75 Percent of ObamaCare Premiums Are Paid By Taxpayers, Not Enrollees

We’ve previously described how expensive it is to bribe people to buy health insurance. Now, the Administration has proved it, releasing a report of “affordablility” in the ObamaCare exchanges. ObamaCare enrollees find ObamaCare affordable because they are not paying for most of it:

HHS officials said the average monthly premium before tax credits costs $346 a month, and $82 when the subsidies are included. The biggest savings, 80%, was achieved by second-tier silver-plan purchasers, who averaged $69 in monthly premiums with credits and $345 without them.

The report says 94% of silver-plan buyers received tax credits, and 87% overall got subsidies.

Buyers of first-tier bronze plans saved 76% on average, paying only $1 less on average for their subsidized policies — $68 a month — than did silver-policy holders. HHS says 73% of bronze plans were subsidized. (WSJ)

Comments (18)

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  1. Devon Herrick says:

    For those who qualify for a subsidy credit, the average monthly premium they are paying is one-fourth the total premium. At some point small firms that offer health coverage will realize they are at a competitive disadvantage to those that drop the company health plans and send moderate-income workers to the exchange. This is not a good development for taxpayers.

  2. Laura says:

    so that bronze plan is pointless?

    • Janice says:

      If I am reading the post correctly, then I would also assume that the bronze plan of the ACA/Obamacare exchanges is pointless because there is a $1 difference for more coverage. Sign me up for silver, please!

  3. Geoff says:

    Honestly, is it really shocking that taxpayers are paying it, even after Obama promised that it wouldn’t be so much of a percent? The individual mandate clause of the Affordable Care Act was a mess from the start.

    • Andrew_M_Garland says:

      In agreement.

      It is great that ObamaCare is solving the free rider problem in healthcare (sarc). Before, the uninsured would show up at emergency rooms and place a financial burden on the rest of us.

      Now, they are insured, and the insurance provides for their care. Or, maybe 25% of their care.

      Narrow provider networks and low reimbursement rates combined with government regulation and red tape mean that emergency rooms are the medical delivery method of choice.

  4. Big truck Joe says:

    This is the first nail in the coffin of employer sponsored healthcare. When my kids are working they will think it an oddity if their employer offers healthcare insurance coverage. First destroy the employer sponsored insurance relationship by making it more cost effective to drop their employees insurance, then destroy insurance companies by mandating they cover too much for too little reimbursement and then we all get to enjoy single payer healthcare ala the VA fiasco. Welcome the United Socialist States of America.

    • Freedom Lover says:

      exactly right Big Truck Joe! These taxpayer-funded subsidies are masking the significantly rising costs of insurance that is being caused by Obamacare. This may temporarily placate those who have gotten insurance through the exchanges, but they will soon realize the ACA does more harm than good once their healthcare starts being rationed.

    • Buddy says:

      I would forego benefits at any job and get paid what is supposed to be put into benefits. However, this was all well and good before the individual mandates.

  5. SPM says:

    This article also points out how the admin’s report does not focus on those who are not receiving any tax credits at all. These people have to pay the full price of their premiums (not lucky enough to have taxpayers pay part of their bill) will undoubtedly pay significantly more in monthly premiums. Maybe they ought to lie on their expected earnings like millions already receiving subsidies are suspected of having done.

  6. Matthew says:

    “75 Percent of ObamaCare Premiums Are Paid By Taxpayers, Not Enrollees”

    Well yeah, unless people are eligible for a subsidy, there really is no incentive for signing up. Taxpayers get to foot the bill.

  7. Don Levit says:

    John wisely pointed out that the subsidies are based on the two lowest premiums for silver plans
    In the next year or two National Prosperity Life and Health plans to partner with two insurers who have plans on the TX exchange

    Over time premiums will reduce significantly including medical inflation using our patented Health Matching Insurance
    Lower premiums mean lower subsidies
    Those two insurers should capture most of the exchange in TX and save the government millions of subsidy dollars

  8. Big Truck Joe says:

    One question for all of you knowledgeable about Obamacare – how are the deductibles gonna be subsidized??? From what I’ve read, the real risk in these Obamacare policies is their deductible. Does the taxpayer pay for the $5000-$10,000 deductible that the subsidized policy holder has?

  9. Don Levit says:

    Big Truck Joe:
    The deductibles are not subsidized by the government.
    Someone please correct me, but the only costs which are lowered are for those whose income is below 250% of FPL, and their cost sharing is reduced (the co-payments and co-insurance, but not the deductible).

    If 75% of the premiums are paid by taxpayers, this looks a lot like Medicare Part D.
    As many of you know, there is no pre-funding of Part D, and 75% of the premium is paid by the government; 25% of the premium is paid by the beneficiary.
    It was an extremely large extension of governmental liability.
    Of course, if you adhere to the “trust fund perspective,” you believe Part D is fully paid for, since there is no limit to the amount of governmental dollars available in an economy that prints its own currency.

    Freedom Lover is correct about the subsidies masking the true cost.
    In fact, I would think the subsidies would inflate the cost more than without the subsidies.
    That which you incentivize through tax credits, rebates, etc. is utilized more than without the incentives.
    Don Levit

    • John R. Graham says:

      Thank you. Do you think, economically, there is a difference if the cost-sharing provisions were applied to lowering the deductible versus lowering co-pays or co-insurance?

      The more I think about it, the more I think it does. A few years ago, I wrote an article about Medicare reform where I advocated means testing the out-of-pocket payments instead of the premiums. I though it was politically do-able in the Bush Administration.

      But I did not figure out in detail the economics of where to apply the means test. It is an interesting question.

  10. Big Truck Joe says:

    So if 75% of Obamacare sign-ups meet poverty level requirements that require special subsidies for monthly payments of $300 to $500, how are these same poor people (literally and figuratively) going to be able to pay the exorbitant deductibles? Something has got to give. The system of subsidized premiums and multi thousand dollar subsidies will not work. This whole Obamacare plan is going to crash.

  11. Big Truck Joe says:

    As far as my real life experience has taught me, the lower the premium, the higher the deductible and vice versa. The monthly premiums are more economically palatable to the common layman than the high deductibles which are more apt to force people into bankruptcy. One would assume that if you were financially well off, then you would have the money to pay for the high deductible so that could be a means tested option. however, I think means testing and cost sharing are only band aids to an Obamacare system that is structured to fail. Those options are simply rearranging the deck chairs on the Titanic.