Tag Archives: Individual Mandate

Obama voters face choice between an expensive fine and an expensive Bronze plan

Should we pick a candidate based on our emotional response to his confidence?
Should we pick a candidate based on our emotional response to his confidence?

Obama told us during his election campaigns that health care premiums would go down an average of $2,500. How did he intend to achieve that? By reducing choice and competition, and require insurance companies to cover more stuff, like drug addiction therapy, onto every health care plan.

Here he is promising things to young voters:

So what happened? Health care premiums went up, because the more stuff that your health care plan has to cover (e.g. – drug addiction treatment) the more you have to pay for that health care plan. And so, as I blogged about before, health care premiums have actually gone up $4,865 on average, per year. Yes, this is another case of keep your doctor / keep your health plan lies.

Well, that’s all fine and good, because this is America, and no one will be forced to buy these expensive plans that cover things that you don’t want or need, right? Well, not so much. See, there is this Obamacare thing called the “individual mandate”, and it says that everyone has to buy health care, or they have to pay a fine. Even single young men in their 30s who don’t even need health care have to buy health care.

Investors Business Daily explains:

Millions of people who will start shopping for ObamaCare plans as early as Sunday will have one question in mind: How much is the cheapest plan for avoiding a $695 individual mandate penalty?

For the vast majority, that means the cheapest bronze plan. The next question they’ll consider, taking into account the deductible that will rise as high as $6,850 in 2016, is whether they would be better off paying a penalty.

A lot of factors will play into the decision, but for most relatively young and healthy adults, the biggest will be just how much more it will cost to get insurance than to go without coverage.

An IBD review of 2016 rates in one major metro area in each of the 37 states using HealthCare.gov reveals where higher bronze-plan costs — even after subsidies — will make the mandate penalty look relatively attractive.

So you either have to pay a $695 or you have to buy a bronze plan with a $6,850 deductible. Most people never use that much health care, so they will be paying out of pocket for all their health care anyway. So, either you are paying a fine that covers nothing, or you are paying for a plan that covers nothing.

Here is the chart of bronze health care plans:

Obamacare Bronze plans: and don't forget the $6850 deductibles
Obamacare Bronze plans (click for larger image)

More:

The accompanying chart lists the after-subsidy cost of the cheapest bronze plan for a 30-year-old earning 257% of the poverty level, or about $30,000. At the top of the chart, young adults earning $30,000 in Miami, Atlanta and Jackson, Miss., would have to pay more than $2,200 for the cheapest exchange plan — or more than triple the mandate penalty.

What’s nice about this is the justice of it. It’s the young, hip, middle-class young people who are going to end up with the bill for their Democrat-voting in 2008 and 2012.

The question is whether average moderate-earning 30-year-olds, assuming they have that much money available for insurance, will think it is better to pay an extra $1,130 or so for a plan with a huge deductible or whether it makes sense to hope for the best and hold on to that cash to pay any medical bills that arise.

A logical goal of the individual mandate is to get young and healthy adults with moderate incomes to sign up for coverage, since low-income young adults get pretty big subsidies and may not need as much of a push to enroll. Yet ObamaCare’s individual mandate does not seem well designed to achieve its goal, which helps explain why young-adult enrollment is somewhere around 2 million below target at this point.

Health care reform is a valid goal, and we do need health care to get cheaper. But the way to do that is not to elect someone who has not done it, but who just makes a lot of promises. The way to fix health care is by electing someone who has experience at fixing health care.

Americans choosing not to purchase Obamacare exchange plans

On Fox News Sunday, Brit Hume talked about how the majority of the new enrollees are signing up for Medicaid, not Obamacare, and how young people are refusing to sign up for Obamacare plans on the exchanges.

And more discussion from the same panel:

For those who can’t watch, here’s an article from Fox News about how the majority of new enrollees are choosing Medicaid, not Obamacare plans.

Excerpt:

While virtually all the ObamaCare focus is trained on the program’s dysfunctional website, another problem could be emerging — in states where individuals are able to sign up, far more are enrolling in Medicaid than private plans.

For now, the statistics are spotty. The Obama administration still hasn’t provided figures on how many people have successfully enrolled through the federally run exchanges. Some, but not all, states have provided their own relatively up-to-date figures.

But for those that have, the lopsided numbers show Medicaid is getting the lion’s share of enrollees.

In Washington state, more than 35,000 people have signed up for coverage since Oct. 1. Of them, just 4,500 went into private plans. Roughly 31,000 signed up for Medicaid — with coverage kicking in sometime between now and Jan. 1.

The director of the state’s Health Care Authority said they were “pleased by the strong response of Medicaid-eligible residents.”

But the imbalance — if it does not even out in the months to come — could create problems for private insurance companies which are relying on a major influx of new and healthy customers to make the system hum.

