Friday, February 1, 2013

What Health Insurance Will Cost in 2016

I saw this item linked from Drudge Report concerning IRS assumptions of what health insurance is going to cost a family of four in 2016.  The number was so scary that I went to the IRS draft regulation, and sure enough, on page 56 there is an example of how to compute tax liability that assumes that a family of four buying its own health insurance will have to pay $20,000 per year.

This appears to be cheapest available coverage, so-called "bronze plan."  That means a family of four will be paying $1666 per month.  If this assumption is correct, there are going to be a lot of self-employed professionals looking seriously at finding full-time employment with a company with a health insurance plan -- and a lot of self-employed craftsmen (plumbers, electricians) who are going to be doing likewise.  And perhaps that was the goal of Obamacare all along -- to make sure that no one is self-employed.


  1. For all the vilfication of corporations (you'd think they were creatures walking around instead of agreements between people) the IRS has worked diligently to ensure that ever more people work for them.

  2. I'm no fan of Obamacare, but I had to work for corporations most of my career because early on I was ineligible to purchase private health insurance (and it wasn't on a high risk thing).

    The big shame of Obamacare is it uses a gigantic, Federal nuclear cannon to purportedly solve a real problem: uninsurability.

  3. The tragedy of Obamacare is it uses a gigantic federal atomic cannon to purport to solve a relatively small, but very real problem: uninsurability.

    I had to work for corporations (or be on COBRA) for most of my career as a result of insurance denial for what wasn't even that much of a risk.

    The private system didn't work for some of us. Obamacare is going to break it for everyone.

  4. What frustrates me is that there were efforts by President Bush to get some more market oriented reforms through at start of his second term when Republicans controlled both houses of Congress, and they kowtowed to the insurance companies and did nothing. There were steps that could have been taken that would have solved a number of deficiencies of the old system, without this over reaching of Obamacare.

  5. I have been a physician for almost 50 years. I have worked for insurance companies at times reviewing claims or evaluating cases. I have also done a lot of expert witness work for malpractice attorneys on both sides plus the state medical board of California. My conclusion from all this is that health insurance is a losing business model.

    The insurance companies don't want to be in the business of insuring health care. That is why most big employer plans are "self-insuring" with the insurance company acting as administrator. That is the role they plan to play in Obamacare. That is why they supported the legislation as it was written and even did some things, such as raising rates in 2010, to make it more attractive.

    The only solution, I believe, is for individuals and families to have major medical with high deductibles and to pay for routine care out of HSAs or out of pocket. This is basically what we had in the 1950s and 1960s before Medicare and Medicaid.

    Most who read this will consider the suggestion unrealistic. In fact, many doctors are shifting practice to a cash model with much lower fees because the transactional costs are a large part of what is driving insurance rates. Most people see a doctor or hospital bill and do not realize that the amount shown is a "retail" price that no one will pay.

    Medicare pays about 20% of the doctor's charge that is shown on the "Explanation of Benefits." The amount that the insurance company pays the doctor or hospital is a trade secret. It has been negotiated between the insurance company and the organization that employs the doctor or the hospital. For this reason, most doctors now work for organizations called "Independent Practice Associations" or for hospitals which have been buying up medical practices rapidly since Obamacare passed.

    HMOs, like Kaiser, do a better job but those that are "for-profit" have done a poor job as they have survived, and even thrived, by underpaying individual doctors who are going broke. Most medical groups of doctors in California are insolvent.

    When you see a bill for a large amount for a hospital stay or surgery, the amount shown probably has little to do with the amount actually paid. Those of you with "20% co-pay" insurance plans are probably not aware that the "20% co-pay you pay the hospital may be more than the total paid by the insurance company as the "80% share" they pay.

    The system is too complex and contains too many fictions to analyze. Obamacare made it worse. Going back to older models, such as "indemnity plans," which pay a fixed amount for a surgical procedure or hospital day, might work again but first the entire system will collapse.

  6. Health insurance will become a dream for many people specially for those who are working with a company which doesn't provide such kind of facilities.