Baucus Bill’s Out of Pocket Costs

Baucus Bill’s Out of Pocket Costs

Heritage Foundation
Posted By Rea Hederman On October 9, 2009 @ 9:20 am In Health Care

Under the Baucus plan, just about everyone who is not covered by a government health program will be required to purchase insurance by 2013. To help pay for the mandated minimum coverage, individuals and families with incomes below 4 times the poverty line will receive a subsidy calculated on a sliding scale worth a percentage of their income, while those with incomes up to 3 times the poverty line will also qualify for a cost-sharing subsidy.

However, even with help from the government subsidies, families will be required to pay substantial out-of-pocket costs for health insurance. As analysis from the Heritage Foundation has shown, on average a family of four with an income at 2 times the poverty line will be forced to shell out 16 percent of their income to buy insurance – and this is even after all the subsidies!

Likewise, a family of four with an income at 3 times the poverty line will be required to pay just fewer than 20 percent of their income for insurance. This escalating cost should be especially alarming in a time of economic downturn. This is because as work becomes more expensive as a family’s income increases some may face a disincentive to work more.