Healthcare cost

The arguments regarding the Covid subsidies offered on Obamacare health plans is in regards to Advanced Premium Tax Credits (APTC). This is money the government sends directly to the insurance to offset the cost to the consumer. When you sign up for coverage you estimate your income and the government calculates your potential subsidy. At tax time you compare the advanced payment with your income and reconcile any differences by paying in more or receiving a refund. Example: John estimates his annual income for the upcoming year at $54,000. The IRS determines that his maximum contribution to Obamacare to be $359. The cost of the Silver Plan is $430 so he gets an APTC subsidy for the difference or $71 per month. This has no effect on the annual deductible which would be about $5,500. His income puts him at 350% of the poverty level. This means his annual out of pocket cost will be his monthly premium plus his annual deductible or $9,800. The cost of this benefit which was enhanced during Covid is $138 billion in 2025 up from $92 billion in 2023. Since there are many on Obamacare whose incomes are lower than John’s the average out of pocket expense is about $5,000. Included in this group are 5 million who pay zero out of pocket. These are single people whose income is less than 150% of the poverty level which for 2025 is $23,475. Even though this is no cost to these people many are not signed up because they are unaware of the benefit. This group includes about 14 million people. There are also 12 million more who are eligible at a small cost but do not sign up because they can sign after they have a claim and avoid the small cost. The cost of healthcare is rising because people are getting older and new procedures are rapidly being introduced. In 2023, Americans paid $14,570 per person for a total healthcare cost of $4.9 trillion. One way to offset these increases is to ration care.