After hearing about the CBO’s finding that Obamacare would lead to the equivalent of 2 million fewer full-time jobs in the next few years (see my posts on this report here and here), some asserted this meant that people would lose incentive and would get stuck in poverty.
However, as the CBO points out, this is not so. And that’s because the U.S. no longer has public support for health care that largely goes to the very poor (Medicaid) and the old (Medicare).
Now numerous people can get subsidies to help buy private insurance. And this means that many middle-class people have new choices — for their health care and their lives.
A woman with a new baby is more able to cut her hours at work and can instead spend more time with her family.
An example can show how this works. There are lots of details here, but they demonstrate what would really happen for this middle-class family.
Let’s take a family of four with a mom, a dad, a five year old and a new baby.
This family makes $70,000 a year (three times the federal poverty level) and lives in Brewer, Maine.
When buying health insurance through the federal marketplace, the family’s cheapest silver plan option costs $517/month. Deductibles can’t be more than $4,700 a year for the whole family (and no more than $2350 for one individual) and the out of pocket maximum is $12,700 for the family ($6,350 for one individual). For this plan from Maine Community Health Options, the family has no charges for a visit to their primary doctors, specialist doctors, generic prescriptions or ER visits. Also, all preventive care is included at no charge.
Of course, they can find lower cost bronze plans (as low as $383/month) and higher cost gold ones (as low as $817/month), and you can see their details at healthcare.gov.
If the mom is making $30,000 a year and working full-time, she may have to pay someone to watch the baby. So there are childcare costs for the family. According to one report, the average cost of infant childcare in Maine is between $9256 and $6760 a year.
What if this mom works less outside of the home?
Perhaps the mom can decrease her hours at her job and, instead of making $30,000 a year, she’s only making $10,000 a year.
Now the family makes $50,000 a year, a bit above twice the federal poverty level for a family of four.
When buying insurance through the federal marketplace, now the cheapest silver option is $248/month. Deductibles can’t be more than $4,000 a year for the whole family ($2000 for one individual) and the out of pocket maximum is $8,700 for the family ($4,750 for one individual). For this plan, the family has no charges for a visit to their primary doctors, specialist doctors, generic prescriptions or ER visits. Also, all preventive care is included at no charge.
Their cheapest bronze option is $114 a month and the cheapest gold plan will cost the family $548/month.
So what happens to thus family’s finances?
For one, the family will pay less for health insurance. Based on the cheapest silver plans, the family would spend $3228 less a year if their annual income went from $70,000 to $50,000.
In addition, perhaps the family could arrange work so that they don’t have to pay for childcare. Let’s ballpark that as an annual savings of $8000.
Depending on their medical costs, the family could pay less since they have lower deductibles and maximum out of pocket costs. However, since that’s hard to predict, the estimate leaves that out.
Taken together — the $3228 in lower premiums and the $8000 for no childcare — this family would still have less money to spend on its needs. They’d only be making up a little more than $11,000 of the $20,000 in lost income.
Actually the loss wouldn’t really be quite that much, since they would have had to pay taxes on the $20,000 that’s now not being earned.
Still, they certainly aren’t coming out ahead financially, so there’s no monetary incentive for them to stay at the lower income level.
But, even though they have less money, the family might decide it’s worth tightening their belts for a time, since they want to be able to have a parent stay home with the baby.
Is this a case of laziness or lack of ambition?
Some critics of Obamacare have claimed that because the health law will enable people to choose to work less, this will create laziness or decreased ambition.
Instead, this family’s choice will likely be a relatively short-term situation (although, of course, it could last awhile).
I know plenty of women who cut back their hours or simply stayed home without paid work after a baby was born, but who went back to work later.
(Sometimes dads stay home, but that is less common. “A 2007 study found that while 5.6 percent of men would opt for fewer work hours, 10.1 percent of women would prefer less time spent in the office. The gap might reflect women’s disproportionate share of household responsibilities, the researchers say. Another explanation might be that women just feel they need to spend more time at home with their children.”)
Staying home with a baby before Obamacare required sacrifices from a family and, after the Affordable Care Act, it still would. But middle-class families now have a greater ability to balance work and family.
Real families care about both money to pay their bills and time with their kids.
These families’ earnings are certainly important to them and to society as a whole.
However, given that the United States has little in the way of family-friendly policies, the Affordable Care Act helps families and society by enabling some to choose greater parental engagement with their children.
Will this cost taxpayers something?
Of course. It isn’t free. Financial costs include higher subsidies going to a family fitting the above example and lower tax revenues paid by such a family.
Ultimately, it will be up to Americans to decide if those costs are worth the benefits.
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