“There are a lot of elements of this law that have to work, that must work — otherwise the whole thing collapses,” the Cato Institute’s Michael Cannon said. “They need — need — lots of healthy people to sign up for insurance through the exchanges.”

The fact that people are flocking to Medicaid isn’t necessarily a problem — but a lack of healthy enrollees on private plans would be.

The main reason the Affordable Care Act mandated that individuals buy insurance was so that private insurers would get enough young, healthy people in the system who could offset the costs of covering older and sicker patients. Otherwise, at the very least, costs will skyrocket for those in the system.

[…]The Democrat and Chronicle newspaper reports that in New York, nearly 24,000 of the 37,000 newly enrolled residents are going into Medicaid, which millions of New Yorkers are already on. Just 13,313 chose private plans.

Medicaid is fully taxpayer-funded, so this is not going to help the deficit/debt situation at all. That money will have to be borrowed and paid back by taxpayers. Making things worse is the fact that young people are not signing up to purchase the overpriced health insurance plans on Obamacare exchanges.

Excerpt:

As Nick Gillespie and Veronique de Rugy have pointed out for Reason magazine, the concept of today’s older generation as impoverished is simply wrong. In fact, today’s seniors are far wealthier than today’s young adults.

Looking at rates of homeownership, 83% of elderly households own a home. Meanwhile, 36% of millennials are still living under their parents’ roof. Those over 65 years of age have much lower poverty rates than most other demographic groups. Households headed by people 65 or older have 22 times the wealth of households headed by people under 35.

Not only are many young people either unemployed or underemployed, the Consumer Financial Protection Bureau estimates that people under 40 owe 67% of the roughly $1.4 trillion that Americans owe on school loans. That’s on top of an average of several thousand dollars of credit card debt.

ObamaCare forces people who can scarcely afford the extra cost to subsidize care for people who absolutely can afford to pay for their own health services.

In the exchanges, a young person will have to pay an estimated $250 per month for basic insurance. Again, this cost is so high because these premiums are expected to pay for older people’s healthcare costs. These costs now include covering a plethora of expensive drugs, services and procedures thanks to ObamaCare’s requirements for insurance plans.

Buying plans on insurance exchanges costs money, and many young people don’t have any money to spend these days. Young people have not done particularly well at finding jobs lately, especially since they have acquired precious few marketable skills in the public schools. (Most people can’t get a job calling people racist and sexist and homophobic, because there are only so many journalism jobs to go around).

So what Obama has really done is promised lots of goodies to all of his supporters, but there is no one signing on to pay for it. And that’s what I would expect from someone with no marketable degrees or skills who has very very limited experience working in the private sector. Many of the people in the Obama administration just haven’t done anything productive in the private sector, and that lack of experience is now showing. We have elected a government that believes in making policy based on feelings, not facts.

Democrats refuse another offer from Republicans to avoid government shutdown

As expected, the Senate Democrats rejected the compromise on Tuesday.

Last Night, Senate Democrats Voted Along Party Lines To Shut Down The Government Rather Than Agree To Delay Obamacare’s Individual Mandate And Surrender Their Special Insurance Subsidies. “In an extraordinary back-and-forth between the House and Senate that extended late into the night, Democrats beat back attempt after attempt to gut President Barack Obama’s signature health care law. After Senate Democrats rejected the House’s year-long delay of Obamacare and a repeal of the medical device tax on Monday afternoon, Democrats returned to the floor after 9 p.m. to kill another House GOP proposal. The second measure would have kept the government open in exchange for delaying the health care law’s individual mandate and eliminating federal health care contributions for lawmakers and Capitol Hill aides. (Burgess Everett and Manu Raju, “Government Shutdown Update: Senate Rejects House Plan – Again,” Politico, 9/30/13)

According To The Congressional Budget Office, Delaying The Individual Mandate By One Year Would Reduce The Federal Budget Deficit By $35 Billion. “CBO and the staff of the Joint Committee on Taxation (JCT) estimate that enacting H.R. 2668 would reduce federal deficits by roughly $36 billion over the 2014-2018 period and by roughly $35 billion over the 2014-2023 period.” (Cost Estimate Of H.R. 2668: An Act To Delay The Application Of The Individual Health Insurance Mandate, To Delay The Application Of The Employer Health Insurance Mandate, And For Other Purposes, Congressional Budget Office, 9/6/13)

A July Poll Found That 77 Percent Of Registered Voters Support Delaying The Individual Mandate Or Repealing It Entirely. (Morning Consult Poll, 2,076 RV, MOE 2%, 7/24-26/13)

