Got to love it when a plan comes together.
The Average Obamacare Family Plan Costs $19,000 Annually—as Much as a New Car
Whatever your personal opinion on universal healthcare in theory, we should all be able to agree that Obama’s Affordable Care Act was a poorly-crafted piece of legislation. Furthermore, it has failed to live up to its stated purpose of making health insurance affordable for even the poorest Americans.
For example, we have observed premiums for Obamacare plans double over the last four years in Maryland, with double-digit increases expected for most other states. Not only do such increases defeat the Act’s purpose, but they also have a negative impact on America’s economy.
Data from the Kaiser Family Foundation, and published published in the Wall Street Journal shows that rising insurance premiums are a major disincentive for small businesses to hire new employees, and are costing many workers their benefits (and private coverage).
According to the report, the average annual cost of employer health coverage for a family plan was nearly $19,000—equivalent to the cost of a new vehicle every year.
The below graph illustrates both the rapid cost increase, and the rising costs to employers:
Now the first thing one will note is that the impact of Obamacare, while significant in its own right, is couched in a broader trend—even without Obamacare healthcare premiums would have nevertheless increased, if not to the same degree.
There are a number of reasons for this which we (regrettably) do not have time to deal with in the current article, but suffice it to say that Obamacare has done nothing to make healthcare more affordable. In fact, it’s done the opposite.
Instead, it is worth considering how rising Obamacare premiums have hampered US employment growth—they’re part of the reason the period since the 2008 collapse has been known as a “jobless recovery”.
Why Obamacare Costs Jobs & Slows Growth
Before Obamacare, healthcare benefits were a perk—if an employer couldn’t afford to offer benefits, they simply advertised the job as lacking benefits, and hired a worker. Said worker could then purchase an individual healthcare plan at their own expense (or not at all).
However, Obamacare has imposed a number of restrictions on employers, oftentimes forcing them to provide health coverage to their employees. This has, essentially, functioned like a giant minimum wage increase, but rather than wages the increased costs were due to state-mandated benefits. And like minimum wage hikes, Obamacare has made it impossible for many employers to hire employees at prices they can afford—essentially, Obamacare benefited those who had jobs (provided they were profitable enough), but reduced the availability for those on the outside looking in.
Think of it like this: you’re an employer who wants to hire someone for an annual salary of $30,000. Furthermore, someone is willing to work for said amount. In a free market they would hire the willing employee and they would both benefit—the employer would get a worker, and the worker would get a job.
Enter Obamacare. The legislation forces many employers to provide benefits plans for their employees. Let’s take the same example: the employer wants to hire someone for $30,000, but now must also shell out $20,000 for a family health plan. This brings the costs of hiring someone to $50,000. What will they do?
The employer could either cut the advertised salary to $10,000, and try to attract qualified employees through the benefits (this won’t work because people don’t think like this), or they could eat the costs. Some employers can afford to do so, and their employees benefit at their expense.
However, the majority are unable to increase wages by such an astronomical amount, and simply refuse to hire new employees. This limits job creation, and creates artificial unemployment—the end result is quite absurd.
Obamacare is a policy disaster, and it must be repealed (and if need be, replaced). The sooner the better.