Unexpectedly Intriguing!
09 October 2013

On Monday, 7 October 2013, U.S. Secretary of Health and Human Services and Obama administration cabinet member endorsed the idea of Americans skipping out on buying health insurance in 2014 in favor of paying the "penalty" tax instead in an interview with the nation's most-trusted news anchor, Jon Stewart:

Real Clear Politics describes the interview:

Secretary of Health and Human Services Kathleen Sebelius defended Obamacare in a very contentious interview with Daily Show host Jon Stewart on Monday night.

Stewart pressed Sebelius on why businesses get a one-year delay on Obamacare but individuals do not. After several attempts for an answer, Sebelius eventually said individuals could delay Obamacare for a year -- by paying the penalty.

JON STEWART: So this is what some would consider the first mall that's been created [for purchasing health care insurance].

KATHLEEN SEBELIUS: You bet. The first -- new rules for companies.

STEWART: So why is it that individuals, though, couldn't say that they didn't want to do it just for a year, like business?

SEBELIUS: Well, they can.

STEWART: Oh, they --

SEBELIUS: They'd pay a fine. They'd pay a fine at the end of the year, but they don't have to -- I mean, they can say I didn't want to do it. The theory is they can't pick and choose if they're going to get hit by a bus or diagnosed with a illness. For a lot of young folks, there is one fall on the basketball court, one auto accident from a lifetime of hospital bills they can't pay.

Now, unlike the nation's politically-connected businesses, who won't have to pay the penalty tax they otherwise would have to pay thanks to President Obama's arbitrary choice to disregard the legal provisions of the Patient Protection and Affordable Care Act for one year on their behalf, the Obama administration wants individual Americans to choose between paying hundreds, if not thousands for health insurance, or lose the subsidy tax credit for buying health insurance when they file their income taxes, which would mean a slightly higher income tax bill.

But, maybe that's something that's worth doing. It all depends on how much extra taxes you would have to pay if you chose to delay your personal implementation of the Obamacare law compared to how much you would have to pay for health insurance coverage. Fortunately for you, we have an app to help you decide if you should pursue the Sebelius solution!

You'll need to go to the government's health insurance marketplace portal to track down the relevant data that you'll need to enter in the tool below, which is needed to either determine how much your health insurance subsidy tax credit would be or your tax (good luck with that!), or you can take advantage of the plan premium data for 34 states that Hugh Chou extracted from that site while it actually worked during a brief portion of its existence.

Your Household Data
Input Data Values
Year in Which Insurance Coverage Will Apply
Your Total Household Income, or Modified Adjusted Gross Income (If Known)
Number of Household Members
Number of Children in Household
Your State's Health Insurance Exchange Data
Select Your State (Select "United States" If Your Territory Isn't Listed)
Monthly Premium for the Second Lowest-Cost "Silver" Plan Available To You
Monthly Premium for the Lowest-Cost "Bronze" Plan Available To You
Monthly Premium for the Health Insurance Plan You're Considering Purchasing

Your Annual Health Insurance Results
Calculated Results Values
Annual Premium (Full Price) of the Health Insurance Plan You're Considering Purchasing
Annual Subsidy Tax Credit You'll Receive For Buying This Health Insurance
Your Annual Out-of-Pocket Costs
For Health Insurance (Premium Only, No Co-Pays or Deductibles)
For the Alternative Tax If You Don't Purchase Health Insurance (And Not Provided by Your Employer)
Potential Savings or Costs If You Choose to Pay the Tax Instead of the Premium
Your Potential Savings (or Costs, if Negative)
The Bottom Line

The default data in our tool above is designed to consider the case of a single mother who is a part-time Trader Joe's employee in California, and who is being forced out of their equivalent "Gold"-level employer-provided plan into a more "affordable", but lower quality "Silver"-level plan through Obamacare.

Oh, and while we're at it, the table below shows the odds of either a man or woman of the indicated ages requiring the kind of hospital care that Kathleen Sebelius described in her interview with Stewart:

Chance of Going to Hospital
Age Group Female Male
Less than 1 1 in 3 1 in 2
1 - 10 1 in 10 1 in 8
10 - 20 1 in 9 1 in 10
20 - 30 1 in 4 1 in 8
30 - 40 1 in 3 1 in 6
40 - 50 1 in 4 1 in 4
50 - 60 1 in 3 1 in 3
60 - 70 1 in 2 1 in 2
70 and Older 4 in 5 (1 in 1.25) 4 in 5 (1 in 1.25)

In case you're wondering why the odds of a woman being admitted to a hospital is double that for a man between the ages of 20 and 40, it largely has to do with a medical condition called "pregnancy", which is something that most people can very easily plan around. Speaking of which, if one plans their due date properly, they could hold out until the next enrollment period to get covered, paying the tax instead, if much cheaper, until their new coverage kicks in to cover the medical expenses associated with having a child. Then perhaps dropping it again after their and their child's odds of needing medical care drops to much lower levels.

Let's call that the family plan version of the Sebelius Solution!

But then, what if getting low income people to accept their income tax increase is the whole point of Obamacare? In that light, since it would cost the federal government more in subsidies to actually support people buying health insurance through its exchanges, and since it stands to gain higher tax revenue if it can get them to choose not to, or as it is working out, because they can't because the exchanges are dysfunctional (perhaps because they were never intended to work), it would make sense for the tax hungry members of the Obama administration to push this very reasonable alternative....

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Welcome to the blogosphere's toolchest! Here, unlike other blogs dedicated to analyzing current events, we create easy-to-use, simple tools to do the math related to them so you can get in on the action too! If you would like to learn more about these tools, or if you would like to contribute ideas to develop for this blog, please e-mail us at:

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