November 07, 2013
NPR did a piece on the pattern of subsidies created by Obamacare. It rightly noted that the Affordable Care Act restructures the individual market so that healthy people will subsidize less healthy people, just as is now the case in the market for employer provided insurance.
However it may have misled listeners about the size of the subsidies. It gave an example of a person who is being made worse off by the change in the structure of insurance under Obamacare:
“Dentist Aaron McLemore of Louisville, Ky., makes more than $100,000 a year and doesn’t qualify for any subsidy on the Obamacare exchange. The 31-year-old’s current policy is being canceled. A new policy from the exchange will more than double his monthly premium and boost his annual deductible to $7,000.”
Okay, the problem here is that the piece is telling us Mr. McLemore’s deductible, not his premium. If we assume that Mr. McLemore is healthy (he is supposed to be an example of a healthy person subsidizing the less healthy), then the size of the deductible is not likely to be of much relevance. He will most likely not incur expenses that would push him over a deductible floor. The item that would be most relevant to McLemore would be the premium he pays, since this is the money that actually comes out of his pocket.
Kentucky’s exchange will not give prices unless you actually register, but DC’s exchange lists bronze plans available for as little as $125 a month or $1,500 a year. While this may be more than McLemore was paying with his current plan, it still implies that he will be paying less than 1.5 percent of his annual income for health insurance. It would have been useful to report the premium on the plan that McLemore chose, since that would be the upper limit on the amount that he would subsidizing less healthy people — if he did not value the insurance at all.
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