In a rare moment of candor, the Obama administration has acknowledged that the so-called Affordable Care Act is making insurance less affordable for millions of Americans.
The Centers for Medicare and Medicaid Services the other night issued a press release that outlines new options for the nearly 5 million Americans who have received cancellation notices from their health insurers. Not surprisingly, these Americans are “finding other coverage options to be more expensive than their cancelled plans or policies,” CMS explains.
Courtesy of the administration's ad hoc announcement, these 5 million Americans—regardless of their age—may now enroll in Obamacare-compliant catastrophic plans, which were previously limited to people younger than 30 years old. But these plans aren’t cheap, in part because they must still provide preventive services—such as contraception, sterilization, and abortifacients—at no cost to the policyholder. Indeed, a 26-year-old in Milwaukee faces a $1,983 premium for the least expensive catastrophic plan. And in Philadelphia, the cheapest catastrophic plan for a 29-year-old carries a $2,189 premium.
Because the administration has only now widened the eligibility requirements for catastrophic plans, we do not know how much these plans will cost for Americans over 30 years old. California’s state-run exchange website, which is among the more user-friendly Obamacare exchange websites, lists only bronze, silver, gold, and platinum prices for individuals 30 and older. Likewise, eHealthInsurance.com, which lets consumers compare off-exchange Obamacare-compliant plans, lists no catastrophic plans for the over-30 demographic.
But based on a cursory look at catastrophic premiums for 29-year-olds in a handful of major American cities (including Cleveland, Atlanta, Phoenix, and Memphis), it seems fair to assume that most Americans who select a catastrophic plan will face premiums in excess of $2,000. Still more, Americans are not allowed to apply any taxpayer-funded subsidy toward the purchase of a catastrophic plan. As a result, for most people over 30 who make less than $30,000 and for most people over 50 who make less than $40,000, the after-subsidy price of a bronze-tier plan will be less than the price of a catastrophic plan.
In the same press release, the CMS announced that Americans who have received cancellation notices will be exempted from the individual mandate fine, which takes effect next year. This relief does not make Obamacare any more appealing. But in the absence of the fine (about $253 for someone making $35,000), a serious, affordable alternative to Obamacare—short-term health insurance—has just become even more attractive.
Short-term plans, which do not comply with the healthcare law and thus leave policyholders subject to the individual mandate fine, offer a significant savings over Obamacare. For example, a 26-year-old Milwaukee man earning $35,000 could buy a 364-day short term health insurance plan for just $759. Even after paying the individual mandate fine, he would still save more than $1,300 by purchasing a short-term plan instead of the cheapest available bronze-tier plan. And in Philadelphia, a 31-year-old woman could buy that same plan (and pay the fine) for $1,323, saving over $1,200 compared to the least-expensive bronze-tier plan.
If that same man and woman were one of the five million Americans who have received a cancellation notice, they would no longer be subject to the individual mandate fine—increasing their savings to $1,584 and $1,516, respectively, by selecting a short-term plan.
Individuals who’ve had their plans cancelled are not the only Americans to find their coverage options under Obamacare to be more expensive. If President Obama is actually “contrite,” as the Washington Post and New York Times have described him in recent days, then he should agree to give the rest of America the same reprieve.