Member of Congress And Their Staff Are Required To Enroll In ObamaCare’s Exchanges. “Sen. Charles Grassley, R-Iowa, then succeeded in adding a measure to Obama’s health care bill three years ago requiring members of Congress and employees in their offices to leave the Federal Employee Health Benefits program and start buying their insurance through the state exchanges that open Tuesday under the Obamacare law.” (Laurie Kellman, “GOP demanded lawmakers pay more for health care,” The Associated Press, 10/1/13)

But OPM Granted Congress The Ability To Provide Subsidies, Which Are Not Available For Other Americans, To Help Purchase Insurance Though The Exchanges. “But the statute means that about 11,000 Members and Congressional staff will lose the generous coverage they now have as part of the Federal Employees Health Benefits Program (FEHBP). Instead they will get the lower-quality, low-choice “Medicaid Plus” of the exchanges. The Members-annual salary: $174,000-and their better paid aides also wouldn’t qualify for ObamaCare subsidies. That means they could be exposed to thousands of dollars a year in out-of-pocket insurance costs…And now the White House is suspending the law to create a double standard. The Office of Personnel Management (OPM) that runs federal benefits will release regulatory details this week, but leaks to the press suggest that Congress will receive extra payments based on the FEHBP defined-contribution formula, which covers about 75% of the cost of the average insurance plan. For 2013, that’s about $4,900 for individuals and $10,000 for families.” (Editorial, “Congress’s ObamaCare Exemption,” The Wall Street Journal, 8/5/13)

I listened to a recent episode of the Weekly Standard podcast, and guest Bill Kristol was advising the GOP to make exactly this proposal, saying that it was a strong move by the Republicans. I agree. We now have vulnerable Democrats going on record in favor of special perks for themselves and their staff, as well as the hated individual mandate. As soon as people see the sticker shock of being forced to buy insurance, or pay a fine, we are going to have a valuable tool in the 2014 elections. The left-wing media isn’t going to be able to protect the Democrats from their own votes.

UPDATE: The Weekly Standard approves of what the GOP is doing.

New study finds that many young people won’t purchase Obamacare plans

Dr. David Hogberg of the National Center for Public Policy Research explains how Obamacare affects young people.

Here’s the executive summary:

If the ObamaCare health insurance exchanges are to function properly, it is crucial that a substantial number of people ages 18-34 join them. This age group that is young and relatively healthy must purchase health insurance on the exchanges in order to “cross-subsidize” people who are older and sicker. Without the young and healthy, the exchanges will enter a “death spiral” where only the older and sicker participate and price of insurance premiums will increase precipitously.

This study finds that in 2014 many single people aged 18-34 who do not have children will have a substantial financial incentive to forego insurance on the exchanges and instead pay the individual mandate penalty of $95 or one percent of income. About 3.7 million of those ages 18-34 will be at least $500 better off if they forgo insurance and pay the penalty. More than 3 million will be $1,000 better off if they go the same route. This raises the likelihood that an insufficient number of young and healthy people will participate in the exchanges, thereby leading to a death spiral. 

The design of the plan is to tax younger, healthier people – especially men – in order to obtain the money to pay for heavy users of health care.

To compel the young and healthy to purchase insurance, the architects of ObamaCare included an individual mandate that requires individuals to either buy insurance or pay a penalty. The penalty, which increases over time, is whichever is greater: $95 or one percent of income in 2014, $325 or two percent of income in 2015, and $695 or 2.5 percent of income in 2016 and thereafter.

[…]The gender breakdown of these individuals presents another problem. Women have higher rates of health utilization than men, including more visits to primary-care physicians and greater use of diagnostic tests and emergency care. However, as Table 3 shows, roughly two-thirds of the individuals for whom insurance will cost at least $1,000 more than the fine are men.

Hard to see why any young man would have voted Democrat, and yet many did. Did they know that they were voting for a tax on themselves at a time when many of them are poorly educated by government-run schools, and can’t even find jobs? How can you pay a fine for not having health care when you don’t have a proper education or a proper job?

The net effect of the “community rating” and “guaranteed issue” provisions of Obamacare will be to raise health insurance premiums and force private companies to stop offering plans:

If the exchanges do not attract a sufficient number of people in the 18-34 age demographic, they will eventually enter an insurance “death spiral.” This occurs when the young and healthy drop out of the “insurance pool.” This leads to “adverse selection” in which insurance is only attractive to those who are generally older and sicker. If the insurance pool is comprised largely of people who are older and sicker, then insurance prices will rise to cover their costs. That rate increase causes even more young and healthy people drop their insurance, leaving the pools even older and sicker than before, and so on. Eventually, all but a few insurers will be forced to discontinue their business on the exchanges because they can no longer make a profit. Fewer insurers means less competition, resulting in even higher insurance premiums.

