Thursday, August 07, 2014

All aboard the Exemption Train

Remember back in the day, when we had over 40 million uninsured folks, and we had to completely upend the existing health care delivery and finance systems to get them coverage?

Ah, the good ol' days:

"The CBO report ... also finds that about 30 million Americans are currently without health insurance"

Wait, what?

That can't be right: we've got this state-of-the-art enrollment website, comprehensive health care plans with low, affordable premiums (thanks in part to easily understood and verifiable subsidies), and the threat of substantial penalties for failing to buy a plan.



Turns out, not so much: that same CBO report projects that "the number of those who don’t have to pay fines to opt out of Obamacare — the exempted class — is going to hit 25 million by 2016."


Part of the problem, of course, is that the fine penalty tax is pretty much pre-empted for millions of people who have been given (illegal) waivers by the Obamastration. And it's only going to get worse as this year's Open Enrollment season spins up this Fall, and folks start to see their January renewals nuking their bank accounts, even as their subsidies begin to dry up.

Wait a second there, Henry: what do you mean about those subsidies "drying up?"

Oh, sorry, got ahead of myself:

"People who decide to stick with the coverage they've already gotten through Obamacare, rather than switching plans, are at risk for some of the biggest premium spikes anywhere in the system."

At issue is the so-called "auto-renewal" process (about which Pat has written), which allows folks who've bought ObamaPans to just set-it-and-forget-it; rather than face again the frustration of the site and all its machinations, one can simply step back, do nothing, and one's current plan is "good" for another year (although that process may be short-lived as the Actuarial Value catastrophe beckons).

Problem is, there's a pretty good chance - bordering on a likelihood - that one will then face not one but two rate increases: an explicit one ("Thanks for choosing Amalgamated Health Insurance, your rate increase for the coming year is 10%") but also an implicit one:

"[M]any of those consumers will find that their subsidies don't go as far next year, even for the same plans ... The size of each person's subsidy is tied to a "benchmark" plan ... But as those plans raise their rates and new options come to the market, they'll often lose their benchmark status to cheaper competitors"

Bet you didn't know that.

Don't feel bad: most folks don't, and that's likely by design. Carriers don't want you to move, and the government certainly doesn't want you to know the true cost . But that doesn't make the problem go away: as new carriers enter the market (and they will - having sat out the initial season to get a feel for how things play out, they're more likley to want to jump in this year). And since they don't have last year's losses to make up, they can offer plans at lower rates, which then become the benchmarks, which then cause a lot of auto-renewers to lose even more ground.

Sweet deal, no?
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