State-to-State Variation of Obamacare Premiums

Econintersect:  A middle-level coverage plan for a 27-year old costs as much as 2.7 times as much in the most expensive state (Wyoming) as in the least expensive state (Minnesota).  The numbers have been compiled by Life Health Pro for the second lowest silver plan using data from 47 states and the District of Columbia.

Data has not yet been obtained for Kentucky, Massachusetts and Hawaii.  The most expensive states after Wyoming ($516 a month) are Alaska ($474), Mississippi ($448), Connecticut ($436) and Vermont ($413), with Indiana and Maine tied at ($403).  The least expensive states after Minnesota ($192) are Tennessee ($245), Arizona and Oregon (tied at $250), Nebraska ($260), Arkansas and Utah (tied at $266), New Mexico ($282), Idaho ($285), Illinois and Pennsylvania ($286), Iowa ($287), District of Columbia and Nevada (tied at $297) and Maryland ($299).

Just over half of the states (26) have monthly premiums between  $305 and $385.

Map from Life Health Pro.

All of the numbers above are for a 27-year-old insured.  At age 60 the premiums are approximately tripled, according to Nichole Morford at Life Health Pro.  Thus, applying that formula, the premiums for a couple in Wyoming, age 60, would be somewhere around $37,000 a year for the second from lowest coverage silver plan.  While that may be what the actuarial cost is, the premium does not seem very affordable.

Some of the premium costs are offset by government subsidies to individuals based on income.  The table below is from 2012:

The definition of the poverty line for 2014 will be the same as for 2013 as far as PPACA implementation is concerned.

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Using the above table and the previous calculation for a 60-year old couple living in Wyoming with income of $62,039 in 2014, the federal premium subsidy will be about $31,500 to reduce the premium paid by the insured to $5,548.

Note: All of the above numbers will be reduced (except the out-of-pocket maximum) if the premium for a couple is less than 2x the individual premium.

However, it appears that once the couple exceeds 400% of the poverty level by any amount there is no longer any subsidy available. Once the income goes to $62,041 the out-of-pocket cost for insurance premiums jumps from 9.5% of income to nearly 60% of income.

Similar problems will arise for a family of four when income reaches $94,201 per year.

This problem was previous documented by Lambert Strether.

For a family of four at the median household income of $52,000 healthcare does become affordable.  With government subsidies their expense for the coverage we have been looking at will have a maximum cost about $275 a month, around 6.4% of income.

For a 27-year-old single person making $30,000 a year the cost will be about $200 a month (around 8.1% of income) after subsidy is applied.

For a 27-year-old making $18,000 a year the cost is approximately $63 a month (about 4.2 % of income).

At lower income levels this truly is an “affordable care” act.

John Lounsbury

Sources:

• PPACA premiums, state-by-state (Nichole Morford, Life Health Pro, 17 October 2013)

• PPACA Premium Subsidies: Qualifications & Maximum Annual Premiums (Henderson Brothers, 26 Juy 2012)

• Federal Poverty Level 2013 – 2014 (Obama Care Facts)

• Obamacare, Obfuscation and Functional Discontinuities (Lambert Strether, GEI Opinion, 29 August 2013)