Affordable HealthcareSummary: Affordable healthcare is good in theory, but is it reality? How many Americans, if polled, would say healthcare is “affordable”?

In keeping with the holiday tradition, we offer the 12 days of Obamacare. As such, on the 5th day of Obamacare, Obama gave to me:

Affordable Healthcare

No Pre-Existing

Preventive Care

Healthcare Exchanges

And an Individual Mandate

One of the goals of the Affordable Care Act is plainly stated in the title “affordable”.  Evidently “affordable healthcare” is one of those relative terms which is in the eyes of the beholder and has different meanings to different individuals. I have heard the terms “affordable for whom” and that the ACA should be coined the “Unaffordable Care Act”.

I think it is safe to say that most Americans will pay higher premiums in 2014 than they did in 2013 and not just a little higher but substantially higher, to the point of becoming “unaffordable”.  Beginning in 2014, there is a new playing field which seeks to level out premiums among individuals. Premiums are no longer a function of health status or gender, with the exception of smoking. Smokers will pay between 1.5 and 2.0 times the premium of non-smokers.

Affordable Healthcare

Premiums will now mostly be determined by income level and age. In an attempt to make affordable healthcare a reality, government subsidies have been added to the public healthcare exchanges. The idea behind these it to assist individuals who earn between 100% and 400% of the poverty level. However, even if you fall into this income level, you still may not be eligible for a subsidy. Another part of the equation is the percentage of healthcare premiums to income. Many individuals that are in the 300% to 400% of the poverty level are finding they do not indeed qualify for a subsidy, again adding to the “affordable healthcare” issue.

For individuals who are now eligible for Medicaid under the new Medicaid expansion, healthcare will be considered affordable. Individual states had the option to choose whether or not to expand Medicaid up to 138% of the poverty level. This particular aspect of the ACA is great and will benefit those who need assistance the most.

The group in which healthcare will most likely be unaffordable are those mentioned above which are in the 300%-400% of the poverty level as well as those who are just above this threshold in which no subsidies are available. Many especially young healthy individuals are finding healthcare to be unaffordable and are opting to be assessed a penalty which is less than the price tag of paying outrageous premiums each month.

So, is healthcare really going to be affordable in 2014? I think the answer is yes for perhaps 5% of the population who will pay the same or less for healthcare than they did in 2013. For the other 95% of the population, the answer would be no. What is your stand? How much more will you pay in 2014? Will you actually have a richer plan with more benefits or just pay more for the same coverage? Will you be eligible for a subsidy? If so, might you have to pay back part of the subsidy if you earn more than anticipated? As Alec Baldwin would say in the Capital One ads, “what’s in your wallet?” Will you choose to spend those dollars on healthcare or will you choose to take the penalty?

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BHM is a healthcare management consulting firm whose specialty is optimizing profitability while improving care in a variety of health care settings. BHM has worked both nationally and internationally with managed care organizations, providers, hospitals, and insurers. In addition to this BHM offers a wide breadth of services ranging including healthcare transformation assistance, strategic planning and organizational analysis, accreditation consulting, healthcare financial analysis, physician advisor/peer review, and organizational development.

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