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