The cost of Obamacare

Building a bit on Dale’s post, contrary to Republican fearmongering, SCOTUS didn’t say the mandate is a tax. It said the mandate is constitutional under Congressional power of taxation. This is big difference in legalese.

In any event, the mandate is not a mandatory tax. You have a choice to get health insurance or pay the penalty. The more pertinent question is why would anyone choose not to get health insurance if they could afford it? So let’s look at what a policy under Obamacare would cost you.

Kevin Drum crunched the numbers:

What follows is back-of-the-envelope stuff, but I think it’s in the right ballpark. Let’s take a family of four where the policyholder is age 35 and has an income of $40,000. How much would insurance cost them? According to this handy calculator from Kaiser, here’s what that family would have to pay (converted into a monthly premium):

Premium cost: $925
Federal tax credit: $760
Net cost of policy: $165

However, this overstates things because it’s based on the cost of a “silver” policy. But you don’t have to buy a silver policy. You can pay more and get a gold or platinum policy, and more importantly, you can pay less and get a bronze policy. Bronze policies don’t provide great coverage, but they do provide the basics and they also cover health emergencies. It’s a reasonable option for someone who just can’t afford more. By my rough calculation, a bronze policy would cost about $125 less than a silver policy. This means that the net monthly premium for our family of four would be about $40.

Addtionally, single people under 30 could get catastrophic coverage for almost nothing. So as a practical matter, it’s likely not very many people will turn down the deal. It’s basically cheaper to take the insurance than it would be to willfully choose to be a freeloader on the system and pay the penalty.

Furthermore if you refuse to pay the penalty, you’re not going to jail. The IRS is not going to be knocking on your door. You basically just have to live with your conscience for failing to participate in the common good of all society. Seems like an easy choice to me.