When the Obama administration says the vast majority of Obamacare shoppers can get subsidies to keep their health insurance costs down, that’s not the whole picture.
It’s true that the vast majority of people buying coverage through the Affordable Care Act’s marketplaces are eligible for income-based assistance. Those people, as well as most workers who have employer-sponsored coverage, don’t have to pay the full cost of their premiums, which are sharply increasing next year.
But there’s another segment of the population — about 28 million people, according to the firm HealthPocket — who must buy unsubsidized coverage or go without it.
“They are the forgotten population,” said HealthPocket’s head of research, Kev Coleman. “The unsubsidized are really in a no-man’s land.”
Of the 28 million people HealthPocket estimates aren’t getting subsidies, the largest share are customers buying plans off-exchange, an estimated 8-12 million people, according to data from the Department of Health and Human Services. Those who buy plans off the exchange are not eligible for subsidies.
Another 5 million or so are illegal immigrants, who are legally banned from getting subsidies. Nearly 3 million fall into a coverage gap in which they don’t earn enough to qualify for subsidies but live in a state that didn’t expand Medicaid. About 2.2 million bought marketplace plans but don’t qualify for subsidies. The rest fall into various smaller categories that make them ineligible for subsidies.
Advocates for the healthcare law are less eager to talk about those people, who could be hit the hardest by soaring premiums in some states. The Obama administration has been hanging much of its defense of the law’s problems by noting that about 85 percent can get subsidies through the marketplaces.
But a more accurate estimate may be that 50 percent of shoppers on the individual market are subsidy-eligible, when both on-exchange and off-exchange purchases are taken into consideration.
Atlantic Information Services recently conducted a nonscientific survey of Blue Cross Blue Shield plans selling off-exchange plans. Of about 4.7 million individual market customers covered by nine Blue Cross affiliates, 2.3 million had subsidies and 2.4 million didn’t.
Anthem, for example, had 1.8 million individual market customers midway through 2016. Assuming that roughly 85 percent of its 923,000 marketplace customers had subsidies, that means more than 1 million of the customers, or 55 percent, didn’t get a subsidy.
Advocates for the law note that some people may be unaware they’re eligible for subsidies, as the law is only a few years old. The administration is trying to convince more people to sign up this year, but their success will hinge on making the case that consumers can afford to buy coverage, even as insurers raise premiums.
A spokeswoman for the Department of Health and Human Services pointed to a report by the McKinsey Center for U.S. Health System Reform estimating that 69 percent of all individual market shoppers, both on and off the marketplaces, qualify for assistance if they sign up for Obamacare.
The report predicts there will continue to be a “large, viable individual market” as a result of the subsidies, which make coverage affordable for people even if premiums continue rising.
“Our modeling work suggests this mechanism acts as a powerful market stabilizer, making coverage affordable for a broad segment of the individual market regardless of premium increases,” the McKinsey report says.
But regardless of the exact percentages, some Obamacare customers are undoubtedly wealthy enough to foot their bill, while others still find it a substantial burden. Subsidies diminish substantially for earners above 250 percent of the federal poverty level and disappear completely at 400 percent, which equals $47,520 for an individual and $97,200 for a family of four.
An individual living in Denver, for example, would pay about $300 per month for a mid-level “silver” marketplace plan, while a family could pay double that. They also would have to cover deductibles and other cost-sharing without help, making it a financial stretch for those earning just above 400 percent of the poverty level.
“The political calculus being missed is that those with incomes between about $50,000 and $100,000 vote … and they’re going to be increasingly unhappy with the pricing as well as the plan designs,” William Pewen, former aide to Sen. Olympia Snowe, told the Atlantic Information Services report.
Massachusetts and Vermont have bulked up the subsidies for moderate-income shoppers with their own dollars. Some liberals, including Democratic presidential nominee Hillary Clinton, have called for the same approach on the federal level.
“There are affordability issues for people over 200 percent of poverty, and we need to think about how moderate-income people may need additional assistance,” said Sarah Lueck, a policy analyst with the Center for Budget and Policy Priorities.
Republicans have sought to highlight the situation, painting the healthcare law as a bane for middle-income Americans. Senate Majority Leader Mitch McConnell blasted Democrats last week, saying they should stop pretending cost hikes are “someone else’s fault.”
“Own up to what you’ve done to the middle class, then work with us to build a bridge away from it,” McConnell said Wednesday on the Senate floor. “Obamacare is scary enough for America’s middle class. The last thing Americans need now is some government-run sequel.”
