowest-priced “pre-subsidy” silver plan listed for a 40-year-old making $28,725 is $212 per month for someone living in Albuquerque, N.M. A 40-year-old with the same income living in New York City would pay $390.

Fortunately, however, both example consumers would qualify for subsidies that would bring their cost down to $193 per month, negating the price difference based on location in this example.

For the bronze plan, price differences remain, even when subsidies are considered. Using the same two cities, a 40-year-old in Albuquerque would pay $136 for bronze coverage while his counterpart in New York City would pay only $111 per month.

The 29-page Kaiser report contains enough detail that most people can at least approximate the cost of insurance in their general geographic area. The overall picture, according to Bloomberg Businessweek, is one that demonstrates insurers seem to be finding ways to make pricing competitive.

Larry Levitt, a senior vice president at Kaiser, told Bloomberg “For the most part insurers seem to find this market attractive and they’re pricing accordingly.” Rand senior economist, Christine Eibner, added, “Our analysis found no widespread trend toward sharply higher prices in the individual market.”

Related: Obamacare May Cost Far Less than Businesses Thought

The Washington Post addressed the question of affordability. The newspaper pointed out that the 2,000-page law known as the Affordable Care Act contains some of the most complicated language imaginable when it comes to premium subsidies.

Fortunately, the Kaiser report used actual rates that insurers plan to charge. According to Kaiser’s Levitt, “Our aim here was to really start making it tangible for people.” Levitt added, “So much until now has been hypothetical, with simulations and models. Now that we have real premiums in 17 states and D.C., we could start looking at what consumers in real circumstances would pay.”

The bottom line is that if you make less than $45,960 as an individual, the government provides a subsidy to the price you pay for insurance on the exchange. Above that amount, you are expected to pay the full price – up to $6,350 or $529 per month.

For a general estimate of the cost of coverage for you and your family, check the Kaiser Family Foundation ACA subsidy calculator

Whether the price you pay is “affordable” depends on your individual or family budget. The Washington Post noted that the premiums listed in the Kaiser report are lower than the Congressional Budget Office expected them to be. “Lower than expected,” however, does not automatically compute to “affordable.”

Health insurance under Obamacare will be unchartered territory. More people will be covered. Many will pay for the first time due to mandatory coverage. Many others will pay less than they have been paying. Some will pay more. Where you fall on the continuum will have a lot to do with your attitude about the Affordable Care Act.