Obamacare鈥檚 open enrollment, which began this week for 2017, is about as appealing as the grand opening of a DMV. Those who have logged onto HealthCare.gov since Tuesday have encountered, on average, 25-percent premium increases and reduced numbers of insurers. Only someone living in a fantasy world would describe this rolling disaster by saying, 鈥淚t鈥檚 worked鈥� 鈥� as President Obama did two weeks ago.
On Oct. 24, Obama鈥檚 own Department of Health and Human Services admitted, 鈥淎cross states using the HealthCare.gov platform 鈥� the average increase [in premiums for the second-lowest-cost silver plan] is 25 percent.鈥� In other words, if your plan cost $4,800 in 2016, it will, on average, cost $6,000 in 2017. 鈥淚n addition,鈥� HHS proclaimed, 鈥渘early 8 out of 10 (79 percent) consumers returning to the Marketplace will be able to choose from 2 or more issuers for 2017 coverage.鈥� Translation: 21 percent won鈥檛 have any choice of insurers but will face a monopoly.
HHS, however, says not to worry 鈥� for 鈥�84 percent of current Marketplace consumers receive tax credits.鈥� HHS adds that 鈥渨e also estimate that 84 percent of the uninsured who are eligible for coverage through the Marketplaces [the exchanges] have incomes between 100 percent and 400 percent of the Federal Poverty Level (FPL) and may be eligible to receive tax credits.鈥� (Note the sleight of hand: It鈥檚 not that 84 percent of such people are eligible for 鈥渢ax credits鈥�; it鈥檚 that 84 percent of such people have incomes between 100 and 400 percent of poverty. But a great many people in that income range 鈥� particularly younger Americans 鈥� don鈥檛 get Obamacare subsidies, as we shall see.)
There are four key things to note about HHS鈥� touting of the notion that 84 percent of current exchange enrollees 鈥渞eceive tax credits鈥�:
First, Obamacare鈥檚 subsidies aren鈥檛 tax credits. They鈥檙e direct outlays to insurance companies, and direct outlays to insurance companies don鈥檛 lower anyone鈥檚 taxes. Falsely labeling these outlays as 鈥渢ax credits鈥� is simply a sneaky way to hide huge sums of federal spending.
Second, such subsidies don't fall from the sky. They're paid for by taxpayers.
Third, roughly 45 percent of the individual insurance market isn't exchange-based, and one can only get an Obamacare subsidy on the government-run exchanges. So while 84 percent of those on the exchanges might be somewhat shielded from the huge premium hikes, 0 percent of those buying insurance via the rest of the individual market are shielded from those hikes.
Fourth, HHS makes it sound like the "84 percent of consumers who receive financial assistance" don't really have to worry about rising costs. But not all Obamacare subsidies are created equal, and some people's monthly subsidies could easily be paid in coins.
That's because Obamacare's subsidies are pretty much only for the near-poor and middle-aged. Take a family in Milwaukee with 57-year-old parents, three kids, and an annual income of $35,000. According to the Kaiser Health Calculator (the source for all subsequent figures), that family gets a whopping annual Obamacare subsidy of more than $23,000 鈥� or nearly $2,000 per month.
But what about a 24-year-old single woman in Milwaukee who makes that same amount ($35,000)? She gets an Obamacare subsidy of just $18 a month 鈥� less than 1 percent as much. That will cover just 6 percent of the cost of the cheapest Obamacare silver plan that's available to her, leaving her with an annual tab of $3,336. Of course, as Obama might note, she could stop trying to be so self-reliant and 鈥� being under 26 鈥� get on Mommy and Daddy's plan. But not everyone has that option, even if their pride permits it.
Similarly, a 30-year-old married couple living in Cleveland and making $49,500 a year gets a monthly Obamacare subsidy of $7. If they were two years younger or made $1,000 more, they'd get nothing 鈥� despite being under 320 percent of the poverty level. That $7 subsidy will cover less than 2 percent of the cost of the cheapest Obamacare silver plan that's available to them 鈥� leaving them with a monthly tab of $400, or $4,797 per year. If they didn't have to use their monthly subsidy to help them buy overpriced Obamacare insurance, it would cover most of the cost of a beer at an Indians game.
Even $7 a month, however, is more than some subsidy recipients get. A 37-year-old single man living in Colorado Springs and making $37,000 a year gets a monthly Obamacare subsidy of 50 cents, or $6 per year. That leaves him with an annual tab of $3,585 for the cheapest Obamacare silver plan available to him.
Summing up, most people in the individual market don't get Obamacare subsidies 鈥� only 84 percent of the roughly 55 percent who buy plans through the Obamacare exchanges do 鈥� and many of those who do get subsidies are still on the hook for almost the entire cost of their plans. This is especially true for those who are relatively young and middle class.
So, regardless of what HHS suggests or what the mainstream press parrots, the key number isn't 84 percent; it's 25 percent 鈥� the amazing percentage by which Obamacare premiums have risen in just one year.