Uh oh: Many younger consumers won't get subsidies in ObamaCare exchanges

If CNN’s analysis is correct, then the website is the least of the White House’s worries on ObamaCare.  The administration, specifically Kathleen Sebelius, insisted that anyone earning less than 400% of poverty level would qualify for subsidies on the exchanges, but that may not actually be true.  Thanks to a complicated formula for subsidies, the system will exclude many lower-income younger consumers from subsidies … the very people the ObamaCare program needs to sign up to keep the system from collapsing (via NewsAlert):

Advertisement

But a CNN analysis shows that in the largest city in nearly every state, many low-income younger Americans won’t get any subsidy at all. Administration officials said the reason so many Americans won’t receive a subsidy is that the cost of insurance is lower than the government initially expected. Subsidies are calculated using a complicated formula based on the cost of insurance premiums, which can vary drastically from state to state, and even county to county.

That doesn’t change the fact that in Chicago, a 27-year old will receive no subsidy to help offset premiums of more than $165 a month if he makes more than $27,400 a year.

In Portland, Oregon, subsidies for individuals making just $28,725 a year phase out for those younger than 35 years old.

CNN compares this to testimony from Sebelius in April, in which she told Congress that anyone under the 400%  of poverty level line would qualify for federal subsidies in the exchanges:

Back in April, Health and Human Services Secretary Kathleen Sebelius told a congressional subcommittee that any individual making under that $45,960 threshold — or four times the poverty level of $11,490 for an individual — would qualify for “an upfront tax subsidy.”

“Somebody who’s making $25,500 would definitely qualify for a subsidy if he or she is purchasing coverage in the individual market,” Sebelius added.

Despite the secretary’s assurance, a 25-year-old living in Nashville, Tennessee, making $25,500 will not qualify for a subsidy, for example.

Advertisement

The trigger on this is the premium price for a qualifying “bronze” plan in the exchange for the consumer.  If the premium does not go over a certain percentage of income, then the formula produces a zero for the calculated subsidy.  The problem for these consumers is that the baseline plans still cost more than their previous options, and have large deductibles to boot.  That sets the incentives for younger consumers to bail out of the system, paying the fine and only signing up for insurance after a catastrophic event, which they cannot be denied under the new law.

That will mean disaster for the ObamaCare system, as CNN notes in this video:

If the subsidies don’t show up, neither will these consumers. They’d be better off paying retail, which thanks to the enormous deductibles in these comprehensive plans they’d have to do anyway, rather than premiums and retail for provider services. And this is yet another point on which the administration has been less than honest with the very people who backed them through two successive presidential elections.

Advertisement

Join the conversation as a VIP Member

Trending on HotAir Videos

Advertisement
Advertisement
Beege Welborn 5:00 PM | December 24, 2024
Advertisement
Advertisement