New Health Care Law: Premium subsidies will make insurance affordable, but not until 2014

I’ve been talking about the early results of the new health care law – mainly tax breaks for small businesses, the federal high risk pool, and allowing 26-year-olds to stay on their parent’s plans, but the major health reform changes don’t take effect until 2014. That’s when individuals who can’t get their insurance through their work, mostly people in small businesses or self-employed and their families, will be able to buy private insurance on new state health exchanges. Private insurers in the exchange will offer apples to apples comparison plans that must meet minimum standards for basic coverage like including hospital stays and prescription drugs. Insurers can certainly sell and people certainly can buy coverage outside the exchanges, but to get subsidies that make coverage affordable for many more people, coverage must be purchased through the exchange.

The Kaiser Family Foundation has created a calculator to show what health insurance will cost for families when all this starts in 2014. Plug in income, family size, and age and you get a pretty good sense of how much of a discount individuals and families will receive. For example, a family of four where the top wage earner makes $45,000 will see their health insurance bill drop from over $11,000 a year to $2,600.