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What to spend on ‘affordable’ health care

When it comes to the Affordable Care Act, one word keeps being bandied about: “affordable.”

The average premium nationally for a midtier plan, meaning one with the second-lowest cost, will be $328 a month before tax credits, 16 percent below projections by the Congressional Budget Office. The Obama administration keeps emphasizing that many people will qualify for a subsidy that will bring that price down.

About 6 in 10 uninsured consumers will be able to get coverage for $100 or less per month when taking into account premium tax credits and Medicaid coverage. However, for others, especially those who don’t qualify for a tax break, a policy could be hundreds more per month. So how will consumers shopping for health insurance determine what’s affordable to them?

When I asked a 29-year-old California man recently, he paused and said, “I think $150 or more a month would be out of my reach.”

I asked him how he came up with this figure.

“It’s just something at the moment I feel I can afford,” said Josh Nece, an uninsured restaurant server in Oakland. “Already I have so many things I have to pay a month just to survive.”

I then asked Nece how much he spends on his cellphone, cable or Internet service.

He knew right away where I was leading him. He doesn’t have cable. His cellphone and Internet cost about $100.

“I see,” he said. “Health insurance is something I need to survive. I guess I can’t afford to play the game that you hope nothing happens.”

I put the same question to an uninsured 19-year-old woman leaving a speech by President Obama in which he urged the largely young crowd to sign up for health insurance.

“I can afford $50 a month,” said Danielle Vest, a student at Prince George’s Community College in Maryland. Vest lives at home and works two jobs.

Obama told the students that on average, a 25-year-old in Maryland making $25,000 a year might pay about $80 a month for health coverage in the exchanges.

Would Vest pay that much?

“My mom says I better do it now,” she said. “So, yes, I would pay that much. I guess.”

That’s the challenge facing the administration and others encouraging people, especially young adults. Affordability is such a fluid term when it comes to someone’s budget. Will people put an arbitrary limit on how much they are willing to spend? I suspect a lot of people will, particularly those who don’t have ongoing health issues.

When you shop in the marketplace, you will find four categories of plans: platinum, gold, silver and bronze.

All the plans will offer the same essential benefits. But you decide your premium level based on how much you want to pay out-of-pocket for health care services.

If you opt to get a plan with a lower monthly premium, you’ll have higher personal costs. If you elect to pay a higher premium, you’ll pay less upfront.

There is a fifth option, a “catastrophic” plan, but it’s available only to people younger than 30 or those who would be exempt from the requirement to purchase coverage because the premium exceeds 8 percent of their income, the Kaiser Family Foundation points out. Catastrophic policies usually have lower premiums than a comprehensive plan, but you get covered only if you need a lot of care.

Information about New York’s plans is available at http://info.nystateofhealth.ny.gov.

Here’s my advice. Don’t be penny-wise and pound-foolish. If you know that you don’t save well, don’t get a plan with a high deductible. All three of my children have asthma. If I were shopping in the marketplace, I would go for gold or platinum. If the costs of those premiums are too high, opt for the second-lowest-priced plan.

I know your family budget may be tight – but what good is it to get a policy that you can’t use because you don’t have the money for co-pays or high deductibles?