What does the word "affordable" in the Affordable Care Act mean? Many people might assume it means Obamacare will make health coverage less expensive. That's certainly the impression President Obama gave when he promised his national health care scheme would "cut the average family's premium by about $2,500 per year.
But Obama and the Democrats who passed the law didn't really mean that premiums will go down. What they meant was that premiums might well go up, but the government will give some Americans money with which they can pay the higher premiums and still come out ahead.
For some people that will be true. For others, not so much. Unlike Social Security and Medicare, Obamacare is a means-tested entitlement program. It will give low-income Americans substantial taxpayer-paid subsidies with which to purchase insurance. People who make a bit more will receive smaller subsidies, and those above a certain income level will receive no subsidies at all. If they have to purchase higher-priced coverage, that's their problem.
The pro-reform Kaiser Family Foundation has created on its website a subsidy calculator into which anyone can enter his location, income and family size to come up with an estimate of how big, or small, his Obamacare subsidy will be.
Start, for example, with a low-income family of four living near St. Louis, Mo., with $35,325 in household income (that is 150 percent of the federal poverty rate for a family that size). A Silver Plan policy for the family would have an annual premium of $8,088, according to Kaiser. But the family would receive a taxpayer-paid subsidy of $6,675, which means the family would pay, with its own money, just $1,413 for the coverage. (Kaiser chose the Silver Plan for the calculator because that is the plan that determines the size of Obamacare
Of course, most families of four in Missouri make more than $35,325 a year. The 2012 Census Bureau estimated that the median income for a Missouri family of four was $72,230 -- meaning that half the state's families of four are below that level and half are above.
For a family that is right on the median income, $72,230, the annual premium would still be $8,088, but the taxpayer-paid subsidy would fall to $1,226, meaning the family would pay, with its own money, $6,862 for the coverage. Is that a better deal than they have now? Maybe yes, and maybe no. In any event, they won't save as much as the president promised.