Government Shutdown, Obamacare, and Potential Impacts on the U.S. Economy

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Obamacare Premiums: Up or Down?

Premiums will go up for many, but federal subsidies will help reduce the net cost. Credit: Health and Human Services.

Premiums will go up for many, but federal subsidies will help reduce the net cost. Credit: Health and Human Services.

Will your insurance premiums go up or down? It depends on various factors, including whether or not you presently have insurance, which plan you select, your age, and the state in which you live.

If you have no health insurance whatsoever, assuming you enroll instead of paying a penalty, your costs will obviously go up. However, government officials have said that 56% of presently-uninsured people can pay under $100 per month, factoring in subsidies.

As for the Silver plan, the Congressional Budget Office originally estimated premiums of $392 per month. In actuality, the costs are coming in all over the map. In Minnesota, the average Silver plan will cost $192 per month; in Wyoming, the same plan will cost an average of $516 per month. Overall, the weighted average cost of the Silver plan across the country is $310 — 79% of the CBO estimate.

Seven states will see premiums above the CBO’s projections, with the rest below it.

Obamacare’s Impact on the Overall Economy

Opponents have taken a declarative stance against the legislation. Texas Senator Ted Cruz, who performed a 21-hour filibuster on the Senate floor on September 24th, said The American people overwhelmingly reject Obamacare. They understand it’s not working. The only people who aren’t listening to the argument are the career politicians in Washington. It’s Harry Reid, who wants to use brute political force.”

The Government Accounting Office has attempted to quantify the impact of the new law on projected budget deficits, projecting forward 75 years. Depending on whether or not the law ultimately reigns in spiraling health care costs as intended, the impact could be positive (a 1.5% decrease in projected budget deficits) or negative (a .7% increase). The GAO made no determination whether or not one scenario is more likely than the other. Put simply, it could result in a cumulative 1.5% boost to overall growth, or a .7% drag. On a per-year basis, the effects would barely move the dial either way.

As with the individual costs, the effectson the overall economy is decidedly uncertain. Anecdotal evidence so far is negative, with the Congress unable to pass a continuing resolution as a direct result of the law, reports of employers scaling back workers’ hours, and polls showing a nearly 2-1 negative perception amongst Americans. However, it is possible that initial reactions are borne out of the uncertainty the new law has created. Either way, the actual impact to the economy won’t be evident for months or even years to come.

Obama and Congress Shutdown and Obamacare Uncertainties

In summary, the probably net effects are fairly straightforward, despite the myriad of complexities inherent within the law: Some will pay more, others less, with most seeing no appreciable difference in their premiums either way. Macroeconomically, projections show the potential for budget improvement as well as burgeoning costs, depending upon various assumptions. President Obama hopes the expanded coverages and enrolling of over 20 million currently-uninsured individuals will help bend the cost curves and lead to a more sustainable long-term approach to health care. The opponents hope to repeal at least some of the new law, if not the entire thing.

With this many uncertainties, it’s no wonder that the politicians can’t agree upon the time of day.

Resources

White House. The Health Insurance Marketplace is Coming Soon. (2013). Accessed October 1, 2013.

Jones, Brent. Editorial: Under ObamaCare, 3.6 million more people insured. (2013). USA Today. Accessed October 1, 2013.

Luhbi, Tamy. Will young people pay a lot more under Obamacare? (2013). CNN Money. Accessed October 1, 2013.

Koenig, Brian. CBO: ObamaCare Price Tag Shifts from $940 Million to $1.76 Trillion. (2013). Yahoo News. Accessed October 1, 2013.

Richmond-Times Dispatch. Morgan Griffiths says GAO estimates Obamacare will add $6.2 trillion to long-term deficits(2013). Accessed October 1, 2013.

GAO. Effect on Long-Term Federal Budget Outlook Largely Dependent on Whether Cost Containment Sustained(2013). Accessed October 1, 2013.

Murray, Mark. Poll: Obamacare remains highly unpopular as implementation looms(2013). NBC News. Accessed October 1, 2013.

Huffington Post. David Gregory to Ted Cruz: ‘You Haven’t Moved Anyone’ on Obamacare(2013). Accessed October 1, 2013.

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