Community rating and guaranteed issue are catalysts for a death spiral. In its strictest form, community rating means that insurers must charge everyone the same premium, regardless of factors such as health status and age. Guaranteed issue means that an insurer must sell a policy to a consumer anytime.

Under ObamaCare, the exchanges use a modified version of both of these regulations. Its form of community rating doesn’t allow insurers to vary rates based on health status. It does allow, however, for modification of premiums if one smokes and to compensate for age (although in a more restricted manner than the market currently does). Regarding guaranteed issue, insurers must sell policies to all comers but (with a few exceptions) only during the annual open enrollment period from October to December.

Both of these rules give young and healthy people big incentives to forgo insurance coverage altogether. Community rating means young people have a reduced incentive to buy insurance since they will pay a premium that is above the market rate. Many who are currently purchasing insurance in the individual market, for example, will see a substantial premium increase if they switch to the exchange.

In a market without guaranteed issue, consumers run the risk of insurers not selling them policies when they get seriously ill. But that risk is largely gone under the exchanges. For instance, a young person who gets a serious illness in June only has to wait until October to sign up for insurance and then wait until January 1 of the next year to receive coverage. Combined, community rating and guaranteed issue give the young and healthy big incentives to forgo insurance until they are sick.

“Community rating” and “guaranteed issue” have actually already been tried at the state level. What happened then?

This:

The late Conrad Meier, then a senior fellow in health care policy for the Heartland Institute, examined what happened when these two regulations were instituted on the state level in his 2005 monograph “Destroying Insurance Markets.” In the early 1990s eight states — Kentucky, Maine, Massachusetts, New Hampshire, New Jersey, New York, Vermont and Washington — imposed community rating and guaranteed issue on their individual insurance markets. The result, according to Meier, was the above-described death spiral.

For example, in 1992 the New Jersey legislature adopted community rating and guaranteed issue rules for its individual insurance market with the passage of the “Individual Health Coverage Program.” The monthly premium for family coverage from Aetna rose from $769 in 1994 to $6,005 in 2005, a whopping increase of 683 percent! Other insurers saw similar increases.

Before the reforms began, there were about 28 insurers covering the New Jersey individual market. By 2007 there were only seven. According to the Census Bureau, the number of people in New Jersey’s individual market fell from about 998,000 in 1994 to 630,000 in 2005, a decline of 37 percent.

It’s pretty clear that Obamacare was designed to replicate this same effect that’s been observed in states at a national level, paving the way for single payer health care. What will Americans think when their healthcare is controlled by the kind of people who run USPS, Amtrak, the Bureau of Motor Vehicles and the IRS? 

IRS: cheapest Obamacare plan will be $20,000 per year per family [CORRECTED]

UPDATE: The $20,000 figure is wrong. Here is the correction from Investors Business Daily: (H/T Sonya M. via Scott S.)

The most current information from the Congressional Budget Office and the Joint Committee on Taxation put the cost of a family policy purchased through an employer in 2016 at $20,000 vs. $15,745 last year.

In 2016, average premiums for a family of four buying a silver-level plan through ObamaCare’s exchange are expected to be $15,400 — before subsidies. The lowest-cost bronze plan, which is far less comprehensive than typical employer policies, would cost about 85% of a silver plan, or $13,000.

CNS News with some sobering news about health care.

Excerpt:

In a final regulation issued Wednesday, the Internal Revenue Service (IRS) assumed that under Obamacare the cheapest health insurance plan available in 2016 for a family will cost $20,000 for the year.

Under Obamacare, Americans will be required to buy health insurance or pay a penalty to the IRS.

The IRS’s assumption that the cheapest plan for a family will cost $20,000 per year is found in examples the IRS gives to help people understand how to calculate the penalty they will need to pay the government if they do not buy a mandated health plan.

The examples point to families of four and families of five, both of which the IRS expects in its assumptions to pay a minimum of $20,000 per year for a bronze plan.

“The annual national average bronze plan premium for a family of 5 (2 adults, 3 children) is $20,000,” the regulation says.

Bronze will be the lowest tier health-insurance plan available under Obamacare–after Silver, Gold, and Platinum. Under the law, the penalty for not buying health insurance is supposed to be capped at either the annual average Bronze premium, 2.5 percent of taxable income, or $2,085.00 per family in 2016.

In the new final rules published Wednesday, IRS set in law the rules for implementing the penalty Americans must pay if they fail to obey Obamacare’s mandate to buy insurance.

You might be thinking that you will be OK because you have health care through your employer, but there are lots of problems with that. First, your premiums are going up already because your insurer has to cover more people. Second, Obamacare is designed to drive out and eliminate private health insurers. Third, you may not have your job much longer because of the taxes, spending and regulations that harm your employer’s ability to stay afloat.