As premiums have skyrocketed in ObamaCare exchanges, the White House and its defenders have endlessly repeated the same mantra: Most consumers will pay less for coverage than their cell-phone bill. Democrats continually note that subsidies will buffer the price hikes for most (but definitely not all) enrollees on the exchanges, but they never get around to explaining who’s paying for the rest of the premiums through those subsidies. The answer is you are, and the bill’s going up 26% in 2017, according to a new study:
Taxpayers will fork over nearly $10 billion more next year to cover double-digit premium hikes for subsidized health insurance under President Barack Obama’s law, according to a study being released Thursday.
The analysis from the Center for Health and Economy comes as the Republican-led Congress is preparing to repeal “Obamacare” and replace it with a GOP alternative whose details have yet to be worked out. With incoming President Donald Trump likely to sign such legislation, historic coverage gains under the 2010 health law are at stake.
The study estimates that the cost of premium subsidies under the Affordable Care Act will increase by $9.8 billion next year, rising from $32.8 billion currently to $42.6 billion.
The average monthly subsidy will increase by $76, or 26 percent, from $291 currently to $367 in 2017.
This is one of the two dirty little secrets about ObamaCare’s costs. The White House almost literally pretends the subsidies come out of thin air by never mentioning that all taxpayers have to fund those premium supports. In the original proposal for the Affordable Care Act, the subsidies theoretically got paid out of taxes and fines collected from individuals and employers who failed to comply with mandates, Cadillac-plan excise taxes, and so on. However, that assumed that premiums would remain stable over the first ten years of the program. Instead, premiums have skyrocketed, and with it the taxpayer obligation to cover those costs above $75-$100 per month range that the White House says is typical for most ObamaCare consumers.
The second dirty little secret is how they kept the premiums as low as they did in the first couple of years. Insurers pushed deductibles into the stratosphere at first in order to keep from having to spike premiums, hoping that would keep the red ink from flowing immediately. It didn’t work, as later premium spikes showed, but it did make it very difficult for consumers to use any benefits from their massively expensive insurance. Now consumers have the worst of both worlds — insurance that is in effect catastrophic coverage only, but at Cadillac-plan prices.
This new study should help bring some sobriety to the effort to dismantle ObamaCare. We’ll have more about that later.