Health insurance enrollment declined among people who do not qualify for financial help under ObamaCare as premiums rose to make coverage less affordable, new federal data shows.
The data released by the Centers for Medicare and Medicaid Services (CMS) on Monday shows that enrollment declined by 1.2 million people, or 24 percent, between 2017 and 2018 among people with incomes too high to qualify for ObamaCare subsidies. [emphasis added]
In contrast, in the same period, enrollment ticked up by 300,000 people among those with lower incomes who did qualify for financial help under ObamaCare. The data illustrates that while ObamaCare remains stable given the subsidies available to lower-income people, premium increases helped drive away people with higher incomes, experts said.
Let’s read part of that quote again:
…enrollment declined by 1.2 million people, or 24 percent… among people with incomes too high to qualify for ObamaCare subsidies .
This does not surprise me in the least. Having been in the health insurance industry for over 25 years, I witnessed the change to Obamacare. It works great if you qualify for a subsidy, but it crushes you if you don’t. It’s simply unaffordable for many. Here’s a real-life example:
The cheapest Obamacare plan a family of five in my area can get will cost them over $2,600/month. That’s over $31,000/year! Did I mention it has a $6,600 deductible? So they’re in for a minimum of $37,600 before the insurance company pays a dime. How do they afford that?
Then there is the argument, “They probably make a lot of money since they don’t qualify for a subsidy” That’s relative, but let’s talk about it since you brought it up. There are two big problems with the subsidies and how they work.
- If anyone in the family has health insurance offered to them by their employer and it’s affordable, then the family is not eligible for the subsidy. What’s affordable, you ask? If the employee’s portion of the premium is less than about 9.5% of his income it’s affordable. Since employers are penalized for offering coverage that is unaffordable, most employers work it out so the employee’s cost – for just the employee – is affordable. If the employee earns around $50,000/year and has health insurance offered to him that costs him less than about $400/month (just for him), it considered affordable by the Wizards of Smart in DC.
- The subsidy is supposed to gradually get smaller as you get closer to the income threshold for the subsidy, which is 400% of the Federal Poverty Limit. It worked fairly well in the beginning, but now the calculation is such that it is a cliff. For the family above, here are the subsidies at various family income amounts:
- At $60,000 the monthly subsidy is up to $3,059
- At $80,000 the monthly subsidy is up to $2,792
- At $100,000 the monthly subsidy is up to $2,572
- At $117,000 the monthly subsidy is up to $2,437
- At $118,000 the monthly subsidy is $0
Look at the last two bullet points. That’s quite a cliff. And here’s how they make it even tougher. You have to predict your income for the year before the year begins!
Imagine you’re a salesman on commission and you’ve averaged about $100,000/year in income for the last several years. Congratulations! That’s a great income. You’ve been on Obamacare for the last several years and you’ve taken the subsidy you’re allowed and paying about $200/month in premiums. Everything is peachy.
In 2019 you knock the cover off the ball with your sales. You have a banner year. You’re going to easily clear $120,000 this year and you have talked to your wife about a big family vacation to celebrate.
Then you do your taxes. You find out a) you owe your $30,000 in subsidies back to the gubment, AND b) you have now have to pay the entire premium so your health insurance premiums next year go from $150-$200/month to $2,600/month. It happens. I’ve seen it happen. It’s not pretty.
Very few people know exactly how much they are going to make in the coming year. Job changes, extra money from a side job, spouse takes a part-time job (or gets more hours than they planned), or God forbid you get a raise!
So Old Man, what you would you do about it? That’s a question for another post, or series of them. This is just a rant to show one of the problems with Obamacare
NOTE: I generally refer to this health insurance as ACA coverage (Affordable Care Act). I talk about Obamacare in this post because that’s what it’s called in the article above.