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Is Health Insurance Still Too Expensive Under Obama's Affordable Care Act?
Posted on Jun 12, 2013 by Sergio Ulloa (G+)
American President Barack Obama this week encouraged those Americans paying high prices for health insurance, as well as the uninsured, to sign up for cover under his new Affordable Care Act. On a trip to California, Obama encouraged the recruitment of Hispanics in particular to the new healthcare scheme that is designed to help uninsured Americans afford health insurance.
California has America's biggest insurance market, and is home to some six million uninsured citizens. As a result, the state is a vital region for Obama if he wants consumers to sign up for coverage. Under the new scheme, thirteen insurance companies in California will be offering health plans varying in price and the extent of their coverage, even in some of the most rural regions of the state.
However, whilst the law seems appealing on the surface, many are concerned that the costs that need to be paid by employees to contribute to the premium are too high for low-paid workers to afford the insurance. Some detractors predict that low-paid workers will opt out of the new employer coverage being offered under the new law, due to the high cost of the portion of the premium that employees have to pay.
Many low-paid Californian workers still find the Affordable Care Act to be unclear, and are in no hurry to sign up. For those with a very low income, the concern is that contributing more money would effectively mean working just to pay for insurance. This ambivalent initial reaction in California suggests that many low-wage workers could remain uninsured next year, despite the law's subsidies and penalties.
Starting next year, firms with fifty or more full-time equivalent workers will be required to offer health insurance to their all employees who average thirty or more hours per week. Moreover, to avoid facing penalties, employers must not ask their employees to contribute more than 9.5% of their income to health insurance premiums. Employers will not face penalties, however, if they offer affordable health insurance benefits but their employees don't sign up.
Under the law's individual-mandate provisions, the majority of US residents will be required to have health insurance or will have to pay a penalty. Those low-wage earners who can't afford their employers' plans may seek coverage, if eligible, through Medicaid, or through an individual plan offered through a government-run exchange. Alternatively, the workers may forgo insurance altogether and pay the small penalty. This, it seems, could be their most affordable option when the amount they must contribute to insurance schemes is high. This penalty, too, may be circumvented in some circumstances by those low-paid workers by claiming a hardship exemption.