The Odds of Going to the Hospital

What are the odds that you will need serious medical care?

By "serious medical care", most people will automatically think of a situation where they might need to be admitted to a hospital to receive care for an unforeseen condition, so that's the standard we'll use to answer that question.

Beyond that, we'll break the information down by age and sex, simply because we can see these being major factors that might affect how likely a person will need hospital care.

It turns out to be a really difficult question to answer, because in the U.S., which is where we first sought to get hospital utilization data, tracks hospital discharges - not admissions. The problem with that is that the number of admissions won't necessarily track with the number of discharges, as patients die or perhaps otherwise leave the hospital before being officially discharged.

So we turned elsewhere to answer the question, and specifically to the island nation of Singapore, whose Ministry of Health makes the data not only easy to find, but presents it in a way that helps us answer our specific questions. Our first chart below illustrates the 2011 hospital admission rates by age group and sex per each 1,000 members of Singapore's resident population:

One interesting aspect of the data is that we see such high numbers for the 0-4 age group, which drops off dramatically for the 5-9 age group, which really didn't make a whole lot of sense to us at first. Why would a 4-year old have such a dramatically higher probability of being admitted to a hospital over a 5-year old?

We started thinking about it, and realized that the MOH's statisticians gave us a valuable clue - the number of hospital admissions for each 1,000 members of Singapore's resident population doesn't include hospitalizations associated with either normal deliveries for pregnancy or legalized abortions.

While both of these categories would count as foreseeable conditions, we suspect that the reason in the case of normal deliveries was in part to avoid double-counting. Here, where normal deliveries are concerned, we suspect that infants born in Singapore's hospitals are subsequently "admitted" to the hospital after being born, which is how the hospital admissions associated with normal deliveries are tracked.

Beyond that, we can see that the rate of hospital admissions for women of child-bearing age is over twice that of men of the same age, which likely corresponds to pregnancies that involved complicating factors requiring more intensive care, which would not count as a foreseeable condition.

Having worked out why that apparent anomaly exists, we used that knowledge to determine the probability of being admitted to a hospital for both men and women by age, reverse engineering Singapore's age-group based data to approximate the odds by single year of age from Age 0 through Age 84:

Note how nearly 100% of those 0-year olds are admitted to the hospital! Next, let's look at the same data for women from Age 0 to Age 84:

In looking at the differences in the data between men and women, we see that boys are more likely to be admitted to a hospital before Age 4, after which we see that both boys and girls have similar odds up until child-bearing becomes a factor. At that point, women are much more likely to require hospital admission than men (likely for the reasons we noted earlier), up until their mid-forties, after which, men become much more likely to require hospital admission.

The longer lifespan of women with respect to men likely explains that discrepancy, although we were surprised to see how wide that gap was by Age 84, with women having a 50% probability of being admitted to a hospital and men having almost a 90% probability.

References

Singapore Ministry of Health. Hospital Admission Rates* by Age and Sex 2011. [Online Report]. 10 November 2012. Accessed 8 October 2013.

The Sebelius Solution

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
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)	United States Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming District of Columbia
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....

Obamacare and Trader Joe's: The Rest of the Story

We said that there was more to the story of Trader Joe's decision to dump its part-time employees into ObamaCare, and there is. What follows is our analysis of the statement that Trader Joe's provided to the Washington Post's Wonkblog over a week and a half ago, for which we're apparently the first media organization to produce any sort of serious analysis. We'll start at the top:

Thank you for writing to us. It's possible you have been misled, at least to some degree, by the headlines in some articles regarding our reasons for implementing the [Affordable Care Act] in January. We'd like to take this opportunity to clarify some facts.

For over 77% of our Crew Members there is absolutely no change to their healthcare coverage provided by Trader Joe's.

In January 2012, Trader Joe's was estimated to have approximately 5,500 employees nationwide, working at 365 stores, with half of these situated in the state of California. Today, we would estimate that figure is over 5,700, as the privately-held grocery store chain now has at least 380 locations.

