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

posted at 1:11 pm on November 25, 2013 by Ed Morrissey

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):

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.

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.


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It won’t take long for kids, even as stupid as they are, to figure out they can have insurance they’ll never use, or make a car payment. Gee, a car or O-care? Quite the dilemma. O-care or their share of the rent… Or, O-care or cell phone/cable service? What to do, what to do… O-care or half an ounce of sticky weed? That’s a tough one, yeah. O-care or beer for the month…O-care or a couple of movie dates and a couple of nights at the local hipster watering hole…O-care and a couple of concert tix (parking extra)…or O-care and some whacked out activity kids do today that I have no idea about.

teacherman on November 25, 2013 at 8:51 PM

and = or

teacherman on November 25, 2013 at 8:52 PM

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.

I didn’t think people could even still get ‘retail’ (old-school catastrophic/non-comprehensive plans) anymore. Didn’t YomommaCare outlaw them?

Or do you mean pay ‘retail’ as in just go without insurance and pay doctors full price as needed?

Marcola on November 25, 2013 at 9:13 PM

Just a reminder: Romney won whites of all age groups and both sexes. Among whites, the young went to Romney too – narrowly, but they did.

The young going Democrat is increasingly about a greater and greater share of young people being non-white, and naturally voting for the more anti-white party as 80% of non-whites do.

So when you think of “the young voting for Obamacare and getting what they deserve now”, that’s not really accurate.

Young whites are getting it in the neck – but they did not vote for Obamacare.

Young non-whites did vote for Obamacare – but for many of them that will work out great, if only because they will get jobs in the huge affirmative action make-work bureaucracy created.

This isn’t about young people being dumb and paying for it and maybe learning their lesson. This is about some people being made winners by government intervention, and other people being made losers.

“Learning your lesson” increasingly won’t work either. Older generations of white Americans had the option to vote their way out of trouble. They made poor use of it, but they had that power. The youngest generation of whites was born out-numbered and out-voted. They can smarten up, as many young voters did by voting against Obama, but that doesn’t necessarily do them any good. Their parents, who let their kids be a minority in their own country, have really dropped them in it.

David Blue on November 25, 2013 at 9:42 PM

They voted for it. Screw ‘em.

Ronnie on November 26, 2013 at 12:03 AM

No they didn’t.

David Blue on November 26, 2013 at 2:32 AM

David Blue on November 25, 2013 at 9:42 PM

I’m a minority, and though I hate to say it, I agree this is true and drew the exact same conclusion myself. I do believe there is hope for the country, however, but unfortunately, it goes back to the same demographics-as-destiny concept. When the Republican party nominates a black candidate against a white Democrat at the presidential level, the majority of blacks will suck it up and vote for the black Republican candidate. (Don’t expect most blacks to admit this.) The same holds true for Latinos.

The conservative case can be made to blacks (and Latinos), and you might be surprised to learn that most middle class and up blacks (and some of the poor) already disapprove of the degradation done to the black community through rampant welfare dependency among the poor, but I can’t imagine that case being made by anyone but an actual black conservative. And here’s the thing: Once the case is made, I honestly think the Democrats will lose their permanent lock on 90+% of the black vote. I do not believe the Republicans will gain the black 90+%, far from it, but the Republicans only need to get about 1/3 of the black vote to win at the presidential level.

The Bringer on November 26, 2013 at 9:21 AM

I love “Let them eat cake moments”

RdLake on November 26, 2013 at 10:08 AM

The conservative case can be made to blacks (and Latinos), but I can’t imagine that case being made by anyone but an actual black conservative.
The Bringer on November 26, 2013 at 9:21 AM

I can’t help but agree, Bringer.
I think it might be a bit of the same difficulty with the abortion issue.
The case can certainly be made for abortion restrictions, but when the case is being made by men, in many instances the message will be left unheard because the wrong gender is delivering it. Many women become immediately defensive and think that men are still just trying to *control* and dictate to them about things men know nothing about.
I can easily see how some (many?) blacks may feel like they don’t connect -and never will connect- with white conservatives.

lynncgb on November 26, 2013 at 11:00 AM

Serious question from a 25-year-old uninsured person as of April:

What are they gonna do if I just refuse to go along with this nonsense? Can they throw me in jail for not paying my fine? Will they take it out of my paycheck? They’re already getting thousands from me that I can barely afford for Student Loans for a degree that I don’t have. At what point do I just start cashing my checks and pretending the government doesn’t exist?

jimmy the notable on November 26, 2013 at 5:34 PM

jimmy the notable on November 26, 2013 at 5:34 PM

Jimmy, it’s a good question that many will ask themselves and if you care at all about the law (which the president does not) you may have to pay a small fine, to be deducted from your tax refund, if you have one. They can’t go after you for the fine.

In the out-years the fine is supposed to escalate but my feeling is that Obamacare ™ is so unpopular that whatever government is in control is going to selectively ignore this embarrasing chapter of legislative history and quietly kill the individual mandate.

