High Obamacare Costs Creating New Middle Class of Uninsured

Image: High Obamacare Costs Creating New Middle Class of Uninsured

Monday, 16 Dec 2013 06:05 PM

By Andrea Billups

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A new subset of uninsured people is finding it doesn't fit into any of the affordable healthcare plans offered through the Affordable Care Act.

Many middle-class Americans are falling through the cracks after being dumped into the Obamacare marketplace. They can't get a subsidy because they earn too much, and they can't find an insurance plan they can reasonably afford, forcing some to make a tough decision: to go without health insurance.

Most harmed are those who could previously afford to buy their own private plans, but are now being hit with higher premiums along with steep increases for deductibles in the healthcare exchanges — costs that far exceed their household budgets.

So, Obamacare is likely to create a new middle class of uninsured people — mostly young and healthy — who, by opting out, will upend the enrollment balance the Affordable Care Act needs to be successful, healthcare experts say.

"It's certainly a fact that if it's more than a minimal amount of people who had coverage, lost it, and can't get it again, and who looked at the options on the individual market and said 'I can't afford it,' the marketplace will be damaged," Joseph Antos told Newsmax.

Antos is the Wilson H. Taylor Scholar in Healthcare and Retirement Policy at the American Enterprise Institute.

President Barack Obama said at its rollout that the ACA would lower premiums for a family of four by $2,500.

But the deductibles in Obamacare plans are averaging $5,081 per year for the minimal-coverage Bronze plans on the HealthCare.gov website. That's 42 percent higher than the $3,589 average deductible for individual plans in 2013.

For some households, deductibles may be as high as $12,700 annually, The Wall Street Journal reports.

The high out-of-pocket costs are a "chunk of change," Mark V. Pauly, professor of Health Care Management at the Wharton School of the University of Pennsylvania, told Newsmax.

Consumers can opt to go into a lower-deductible plan, "but it's going to cost you a lot more in premiums," he said.

"The designers of this reform planned it this way," Pauly said. "They planned that there would be some losers."

Pauly said it's likely that at least some Americans caught in the high-cost/no-insurance quandary may throw their hands up in disgust and just forgo insurance.

"I think there is a good chance we will see that happen because the penalty for not having insurance is small compared to the premium for a low-deductible plan."

The way the system was designed was that some in the marketplace overpay with high premiums to allow others, who are older, to pay lower premiums, he explained.

"If the people who were supposed to overpay bagged the whole thing, the transfer for those other folks would not be easy to accomplish," Pauly said.

Antos said it is likely the president will try to increase subsidies to attract more young people to sign up for Obamacare.

"If that turns out to be a million people [who don't enroll in Obamacare], it will be impossible for the president and Congress not to take some sort of action to ease the cost," Antos told Newsmax.

"They are going to have to respond to this. It's a little early yet, but I think there will likely have to be legislative action in 2015 to rethink some of these requirements that really drive up costs and make it difficult for people."

It remains uncertain how the individual enrollment numbers will ultimately shake out. As of Wednesday, the government's most recent count showed 365,000 people had enrolled in private coverage between Oct. 1 and Nov. 30.

That number was far below the administration's goal of 500,000 by the end of October, and way off pace to hit the year-end target of 3.3 million.

But with nearly 6 million insurance plans canceled because they didn't meet Obamacare regulations, the number of newly uninsured is likely to outstrip the total who are registering for the healthcare exchanges by Jan. 1, when many plans expire.

Those most negatively affected by the high cost of Obamacare are Americans who have incomes in the $34,000 to $40,000 range for an individual, or 400 percent above the poverty line, Pauly said.

"If you are poorer than that, there are all kinds of protections and you get a big subsidy," he said. "The people who will be hit most will be either those who are getting a small subsidy or won't get a subsidy at all."

"I think the exchange will end up catering to those with large subsidies, the lower-income people, while the upper-income people either will go without insurance or figure out a different way to get it at a lower price, like taking a job at a company for the insurance — even if it's the world's worst job," Pauly predicted.

"Generally, even that is going to be a better deal than going on an exchange," he said.

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