According to the company's statement, of those estimated 5,700 employees, 23% are part-time employees that Trader Joe's will drop from their employer-provided health insurance program, which works out to be over 1,300 employees that will be affected by the change.

The ACA brings a new potential player into the arena for the acquisition of health care. Stated quite simply, the law is centered on providing low cost options to people who do not make a lot of money. Somewhat by definition, the law provides those people a pretty good deal for insurance ... a deal that can't be matched by us -- or any company. However, an individual employee (we call them Crew Member) is only able to receive the tax credit from the exchanges under the act if we do not offer them insurance under our company plan.

Since half of the company's employees are based in California, we can see just how "affordable" their insurance coverage will be after they are forced out of Trader Joe's employer-provided health insurance plans into the plans that will typically be available in that state. The table below reveals what we found when we used UC-Berkeley's "How Much Will a Family Save Under the New Federal Health Law? California Calculator" application to approximately determine what a single adult or a single adult parent with one child will have to pay for health insurance on the state's exchange:

Estimated Full Cost of Monthly Premium for Second-Least Expensive "Silver" Health Insurance Plan in California in 2014
Household Description	Age 21	Age 25	Age 30	Age 35
Single Adult	$230	$231	$261	$281
One Adult, One Child (Under Age 21)	$376	$377	$407	$427
Source: University of California at Berkeley Labor Center

California's "Silver" plans are intended to cover roughly 70% of the health care expenses for the individual or family covered by the plan will have, with the remaining 30% of the costs being paid for by the insured. But that's after paying the premiums for the plan, the full cost of which would run anywhere from a minimum of $2,760 per year for a single, 21-year-old individual with no children to $5,124 per year for a 35-year-old single parent with just one child.

We know from a previous example that we considered that Trader Joe's employer-provided health insurance policies are much closer to what would qualify as being a "Gold"-level plan on the new exchanges being established under the Patient Protection and Affordable Care Act, which would cover roughly 80% of the costs for health care incurred by the insured. The costs associated with the "Silver" plans that we've listed above would therefore represent a downgrade in the quality of coverage, even though they would be considered to be more affordable because they cost less than what a "Gold"-level plan would cost. Basically, the savings result because you pay less to get less.

These numbers don't consider the role that the new ObamaCare subsidy tax credits might play in reducing the out-of-pocket costs that would be paid by Trader Joe's employees, but we'll need to know how much they earn to be able to approximate what their actual out-of-pocket costs for insurance will be after being kicked out of Trader Joe's employee plan into California's ObamaCare health insurance marketplaces.

Fortunately for us, Trader Joe's provided just such an example.

Perhaps an example will help. A Crew Member called in the other day and was quite unhappy that she was being dropped from our coverage unless she worked more hours. She is a single mom with one child who makes $18 per hour and works about 25 hours per week. We ran the numbers for her. She currently pays $166.50 per month for her coverage with Trader Joe's. Because of the tax credits under the ACA she can go to an exchange and purchase insurance that is almost identical to our plan for $69.59 per month. Accordingly, by going to the exchange she will save $1,175 each year ... and that is before counting the $500 we will give her in January.

Let's do some relevant math to get some insight into what's going on here:

• Assuming the single mother, parent of one child, works 52 weeks per year, at a wage of $18 per hour and working 25 hours per week, she will earn $23,400 in a year.


• Trader Joe's claims she has been paying $166.50 per month, or $1,998 per year, for health insurance through the company's health insurance program, which covers both herself and her child.


• If she buys insurance on California's ObamaCare exchange, Trader Joe's claims she will only pay $69.59 out of pocket each month, which works out to be $835.08 per year.


• The difference between $1,998 per year and $835.08 per year is $1,162.92, which would be the actual annual "savings" that she would have if Trader Joe's accurately represented these figures.

Trader Joe's states that the savings would be $1,175 per year, which is off by $12.08. That doesn't sound like much, but it was enough to get us to dig deeper into their numbers.