Finally, it really is up to the young people who put democrats in power to rein them back in and remove the obnoxious characters who had no trouble at all writing this law, knowing it would hurt millions of their voters.

virgo on November 26, 2013 at 9:21 PM

Finally, it really is up to the young people who put democrats in power to rein them back in and remove the obnoxious characters who had no trouble at all writing this law, knowing it would hurt millions of their voters.

virgo on November 26, 2013 at 9:21 PM

Young whites voted for Romney. The blame is on the older generation, for creating a situation where young whites are outnumbered.

Old people tend to have a false “residual image” of the country they grew up in. That is not the world young whites are living in. White babies being born now are an ethnic minority.

David Blue on November 26, 2013 at 9:37 PM

Finally, it really is up to the young people who put democrats in power to rein them back in and remove the obnoxious characters who had no trouble at all writing this law, knowing it would hurt millions of their voters.

virgo on November 26, 2013 at 9:21 PM

But if you mean by “the young people who put democrats in power” non-whites, of course they are not going to do what you want. Blacks are not natural conservatives at the voting booth. Nor Hispanics. Nor Asians. That fantasy is not happening.

David Blue on November 26, 2013 at 9:42 PM

…I can’t imagine that case being made by anyone but an actual black conservative.

The Bringer on November 26, 2013 at 9:21 AM

I can’t either.

And I can’t imagine actual black conservatives not being painted as Uncle Toms.

David Blue on November 26, 2013 at 9:45 PM

teacherman on November 25, 2013 at 8:51 PM

Has anyone crunched the numbers to predict what will happen to the stability of the exchanges if this type of scenario happens en masse? Say, by some miracle, the exchanges get enough young healthy folks signed up to be viable. What happens when those young healthies just stop paying their premiums a month or two into 2014, when they realize their insurance is worthless because of the outrageous deductibles?

Meezles on November 26, 2013 at 11:28 PM

Has anyone crunched the numbers to predict what will happen to the stability of the exchanges if this type of scenario happens en masse?

Meezles on November 26, 2013 at 11:28 PM

Good question! Everything I’ve seen assumes that once they have their coerced customers they have them forever.

David Blue on November 26, 2013 at 11:55 PM

Third-party payer for the majority of health care has been worse than single payer for a single reason: the employer contribution.

There is nothing wrong with a system where employers are competing by offering this or that perk. There’s nothing intrinsically wrong with the system we had…vis a vis consumer “perk” from work. We got better and better coverage as we got older, shopped for employers that covered our families better. Amazingly, even when the electric was at risk, or the cable was shut off, or the vacations got postponed, we kept on having these benefits! Why, the premiums were deducted (incentive) pre-tax for us (incentive) from our direct-deposited paychecks. The employer mailed the check for the premiums (incentive) for us to the carriers. They shopped for the best plans for the employee demographic they analyzed annually for us (incentive).

Now, the skirt has been hiked way, way up. Now, instead of the little ankle we had to show to “keep our plans,” select a plan from a table of two or three pretty decent choices, plus an HSA and FSA, etc., and get used to the deduction so we just didn’t see it any more after a month…ah, now we see the full monte.

All the cost, born just by us. Mostly no employer contribution, or what seemed to be the same contribution…in cash against a plan we had to do all the work for that they used to do. Now, we are writing the checks. People can now only grimace as they sign up for plans they would have laughed out of the board room only last year. Deductibles? I work at a pharmacy. Let me tell you about the sticker shock that is already happening.

I see claim after claim now, for people who have been with their employers for years, where the claim goes through, but the price is still the cash price for maintenance medicines. Why? Family deductibles, typically around $6,000, that were not present in prior years. Many plan years start in September or October, not January, and the jaw-dropping amazement of these people is painful, utterly painful, to endure.

Sure, the premiums might be subsidized still by the employer, but the plan is out of their hands entirely, and they are just putting a little money on the nightstand on their way out. There is absolutely no way at all…none…that people will not suffer and die as a result of purely the pharmacy benefit deductibles and disappearances. The employer was like the life coach, or the financial coach, who was making sure that prudent and continual health care coverage was available to the employees. The mommy is gone, and the work-a-days that let the cable and the electric slide now and again will never, ever be able to keep up the commitment themselves, let alone with a half-assed scheme like healthcare.guv to depend on.

winoceros on November 27, 2013 at 1:29 AM

David Blue on November 26, 2013 at 9:42 PM

David, even though there are old fools who vote Democrat for selfish reasons, and enclaves of ethnic bigotry, the key demographic of starry-eyed Obama voters is the young, of all races.

Young people aren’t intrinsically fated to support leftist ideals, they just lack information, but that reality-check is coming in quickly now, as Obamacare ™ chickens come home to roost, so, for many of them, they won’t get fooled again.

virgo on November 27, 2013 at 12:35 PM

David, even though there are old fools who vote Democrat for selfish reasons, and enclaves of ethnic bigotry, the key demographic of starry-eyed Obama voters is the young, of all races.

virgo on November 27, 2013 at 12:35 PM

That is factually wrong. Whites of all ages and both sexes went for Romney; non-whites went for Obama. That is how it is.

David Blue on November 27, 2013 at 9:32 PM

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