Earn More Get Less

Have you ever wondered who created the ObamaCare exchange subsidies? By that I mean, what staffer (of staffers) actually came up with this stuff. If you know, tell us in the comments section. If we decide to give out The-Worst-Subsidy-System-Ever-Devised Award, we want to know who to give it to.

[A] couple in Ohio, both age 50, would be eligible for subsidies worth $3,452 to purchase a so-called silver insurance plan — a moderately priced level of benefits under the ACA’s scheme — that costs $9,346 annually if they made up to $62,040 per year.

But if they made just $1 more than that, they would lose the subsidy…

In New York, a family of three whose annual income totals $78,120 would pay $12,784 for the second-lower-priced silver plan on that state’s insurance exchange. After getting a $5,363 tax credit, the family’s net cost for the insurance would be $7,421.

But if the family earned even slightly more than $78,120, they would have to pay the entire $12,784 for the insurance because they then wouldn’t qualify for the subsidy. (More: CNBC)

Comments (16)

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  1. Yesus says:

    Marginal tax rates of over 100% ensure the success of the policy

  2. Dewaine says:

    This will definitely incentivize many people to slightly decrease their income. We’ll end up with a lot of people just under the cut offs.

  3. Sammy says:

    Fixed limits. Sounds a lot like the poverty standard. I just think it’s a U.S. political tradition to revert to simple and ineffective standards/limits.

    • JD says:

      Looks like it. I don’t know how these things are done in other countries, but it seems like people have a hard time thinking beyond rigidity.

  4. Ashley says:

    If only there were some competent politicians.

    • August says:

      If only competent politician wasn’t a oxymoron.

      • Sabal says:

        If only bashing politicians wasn’t a prosaic bromide.

        • August says:

          a)Prosaic – commonplace, unromantic
          b)Bromide – an overused phrase that “suggests insincerity or a lack of originality in the speaker”

          I commend you on your vocabulary, although I think the phrase “prosaic bromide” is redundant and pretentious.

          I also think the commonplace nature of insulting politicians indicates the general failure of those politicians. Would you agree?

    • Sandip says:

      It’s not a matter of politicians being competent. Many are very able and competent people. Moreover, their staffers most often draft policies, not them. But the real issue is how the system incentives politicians to be more worried about fundraising and appealing to their base to get re-elected while formulating policy is only a way to show they are doing their job instead of actually helping/serving people.

      • JD says:

        Exactly. Politicians aren’t less competent or less moral than the rest of us, they are just responding to their incentives. It is the system that must change, not necessarily the people.

  5. Linda Gorman says:

    Providing subsidies without a significant “cliff” effect is very, very, expensive.

    And to get OCare to save money in the 10 year CBO window already required over-the-top fiscal legerdemain…

  6. Henry says:

    It’s another reason to believe that there will be widespread fraud with this so-called honor system in declaring income. The IRS is restricted by the ACA in recovering any excess tax credits of $600 to $3,500 for a family (half for individuals) and the CBO projects an average credit of $5,290!!
    An astute Navigator could easily point this out to the applicant so they can qualify for the credit.
    Seriously, they have to come up with new options on how to transfer wealth. 🙂

  7. Bubba says:

    I’m not sure I like the idea of handing out taxpayer subsidies worth $7,000 to $10,000 to families just because a Democratic staffer thinks everyone should have health coverage with only modest copayments. Now if the late Senator Kennedy’s family wants to hand out subsidies from his family’s bootlegging legacy, I have nothing against that.

  8. Floccina says:

    I propose a compromise.

    This is a compromise between advocates of government provided health insurance and those against:
    The state would provide insurance to all Americans but the annual deductible would be equal to the family’s trailing year adjusted income minus the poverty line income (say $25,000 for a family of 4) + $300. So a family of 4 with a trailing year adjusted income of $30,000 would have a deductible of $5,300. A family of 4 with a trailing year adjusted income of $80,000 would have a deductible of $55,300. Middle class and rich people could fill the gap with private supplemental insurance but this should be full taxed. This would encourage the middle class and rich, who are generally capable people, to demand prices from medical providers and might force down costs. They could opt to pay for most health-care out of pocket while the poor often less capable would be protected.
    It is not a perfect plan but it might help. Some deregulation of health-care would also help the poor gain access. The gauntlet that Doctors have to run these days to get to practice seems like an anachronism in today’s world. Let smart people get to practice medicine after on the job training. Let the medical businesses decide who is qualified to practice medicine. 12 years of training to tell if my child has an ear infection is overkill and reduces access to health-care for the poor.
    Another benefit of my plan is that it would encourage capable Americans (the rich and middle class) to be a counter weight politically against the providers.