Using the tool we originally developed to determine whether it would be better to buy health insurance on your state's ObamaCare exchange or to pay the ObamaCare income tax instead, we reverse-engineered Trader Joe's numbers. Here's the adapted version of the tool with the relevant numbers so you can see what we found:

Your Household Data
Input Data	Values
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)	United States Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming District of Columbia
Monthly Premium for the Second Lowest-Cost "Silver" 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 Cost
For Health Insurance (Premium Only, No Co-Pays or Deductibles)

Since the $377 figure in our tool represents the estimated second-lowest cost for a "Silver" plan for a 25-year year old single mother with one child, it appears that Trader Joe's would have their employee enroll in what the price for the monthly premium for the health insurance plan being considered suggests is the lowest-cost "Silver" plan for health insurance, which appears to run $367.81 per month.

Once again, since we've already established that the coverage of Trader Joe's employer-provided plan is more akin to a "Gold"-level plan in the new ObamaCare exchanges, this represents a downgrade in the quality of the single mother's health insurance coverage.

If the employee were willing to continue paying the same $166.50 per month, or $1,998 per year, for health insurance that she is today for a "Gold" or perhaps even a "Platinum"-level plan on California's ObamaCare exchange, she could afford a plan with a premium of $464.72 per month, or $5,576.64 per year, which would be more equivalent to the level of coverage she had through the plan that Trader Joe's previously provided to her family.

As such, we can work out how much Trader Joe's stands to gain from dumping their single mother employee onto the ObamaCare health insurance marketplaces. Here, assuming that our estimated ObamaCare "Gold" or "Platinum" health insurance cost is close in value to the full cost of the policy that Trader Joe's provides today for this particular employee, we find that since the employee is contributing $1,998 toward the cost of their health insurance premium, Trader Joe's must be paying about 64.2% of the full cost of the health insurance toward her family's coverage, or $3,578.64. Multiply a number like that by 1,300 part-time employees being dropped from good health insurance coverage into ObamaCare, and suddenly, we're talking about millions of dollars worth of reduced costs and savings for the company.

This is why Trader Joe's is able to provide the part-time employees that it's ousting from its employer-provided health insurance plans with $500 each. In reality, they would be reducing their costs and increasing the company's annual profit by $3,078.64, and that's just from dumping this single employee onto the ObamaCare exchange in California.

Let's resume going through Trader Joe's statement to the media:

While we understand her fear of change, at her income level this is a big benefit that we will help her achieve.

Hopefully, she won't recognize that in gaining this "big benefit" as Trader Joe's would have her do, she's putting herself into a situation where she has health insurance coverage of lesser quality than she did before, putting her at risk of higher out-of-pocket expenses.

Clearly, there are others who will go to the exchanges and will be required to pay more. That is usually because they have other income and typically a spouse who had a job with no benefits and they do not qualify for the subsidies under the ACA.

One example of that we had yesterday was the male Crew Member who worked an average of 20 hours per week but had a spouse who is a contract consultant who makes more than $200,000 per year. The Crew Member worked for the medical benefits and unfortunately for them they are likely to have to pay more because of their real income. We understand how important healthcare coverage is to our Crew Members and we are pleased to be able to provide and support this program.

Does this means that in addition to greedily profiting from pushing their part-time employees into lower quality health insurance by selling them on the phony "big benefits" they'll get if they do, they also oppose the idea of any of their employees being married to people who also work in jobs that don't provide the generous benefits that Trader Joe's has previously sought to provide, but would now appear to believe are too generous?

We do hope this information helps, and we appreciate your interest in Trader Joe's.

It helped quite a bit actually. It tells us exactly what Trader Joe's principles and priorities were and will be with respect to their employees, given the perverse incentives created for the company by the Obamacare law.

