Monday, September 16, 2013

On the Contrary Mr. President, ObamaCare Does "Shoot Rates Way Up"

UPDATED on 8-OCT-2013 with latest pricing information from Covered California.  The new pricing is slightly higher than the information available in September, before the exchanges opened officially.

In a September 16, 2013 speech, President Obama said of the "Affordable Care Act (ACA or ObamaCare), the signature legislation during his presidency ...

“There were lot of the horror stories, how this would shoot rates way up, how there were going to be death panels, and all that stuff. None of that’s happened."
I'm sorry, Mr. President, but you are WRONG and I have the numbers to prove it--at least for our family.  Maybe a DOUBLING or a TRIPLING of insurance costs may not qualify for "shoot rates way up" in your book, but they do in ours.

Here's a chart showing the actual monthly premium costs paid for our Blue Shield of California high-deductible plan since the President first proposed his major overhaul of the U.S. health care system.  As is PLAINLY obvious, our rates have more than DOUBLED!  We even experienced a 30% increase just months after the "Affordable" Care Act (ACA) was officially signed into law.

That red dot in the upper right-hand corner?  That the price of the least-expensive plan available from Covered California, the ObamaCare health insurance exchange.  Notice that it is HIGHER than what we pay now, unless we receive a taxpayer-financed subsidy.  So, if we adopt one of the President's plans, our insurance premiums will be 231% higher--more than TRIPLE--what they were when the President first proposed ObamaCare.  The ObamaCare policy is also roughly 50% HIGHER than what we pay now.

The dashed dark red line shows the trend line for a 20.1% annual growth rate since President Obama took office, which is MUCH, MUCH faster than the official rate of inflation.

On the Covered California exchange, the price you actually pay for health insurance depends on your family size, age, and--most importantly--how much money you make.  The least-expensive plan available for our family is $1,121 per month, or $13,452 per year.  Depending on your income, the price you pay for this policy ranges from $0 to $13,224 with any difference generously paid by taxpayers via a subsidy called "premium assistance," as shown in the following chart.

There's also an interesting "feature" of the pricing structure.  For example, should our family income be $110,279 (which isn't "rich" for many portions of Santa Cruz County and its high housing costs and cost of living), we would pay $446 per month ($5,352 per year) for a $1,121 per month ($13,452 per year) health insurance package. Despite our income, the additional $8,100 cost difference is generously paid by as a subsidy from taxpayers.

However, should I earn just $1 more, the ObamaCare pricing scheme "shoot rates way up," as the President so eloquently states it, by $8,100.  Earning just $1 more--$110,280 per year instead of $100,279--increases my health insurance cost by $8,100!

I understand the reader's skepticism at this seemingly ridiculous claim.  Consequently, I encourage you to visit the Covered California web site and double-check my numbers for yourself using the data provided above in the screen shots.  One can only hope that this is somehow a "glitch" in the system, but it appears to be built into the pricing scheme for all packages, just at different income levels based on the number and ages of people covered.

As a side note, I fully expect those income limits to remain firm as income naturally increase thanks to inflation.  That way, more and more people are forced off subsidies into paying the full cost.  The current income levels are likely set based on ballot-box power.  You only need a certain percentage of people receiving government benefits to force them to vote your way.

Surely, ObamaCare makes those earning above $100,279 pay more simply out of fairness, right? Let's instead evaluate ObamaCare premiums as a percentage of total family income, as shown in the following chart. Those in the Obamacare "Donut Hole" pay the most as a percentage of income. The donut hole extends from $110,280 to almost $290,000.  Those making less than $110,280 pay less thanks to taxpayer subsidies.  Those making more than $290,000 pay less because ObamaCare premiums are a smaller share of their family income.  The "affordability" red line under the "Affordable" Care Act is supposed that nobody should pay more than 9.5% of their income toward health care.  On that measure, Covered California fails those earning between $110,280 and a little more than $140,000. Those who suffer from the wedge will either work less or work more to avoid the extra burden.  This is not what sane policy looks like.

But it gets worse.  Consider your "after-insurance" income under ObamaCare.  If I made $110,279, I would pay $5,352 for insurance but receive a $13,452 insurance policy thanks to the generous $8,100 taxpayer-provided subsidy.  My effective after-insurance income would be $110,279 (income) - $5,352 (the cost of the ObamaCare policy) + 8,100 (subsidy to buy and benefit from a $13,224 insurance plan), which equates to $113,027.

However, if I earn jut $1 more--$110,280 instead of $110,279--my after-insurance income actually DROPS BY $16,199!  My effective after-insurance income would be $110,280 (income) - $13,452 (the cost of the ObamaCare policy) + $0 (subsidy), which equates to just $97,056.

Thanks to ObamaCare, I can earn $1 more and actually end up with $16,199 less!  That's Obamanomics for you.

I won't even discuss the much more limited access to doctors.  It took over two months for my daughter to see a doctor about a leg injury.  In the meantime, she's stuck on crutches.

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