On Thursday afternoon the Obama Administration made another attempt to persuade the public that the number of people who are losing their health insurance in the individual market really isnâ€™t that bad. Since President Obama has said that such people can keep their insurance for another year, itâ€™s not clear why the administration bothered. The best guess at this point is they are in Throw-As-Much-Propaganda-Out-There-And-See-What-Sticks mode.
Anyway, the Department of Health and Human Services touted a study by the liberal health-care group FamiliesUSA that purported to show that â€śless than 1 percent of nationâ€™s non-elderly are at risk of losing their current individual market plan and paying more for insuranceâ€ť on the Obamacare exchanges.
To get that one percent number FamiliesUSA assumed that everyone below 400 percent of the federal poverty level (FPL) is eligible for a subsidy to help purchase insurance on the exchanges. As the study claims:
The individual market covers 5.7 percent of the non-elderly populationâ€”a small slice of all insured Americans. The overwhelming majority of those people will obtain more affordable coverage under the health care law because they will be income-eligible for financial assistance to help pay for comprehensive insurance at a lower cost. Individuals with household incomes that do not exceed four times the federal poverty level ($94,200 for a family of four in 2013) are income-eligible for either premium tax credit subsidies to buy coverage in the new health insurance marketplaces or Medicaid, which charges no premiums for most enrollees.
That is a serious flaw. As Sean Parnell and I showed in a study for the National Center for Public Policy Research back in September, many people earning less than 400 percent FPL will not qualify for a subsidy because of the way subsidies are calculated.
The subsidy formula is the price of the second lowest-cost Silver plan on the exchange minus the â€śapplicable percentage.â€ť Under Obamacare, the applicable percentage is the percentage of your income that you must pay toward your insurance before you qualify for a premium subsidy on an exchange. The applicable percentage is based on a sliding scale, starting at 2 percent for those with incomes at 133 percent FPL and rising to 9.5 percent for those with incomes at 400 percent FPL. So, if the second lowest-cost Silver plan is $1,500 and the dollar amount of an individualâ€™s applicable percentage is $1,000, he or she qualifies for a premium subsidy of $500.
However, no premium subsidy is offered if the applicable percentage equals or exceeds the cost of the Silver plan. Thus, if the dollar amount of an individualâ€™s applicable percentage is $2,096 but the second lowest cost silver plan is $2,083, he receives no subsidy.
That last example isnâ€™t hypothetical but is exactly the situation of someone age 27, who is living in Chicago, is a non-smoker, and is earning $27,400, or 238 percent FPL. A problem with the Families USA study is that it excludes all such individuals from those who could be losing their insurance and paying more on the exchanges.
Thatâ€™s not the only flaw in the study. Suppose that 27-year-old living in Chicago was earning $25,000 annually. Then heâ€™d qualify for a subsidy of $354 per year which, if he applied to the lowest-cost Bronze plan, would result in annual premium of $1,144 or about $95 a month. Going on to ehealthinsurance reveals that for a 27-year-old male there are 15 plans cheaper than $95 a month and three such plans for a female. Thus, itâ€™s quite possible to have subsidized insurance on the exchange that still costs more than a current plan. Yet such people are also excluded from those who could be losing their insurance and paying more on the exchanges in the FamiliesUSA study.
In short, FamiliesUSA is excluding a lot of people who will lose insurance and pay a higher price on the exchange, thereby rendering its statistic of less than 1 percent grossly inaccurate. Alas, it seems that much of America, including the mainstream media, is tired of the nonsense exuded by the Obama Administration, especially on health care. Thus, the chances of this study getting much traction are pretty slim.
No doubt the administration will keep trying. But itâ€™s not likely to make many inroads with people like Rev. Brad McClain of Mobile, Alabama, who received news that the premiums for his family plan will double next year from $800 to $1,600.
Propaganda isnâ€™t that effective when the hard truth is smacking people in the face.