We must remember that before the law's provisions kicked in, the company was very willing to provide very generous benefits to all of its employees. We're just starting to find out how the law has changed their perspective on the value of their crew members so much that they're now willing to kick 23% of them to the curb. The company is being compelled by President Obama's Patient Protection and Affordable Care Act to break the trust they worked hard to build with their crew members.

And that's perhaps the biggest problem with Obamacare. ObamaCare breaks trust.

References

University of California at Berkeley Labor Center. How Much Will a Family Save Under the New Federal Health Law? California Calculator. [Online Application]. May 2013. Accessed 23 September 2013.

Oakner, Larry. Trader Joe's: The Chicken or the Egg? [Online Article]. CoreBrand. 10 January 2012. Accessed 23 September 2013.

Kliff, Sarah. Trader Joe's cut health benefits last week. Here's its side of the story. [Online Article]. Washington Post. 16 September 2013. Accessed 23 September 2013.

Obamacare and Trader Joe's: An Economic Detective Story

Last week, we introduced our tool that can help you choose which option is financially better for you: buying an Obamacare insurance plan in your state or paying the Obamacare income tax. When we did, we hinted that there was more to the story regarding the default values that we entered into our tool, and today we're following up that story: they are the numbers that apply to a young woman who just found out that her employer, Trader Joe's, is going to drop her and a large number of other part time employees from the company's health insurance program for employees.

Owned by Germany's Albrecht family, who also own the German-based Aldi international grocery store corporation, Trader Joe's previously had the reputation of providing above-market compensation and benefits for its employees, where it traded higher labor costs for higher productivity and lower employee turnover-related expenses for the firm.

Here are a number of key excerpts from the anonymous woman's story, which came out in response to a memo that the company issued to its staff on 30 August 2013:

A current Trader Joe's worker described the coverage she'll likely lose as "one of the best parts about the job." (The employee requested anonymity since she isn't authorized to speak to the media.) She said she pays only $35 per paycheck, or $70 per month, for a plan that generally covers 80 percent of her medical costs, carries a reasonable $500 deductible and includes prescription drug coverage.

"There are several folks I work with who are there for the insurance as much as anything, mostly folks with young families," she said. "I can say that when I opened and read the letter yesterday my reaction was pure panic, followed quickly by anger."

The employee said she averages about 28 hours per week and worries she won't make the cutoff for company-based coverage. Whether workers hit the 30-hour threshold and become eligible for the company plan will be determined by their work schedules over the course of the next three months, the memo explains. For those who may be on the cusp, the memo left little hope that they can pack in extra hours to meet the requirement.

"It is important to note ... we do not create our weekly schedules with healthcare eligibility in mind," Bane wrote. "Rather, we will continue to create weekly schedules that are solely focused on supporting the customer experience."

The worker, who took home less than $20,000 last year, might be able to find a similar plan at a comparable cost under Obamacare, judging from a subsidy calculator. But there's no guarantee, other than uncertainty.

Here's what we can work out from the information presented in the article with some straightforward economic detective work. The employee is relatively young and single, which we can determine from the relatively low values she provide for what she pays for her current health insurance coverage.

That employee benefit was very generous. Her health insurance plan was roughly equivalent to what would be considered to be the "Gold" level plans that are now being marketed through the new state health insurance marketplaces, which we can deduce from the fact that she indicates that it covers approximately 80% of her health care costs. While those plans would typically not have a deductible, she indicates that her deductible is $500, which is about one-fourth what would be typical for the next-lower tier "Silver" plan available through the state health insurance exchanges.

At $35 per paycheck, her annual out-of-pocket cost for her portion of the premiums that she pays for near-equivalent Gold plan is $910, assuming that she is paid on a biweekly basis. The article does not provide enough information to determine the full actual cost of her health insurance premiums.

The article also provides critical information about her income. It indicates she earns "under $20,000" per year, working an average of 28 hours per week. Assuming that she works 52 weeks per year, that would put her hourly wage at less than $13.74 per hour. For our purposes, we'll assume she actually earns $13.70 per hour, which would give her an annual income of $19,947.20, which is just "under $20,000".

