When Obamacare health insurance coverage takes effect on January 1 for those who have actually enrolled, middle class America will likely be taking the biggest hit given skyrocketing premium costs.
Many hardworking middle income Americans earn too much to qualify for taxpayer-funded federal subsidies that are available only through purchasing health insurance on the government exchanges. For an individual consumer, the subsidy cutoff is about $46,000. Other consumers may prefer to avoid the chaos and confusion — and limited provider networks — on the Obamacare exchanges, and obtain their non-subsidized coverage directly from insurers or insurance brokers.
The announcement of the estimated 1 million Obamacare enrollees (which fell short of the administration’s goal) does not differentiate among those who have yet to pay their premium, and thus aren’t really enrolled. Nor does it take into consideration those in the individual market who have been booted from their plans and are currently not re-insured. So collectively, there may be fewer consumers with insurance after January 1 than before, despite all the hoopla. According to many observers, temporary measures such as the hardship exemption for those who have lost their plans in the individual market will probably have very little practical effect on actually reducing costs for those affected.
Of the latest enrollment numbers, the Obamacare-supporting New Republic pointed out, “It doesn’t tell us whether these people getting private (or public) coverage had insurance previously — or, if they had insurance, how much they were paying for it. It doesn’t tell us how many of these people have actually paid premiums, which is essential for coverage to take effect. It doesn’t tell us whether insurers have proper data on these people or what kind of access and protection the new coverage will give. It doesn’t tell us how many of the enrollees are in relatively good health or how many are in relatively poor health — or how that mix will affect insurance prices going forward.”
In what has developed into a major, ongoing controversy, President Obama repeatedly declared, “If you like your plan, you can keep your plan,” when he was selling healthcare reform via the Affordable Care Act to the American people; an assertion that was named lie of the year by Poltifact. He made a similar pledge about keeping your doctor, and also promised premium cost-savings under Obamacare.
So far, for the most part, it’s only those who buy (or more precisely, bought) health insurance on the individual market who have been locked out of their existing provider networks and forced to pay higher premiums, co-pays, and deductibles for new or renewed coverage. Under Obamacare, consumers are now faced with the requirement to pay for coverage they neither need nor want for their age or gender because of the law’s one-size-fits-all standards. When the postponed employer mandate begins kicking in this fall in the run-up to 2015, millions more Americans on employer-based plans will find their coverage similarly disrupted with significant rate increases and so forth. At that time, employers may be tempted to drop health benefits entirely and send their workers into the exchanges.
The Democrats — who passed the Obamacare law on a straight party-line vote in Congress after some questionable parliamentary maneuvering when they controlled both chambers on Capitol Hill — have never publicly explained why they couldn’t have focused the legislation on the estimated 15 percent of Americans who lack health insurance and just left the remaining 85 percent of the population alone.
A recent article in The New York Times — a publication generally very supportive of the Obama administration — addressed the frustrations of many in the middle class when it comes to Obamacare:
“While the act clearly benefits those at the low end of the income scale — and rich people can continue to afford even the most generous plans — people like the Chapmans [a representative New Hampshire family] are caught in the uncomfortable middle: not poor enough for help, but not rich enough to be indifferent to cost … An analysis by The New York Times shows the cost of premiums for people who just miss qualifying for subsidies varies widely across the country and rises rapidly for people in their 50s and 60s. In some places, prices can quickly approach 20 percent of a person’s income.”
Commenting on the most inexpensive plan they could find on HealthCare.gov, which cost the family $1,000 a month, Mrs. Chapman noted, “That’s an insane amount of money. How are you supposed to pay that?”
According to The Times, health insurance is deemed unaffordable if it consumes more than 10 percent of annual income.
In a related story, the Houston Chronicle warned of the hazards of picking the up-front cheapest plan, the so-called bronze plan, on HealthCare.gov. Sometimes the cheap becomes expensive (as People’s Court Judge Marilyn Milian often says in the context of small claims disputes), when high deductibles and other out-of-pocket costs are factored in:
“Increasingly, experts in health insurance are becoming concerned that many of these first-time buyers will be in for a shock when they get medical care next year and discover they’re on the hook for most of the initial cost…The danger of a wrong snap judgment is great for those under financial pressure — especially those with modest incomes who make too much to qualify for the government subsidies available under the new health care system.”
Historian Victor Davis Hanson similarly explained how the middle class will be left high and dry under the healthcare law:
“The problem with ObamaCare is that its well-connected and influential supporters — pet businesses, unions and congressional insiders — have already won exemption from it. The rich will always have their concierge doctors and Cadillac health plans. The poor can usually find low-cost care through Medicaid, federal clinics and emergency rooms. In contrast, those who have lost their preferred individual plans, or will pay higher premiums and deductibles, are largely members of the self-employed middle class. They are too poor to have their own exclusive health care coverage but too wealthy for most government subsidies. So far, ObamaCare is falling hardest on the middle class.”
Along these lines, Dr. Scott Gottlieb of the American Enterprise Institute said on FNC yesterday that “Most of the people are people who had insurance are now being forcibly moved into the exchange, and most of the middle class folks really don’t benefit in the subsidies. They’re going to find these plans much more expensive than what they were getting before.”
The Obamacare middle class “sucker punch” could have a ripple effect across the entire economy, according to some estimates: “Now that most people can get past the tech problems of HealthCare.gov and actually see the real cost of insurance plans available, they are finding that Affordable Care is a big hit to the family budget. And when the family budget gets hit in the solar plexus, guess what happens to consumer spending and the economy?… If even a fraction of the middle class and upper middle income earners divert some of their discretionary dollars to pay for health care, it will have a significant impact on consumer spending… When you increase the costs of health care and the new taxes associated with ObamaCare, you can hear the wallets closing.”
A recent AP poll about Obamacare indicated that about half of those Americans with employer-based insurance expect their coverage to change next year, and mostly for the worse in terms of higher premiums and increased deductibles and co-pays.
[image credit: Pete Souza]