Tag Archives: Subsidies

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Obamacare web site hides health insurance costs until users apply for subsidies

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Another article from health care policy expert Avik Roy in Forbes magazine.

Excerpt:

A growing consensus of IT experts, outside and inside the government, have figured out a principal reason why the website for Obamacare’s federally-sponsored insurance exchange is crashing. Healthcare.gov forces you to create an account and enter detailed personal information before you can start shopping. This, in turn, creates a massive traffic bottleneck, as the government verifies your information and decides whether or not you’re eligible for subsidies. HHS bureaucrats knew this would make the website run more slowly. But they were more afraid that letting people see the underlying cost of Obamacare’s insurance plans would scare people away.

“Healthcare.gov was initially going to include an option to browse before registering,” report Christopher Weaver and Louise Radnofsky in the Wall Street Journal. “But that tool was delayed, people familiar with the situation said.” Why was it delayed? “An HHS spokeswoman said the agency wanted to ensure that users were aware of their eligibility for subsidies that could help pay for coverage, before they started seeing the prices of policies.” (Emphasis added.)

As you know if you’ve been following this space, Obamacare’s bevy of mandates, regulations, taxes, and fees drives up the cost of the insurance plans that are offered under the law’s public exchanges. AManhattan Institute analysis I helped conduct found that, on average, the cheapest plan offered in a given state, under Obamacare, will be 99 percent more expensive for men, and 62 percent more expensive for women, than the cheapest plan offered under the old system. And those disparities are even wider for healthy people.

That raises an obvious question. If 50 million people are uninsured today, mainly because insurance is too expensive, why is it better to make coverage even costlier?

The answer is that Obamacare wasn’t designed to help healthy people with average incomes get health insurance. It was designed to force those people to pay more for coverage, in order to subsidize insurance for people with incomes near the poverty line, and those with chronic or costly medical conditions.

But the laws’ supporters and enforcers don’t want you to know that, because it would violate the President’s incessantly repeated promise that nothing would change for the people that Obamacare doesn’t directly help. If you shop for Obamacare-based coverage without knowing if you qualify for subsidies, you might be discouraged by the law’s steep costs.

So, by analyzing your income first, if you qualify for heavy subsidies, the website can advertise those subsidies to you instead of just hitting you with Obamacare’s steep premiums. For example, the site could advertise plans that cost “$0″ or “$30″ instead of explaining that the plan really costs $200, and that you’re getting a subsidy of $200 or $170. But you’ll have to be at or near the poverty line to gain subsidies of that size; most people will either not qualify for a subsidy, or qualify for a small one that, net-net, doesn’t make up for the law’s cost hikes.

This political objective—masking the true underlying cost of Obamacare’s insurance plans—far outweighed the operational objective of making the federal website work properly. Think about it the other way around. If the “Affordable Care Act” truly did make health insurance more affordable, there would be no need to hide these prices from the public.

The plain truth of the matter is that you can’t lower the costs of health care by covering more people or by covering more treatments or by regulating more doctors. All of those things don’t lower the cost of health insurance – they raise it. The subsidies that the Democrats are offering are costs that are being added to the deficit. They will have to be paid by job creators and their employees through higher taxes later. Obamacare didn’t solve a thing. It just adds costs and complexity. It’s the equivalent of shuffling deck chairs on the Titanic.

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New study: premiums for young people to rise in all 50 states under Obamacare

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The Washington Free Beacon reports on a new study.

Excerpt:

Health insurance premiums for young people will rise in all 50 states under Obamacare, with an average increase of 260 percent, according to a study released Thursday.

The young and healthy segment of the uninsured is considered crucial for the Affordable Care Act to succeed. Former President Bill Clinton suggested last week that Obamacare only works “if young people show up.”

However, an analysis of premiums both before and after the implementation of Obamacare shows that 18- to 35-year-olds are likely to opt out of high rates in the exchanges in favor of cheaper penalties for not having insurance.

According to a study released by the American Action Forum, post-Obamacare premiums will average $187.08 per month, up from $62 per month in 2013, a 202 percent increase.  Overall, states averaged an increase of 260 percent.

Forty-four out of 50 states saw a three-digit percent increase, and in Vermont the cheapest available premium for a 30 year-old male nonsmoker will increase by $332.69, or 600 percent.

[…]Massachusetts had the lowest increase at 9 percent, though the state is considered an “outlier” since it already had similar health care reforms put in place under former Republican Gov. Mitt Romney.

“[T]hat state’s insurance market has been subject to ACA-like reforms since 2006, bloating the premium for the lowest-cost pre-ACA policy to nearly $214, making it the highest of the 2013 premiums analyzed in this study,” the report said.

But what about the subsidies, won’t they help cover the cost of all the free condoms and birth control pills and abortion drugs?

No:

Given the high costs of the premiums, the study predicts that even with subsidies, most of the young uninsured will opt to pay the penalty rather than sign up for health care.

Individuals between 100 and 400 percent of the federal poverty line are eligible for subsidies under the law.

Only those who earn up to 133 percent of the poverty line will have a financial incentive to join the health exchange.  An individual with an income of $15,281.70 would receive a subsidy to cover 100 percent of their health care premiums.

Moving up the income bracket creates disincentives for the young to enroll.  Those making $20,107.50, or 175 percent of the poverty line, will still face a $449 premium, which is three times higher than the penalty they would incur in 2014 ($103.57) if they did not purchase insurance.

An individual earning $37,342.50 will receive no subsidy at all and will face a minimum premium of $2,839, as opposed to a $275.92 penalty in 2014.

I’m pretty sure that most people who get jobs out of college will make more than $37,342.50. Petroleum engineers start at around double that income.

So, I’m thinking that the young people – especially college-educated people with jobs – shouldn’t have voted for Obama. Do you think that their teachers and professors explained to them what would happen to them if they voted for Obama? I think not. I think that their teachers and professors wanted their little wide-eyed charges to vote for more funding of education, with no performance checking, so that they could be paid more money. And the children believed their teachers and voted accordingly. This is a particularly bad deal for bright young men – the kind you might expect to be interested in marriage. Now not only have they inherited massive amounts of debt and a crappy socialist economy with no jobs, but they are being forced to buy expensive health care coverage that they don’t need and won’t use. Why? To subsidize the health care claims made by women and the elderly, who use more health care products and services.

News

Democrats refuse another offer from Republicans to avoid government shutdown

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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.