Obamacare subsidies are ginormous. How will they be paid?

Credit: thehealthsherpa.com
Credit: thehealthsherpa.com

Obamacare contains startlingly large subsidies, up to $9,500 a year. Multiple that by millions of families and the cost is staggering. I favor affordable healthcare for all yet wonder how Obamacare can be anything but a huge money pit and increase the deficit dramatically.

I calculated insurance costs and subsidies on The Health Sherpa using a hypothetical family of 4 making $50,000. The parents are 45 and 40, the children 15 and 12. I chose two areas I know, Cedar City UT, and San Jose CA, and a bottom-rung Bronze Obamacare plan.

In San Jose the family would pay $37.21 a month and receive a subsidy of $792 a month. The cost of living in San Jose, where we live now, is among the highest in the nation. Yet there are plenty of immigrant Asian and Latino families here packed into little houses and apartments. San Jose has a population of two million so there are probably several hundred thousand families who qualify for a subsidy. In Cedar City, the same family would pay $107 a month and get a subsidy of $499 a month. You can rent a house in Cedar for $700 a month (vs at least $2,500 in San Jose), so $50,000 goes much further. However, $12 an hour is considered a decent wage. In both cases, the Obamacare subsidy is quite large.

The Kaiser Family Foundation has a handy Subsidy Calculator. Enter your zip code, income, and number of family members and it calculates your subsidy. It gives results quite close to that of The Health Sherpxa.

Obamacare subsidies are touted as being a net positive based on projected savings in Medicare payments to insurers, higher taxes on medical-device and drug companies, and a tax hike on those making more than $250,000 a year. I have difficulty with such perky calculations which magically make sharply higher medical costs for the government disappear in a cloud of pixie dust spreadsheet wizardry.