Next, we'll consider what her health insurance costs might be if she chooses to buy a health insurance plan through her state's ObamaCare exchange. Since nearly half of all of Trader Joe's stores are located in California, we'll use that state's exchange information. That's where our assumption that she is relatively young comes into play, as the data we'll use in our tool is take from Covered California's average statewide rates that will apply for a 21-year old in that state in 2014.

In the chart above, the top value listed for each income level represents the "typical" out-of-pocket potion of the average monthly premium for each plan, while the lower green value that's listed represents the average subsidy that a single individual might receive, which is based upon the cost of the second-least expensive "Silver" plan. Adding the two values together gives us the full actual cost of an average health insurance premium for a 21-year old in California.

We'll use the cost differences between the "Bronze" plans listed in the chart above, where approximately 60% of the insured's health insurance costs are covered under the plan and the "Silver" plans, which cover around 70% of the insured's health care expenses, to estimate what the near-equivalent "Gold" plan would cost her. Taking the average of the second-least and third-least expensive plans listed, we estimate the typical average monthly cost of a "Gold" plan in California would be $283.

With all that data then, we can now establish what the real financial choice that will soon be faced by Trader Joe's part-time employee in the tool below. We'll find out how much she'll have to pay for health insurance plan that's nearly equivalent to the one that Trader Joe's is taking away from her, and whether she would simply be better off paying the tax, and only buying the insurance if and when she actually needs it.

Your Household Data
Input Data	Values
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)	United States Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming District of Columbia
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

For the default values we've entered in the tool above, which doesn't factor in Trader Joe's $500 "go-away" payment, we find that if our heroine can reasonably expect to be healthy, it will be much less costly for her to hold off on buying any health insurance until she might actually need it and pay the additional tax on her income instead, as she will come out ahead by $1,551.01 per year. [Update: There was a small glitch in our original calculation - now fixed (HT: Sean Parnell)!]

We also find that she comes out behind if she chooses to buy into a health insurance plan in California that's nearly equivalent to what her previous employer-provided health insurance coverage was. At her $19,947.20 annual income, she could expect to pay $1,650.48 per year out of her own pocket for the "Gold" level plan that is most nearly equivalent to the coverage that Trader Joe's was previously providing her with an out-of-pocket cost to her of $910, which leaves her some $740.48 in the hole, even after she collects ObamaCare's subsidy tax credit.

Even with Trader Joe's promised extra check for $500, she would still find herself at least $240.48 in the hole compared to today, unless she accepts lesser health insurance coverage that requires her to pay a much larger percentage of her health care costs. And it only gets worse if we account for that extra $500 payment to our heroine's income, because it reduces her ObamaCare subsidy, but we'll leave that for you discover for yourself in our tool above.

The bottom line is that this is a clear example of a case where an individual is both not going to be able to keep the plan they have today where they also come out worse off than they were before, whether through being forced into lesser insurance coverage or through having less disposable income after taxes and health insurance costs.

Looking at Trader Joe's motives in dropping the health insurance it was providing to its part-time crew members, if our estimated full annual cost of $3,396 for a "Gold" plan in California's ObamaCare health insurance exchanges is a good indication of what the company was spending per employee to provide that coverage, reducing that figure by the $910 that the part-time employee was paying per year means that the company stands to reduce its costs for health insurance by $2,496 per previously-covered part-time employee before its $500 "don't bother us" payment, and $1,996 per previously-covered employee after it.

There's still more to the story, as Trader Joe's has both taken heat in the media and responded to the criticism that it has received for dumping its part-time employees out of its health insurance coverage program, but we'll cover that in an upcoming post.

References

Covered California. Health Plans & Rates for 2014: Making the Individual Market in California Affordable. [PDF Document]. 23 May 2013. Accessed 21 September 2013.

HealthPocket. Obamacare Metal Plans. [Online article]. 1 June 2013. Accessed 21 September 2013.