Thanks To The Affordable Care Act, The Cheapest Family Insurance Policy In America Will Cost $20,000


There’s an old joke among conservatives about government health care programs. It goes something like, “If you think health care is expensive now just wait until it’s free.”

I can’t help thinking about that as I read what the “Affordable Care Act” is doing for the affordability of health insurance in America.

( – In a final regulation issued Wednesday, the Internal Revenue Service (IRS) assumed that under Obamacare the cheapest health insurance plan available in 2016 for a family will cost $20,000 for the year.

Under Obamacare, Americans will be required to buy health insurance or pay a penalty to the IRS.

The IRS’s assumption that the cheapest plan for a family will cost $20,000 per year is found in examples the IRS gives to help people understand how to calculate the penalty they will need to pay the government if they do not buy a mandated health plan.

The examples point to families of four and families of five, both of which the IRS expects in its assumptions to pay a minimum of $20,000 per year for a bronze plan.

“The annual national average bronze plan premium for a family of 5 (2 adults, 3 children) is $20,000,” the regulation says.

Bronze will be the lowest tier health-insurance plan available under Obamacare–after Silver, Gold, and Platinum. Under the law, the penalty for not buying health insurance is supposed to be capped at either the annual average Bronze premium, 2.5 percent of taxable income, or $2,085.00 per family in 2016.

That gap between what a health insurance policy is going to cost in this coming era of Obamacare, and what the tax will be if you don’t buy a policy, could well be what does the law in. George Will referred to this problem in a column a couple of weeks ago.

The Supreme Court upheld the legality of the individual mandate based on the idea that the mandate’s penalty was a tax and not a penalty. But the Supreme Court noted in its ruling that the difference between a tax and a penalty is a matter of degree. As long as the tax for not buying health insurance stays low enough to not be considered punitive, it’s a tax. But if it’s raised, it becomes a penalty.

This is all a lot of nonsensical parsing, of course, but what it does mean is that if the federal government intends to raise the tax for not having health insurance the law is susceptible again to being overturned by the courts. But if they leave it as low as it is now, a lot of Americans are going to see the big difference between paying the tax and paying for cost-inflated health insurance and opt for the former.

And who could blame them?