There's been much media discussion about how the Obamacare tax penalty may be too small to prod so-called young invincibles to buy health insurance come Jan. 1, 2014. Many news reports and commentaries have scoffed at the idea that Obamacare's tax penalty will be stiff enough to convince healthy 30-somethings to pay what could be a relatively hefty premium for coverage and also face high deductibles, copayments and coinsurance. Quite a few media reports, including those in the Washington Post, have described the penalty simply as $95 for the first year, 2014. Pundits have predicted many uninsured Americans will choose to pay that paltry penalty rather than pony up what could be a lot more to buy insurance they don't think they need.
But many Americans—and many journalists—may not be aware of what the Patient Protect and Affordable Care Act and the implementing IRS rule actually establish as the penalty in 2014 and beyond for failing to buy coverage.
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A University of Texas academic has concluded after pouring over Kaiser Permanente's proposed rates for its exchange offerings in California that the high rate on its lowest-cost health insurance plan is not due to the plan's generosity.
Comparing Kaiser's proposed “bronze” offering to its existing plans for healthy young adults, the researcher wrote on The Incidental Economist blog that the new premium, at $205 a month, will be more than double the old premium. Yet the benefits and available provider network (they both used Kaiser) will be essentially the same.
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It goes without saying that people on Medicaid don't earn much money. While state programs' health benefits differ from state to state, all must have very low co-pays and deductibles to earn the federal match. The same will be true for those states that expand their Medicaid programs to cover people earning up to 138% of the poverty level.
The CMS is considering an Arkansas proposal to use its Medicaid expansion money to subsidize purchase of individual insurance coverage on the state's exchange. A CBO report concluded that buying private plans would cost the federal government a lot more than simply expanding Medicaid.
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