Truth about Obamacare Premiums

 


September 18, 2013
 

 

Is it truth or is it fiction? Two days ago the Department of Health and Human Services (HHS) came out with an ASPE Issue Brief titled, “Fifty-Six Percent of the Uninsured Could Pay $100 or Less per Month for Coverage in 2014.”

Let’s look beyond the headline.
 
  1. As the HHS brief notes, this $100 or less is not the cost of the coverage. This is what the individual will pay after Medicaid or taxpayer-funded federal subsidies (advanced premium tax credits) are used to pay the majority of the cost. In other words, the $100 or less is after taxpayers kick in thousands of dollars on behalf of the individual.
  1. The $100 or less is per person, not per family, so some families could still be paying hundreds of dollars per month for limited “narrow network” government  coverage that violates their personal privacy and exposes them to fraud and identity theft.
  1. The only place these “$100 or less” prices may be available – if reality matches hype – is in the government exchange for Obamacare coverage because that’s the only place federal premium subsidies will be available. If the uninsured try to buy private insurance (only available outside the Exchange), the cost will be much higher because there are no federal subsidies.
  1. A lawsuit filed by Oklahoma’s Attorney General has been allowed to move forward against the IRS issuing a regulation that says federal premium subsidies will be provided to people enrolling in the federal exchange (healthcare.gov) in the 33 states that have no state exchange. Obamacare only allows premium subsidies to be issued in exchanges set up by states. If the lawsuit is successful, these “100 or less” prices will only be available in 17 states and Washington, D.C.
 
Furthermore, most of the uninsured won’t pay anything anyway. HHS says the majority of the 56% of the uninsured will be eligible for Medicaid or the Children’s Health Insurance Program in states that have expanded their Medicaid program under Obamacare. They will pay either nothing or a “nominal” payment. Again, the cost will be born by taxpayers. The government has nothing to give that it did not first take from a taxpayer.
 
HHS hopes more states will expand Medicaid, but only 25 states have expanded Medicaid to Obamacare levels. Despite Obama’s objections, the U.S. Supreme Court ruled that no states are required to do so. However, HHS claims that if the other 25 states expand Medicaid, 78% of the uninsured will pay $100 or less for coverage. If true, taxpayers would be on the hook for an even higher level of state and federal subsidies.
 
Case in point, Michigan Governor Rick Snyder just signed ACA’s Medicaid expansion into state law despite opposition from local tea party groups. Alongside him to celebrate the moment was Congressman John Dingell (D-MI), a leading voice for national health care in the U.S. House. POLITICO reports that Snyder plans to initiate an outreach effort to sign up 470,000 Michiganders for Medicaid -- all on the taxpayer’s dime.
 
What about costs for the other 44% of the uninsured? First, there are no posted premium prices for Obamacare coverage in the 33 states that don’t have a state exchange, but high prices have been predicted to cover the cost of caring for people with pre-existing conditions who will enroll in the government Exchanges.
 
Second, federal funding of the exchanges stops December 31, 2014, after which a portion of payments from exchange enrollees will fund all exchange operations. So premium prices can be lower in 2014.
 
Third, if Obamacare exchange prices are lower the first year, that shouldn’t be a sign of the future. Health plans are likely cutting their prices as low as possible the first year or two to squeeze out the competition and to entice everyone to enroll in the government exchanges. Fully 98% of all new spending in Obamacare goes to the health plans through the exchanges. Once everyone, or a majority of Americans, are in the exchanges and the outside competition has been eliminated, expect premium prices to jump.
 
Obamacare does not limit what health plans can charge. Plans must report “unreasonable” rate increases to HHS for review, but HHS cannot prevent them from taking place (Sec. 1003). The law does limit out-of-pocket expenses, but this will likely increase premiums. The law also prohibits higher premiums based on health status and limits how much more an older person or a smoker can be charged than a younger non-smoker. But these limits increase costs for the young, the healthy and the non-smokers.
 
I suspect health plans are carefully calculating the game they must play to be one of the health plans that survives over the next few years to run Obamacare for the government long-term -- at whatever price the health plans demand government (taxpayers) pay.
 
This future must be avoided. If our “Refuse to Enroll” campaign, other “Stop Obamacare” campaigns, and the #DontFundIt campaign are not successful; if the Exchanges not only survive but begin to thrive; if Americans flood into government exchanges leaving the real marketplace behind, the only health plans left will be Exchange plans. That will give us a single-seller system with a few health plans that can raise premium prices to the roof.
 
Donate to our “Refuse to Enroll” campaign today. Help us put radio ad on the air and Internet ads online. It is possible to stop Obamacare. Despite claims of “it’s the law of the land,” Obamacare is not inevitable and very repealable. Now is the time to take action.
 
 
Twila Brase, RN, PHN
President and Co-founder