Does MN ObamaCare exchange subsidize millionaires?

Congress created a complicated subsidy system in ObamaCare to offer price supports for health insurance premiums, which have skyrocketed since the law went into effect. But do those subsidies apply to more than just working- and middle-class consumers on the individual market? The Center of the American Experiment accuses the MNsure system of paying subsidies to the wealthy, based on testimony from health-insurance brokers in Minnesota:

“It’s happening all over the nation and all over Minnesota,” said Harlan Johnson, a Pequot Lakes health insurance broker and MNsure Health Industry Advisory Council member. “I’ve looked people on the MNsure Board of Directors right in the eye and told them this. They know it, but they don’t want to deal with it.”

It’s a legal, but dirty little secret among health insurance agents and brokers who help Minnesotans apply for and pick health care plans.

“When a millionaire on Medicaid calls you and says, ‘I’m going to spend the winter in Florida. Can you help me find a doctor,’ it’s like, what?” said Dave Racer, a long time St. Paul health-care consultant.

Strange, but true. High net worth individuals who keep their taxable income below 138 percent of the federal poverty level—about $22,000 for a couple—qualify for Medicaid under Obamacare.

The reason? The Affordable Care Act eliminated the assets test to determine eligibility for medical welfare. Applicants qualify solely on the basis of their modified adjusted gross income.

Part of the issue is the complicated nature of Medicare, which unlike Medicaid is ostensibly not a welfare program. People pay all of their working lives into the Social Security system, and therefore there is no means testing for qualifying. But Medicaid is a means-tested program, intended to help low-income families cover their basic health care needs. (How well that works is another matter.) Not including assets helps protect people who may have moderate but mostly non-liquid wealth from having to descend into total poverty before getting assistance.

Clearly, though, that’s a loophole that some wealthy Minnesotans are willing to exploit — at taxpayer expense. “A few of them might be at $3 million or $4 million in assets,” Johnson told CAE. “They chose to take advantage of the situation, and they’re not doing anything illegal.” If the only income they receive is Social Security, then they can qualify for Medicaid, or for private insurance bolstered by taxpayer subsidies. Either way, that comes out of the pockets of taxpayers, as do the rest of the subsidies that supposedly make ObamaCare “affordable.”

This isn’t the only problem MNsure has faced in recent weeks about its spending and its accountability. The system has repeatedly failed at verifying eligibility for subsidies at all, which has cost the state at least $115 million, and perhaps as much as $271 million in benefit payments:

Small wonder that enrollments were “going well” in late January. First, people face tax penalties if they don’t comply, but it also looks like the incentives are set up for those who need it least to push their way to the head of the subsidy line. “Monopoly money,” indeed.

Update: I got an e-mail this evening from a reader who wishes to remain anonymous. Part of the problem is that the wealthy who still have to buy health insurance may end up having no choice but to enroll in Medicaid, he explains:

The problem is that if I even go into the MNSure website to examine insurance plans, it will automatically sign me up into Medical Assistance, which as you know is Minnesota’s Medicaid. And once signed up it’s been only with great difficulty that I’ve been able to un-sign up. Its taken dozens of hours on the phone, directed to offices hundreds of miles away and even when completed it took months for the Medicaid to stop. In the mean time I end up carrying insurance while the state also pays an insurance company to manage my (unused) Medicaid. I’m almost certain I spent one year doubly insured despite their insistence that I wasn’t (I kept getting literature and insurance cards throughout the year).
I’ve now taken to doing my investment planning to deliberately create investment income solely to avoid being thrown back on Medical Assistance. Which I agree sounds pretty crazy.


The question I keep asking myself is how can such a system persist? I don’t see millionaires deliberately lobbying to be on Medicaid. But I can easily imagine that with the close link between social services and the companies that actually deliver these services … creates an effective lobbying operation inside the agencies and at the St. Paul capital.