A new report sponsored by the Society of Actuaries predicts implementation of President Barack Obama's health care law will increase underlying claim costs in Oklahoma's individual health market by 29.3 percent by 2017. The only consolation is that things could be worse: Wisconsin and Ohio face increases of 80 percent!
Officials expect pools of high-risk patients will move to individual health plans, which will offset any gains that insurers realize as the result of younger, healthier citizens being forced to buy insurance. Not to worry, say Obamacare supporters. Government subsidies will offset much of the increased consumer cost. But now it turns out those getting subsidies could face potential tax penalties.
Under Obamacare, those who don't get coverage through work will be required to get it through government-run insurance exchanges. Subsidies will be provided on a sliding scale based on income. But as The Associated Press noted in a recent report, the government doesn't know how much money you're going to make next year. Those applying for subsidies will be doing so in the current year, based on their estimated income the next year.
As a result, if the head of a family gets a new job with a nice raise, that family would face tax penalties for receiving excessive subsidies. The penalty could range from $600 for families with income below $47,000 to $2,500 for those earning more. If a family's income increases dramatically, they might have to repay the entire subsidy.
A significant financial penalty potentially faces those with new work opportunities who also get government insurance subsidies. It's a perverse incentive that could actually discourage some from pursuing job opportunities. Of course, this assumes people will decide to obtain health insurance at all. There's growing reason for skepticism on that front.
Restaurants have long warned that Obamacare's mandates could dramatically increase their cost of doing business. The Wall Street Journal recently reported that Wendy's, the hamburger chain, has now reduced its estimates of that impact by 80 percent — “primarily because they expect many employees to decline the insurance offering.” In many cases, workers are expected to turn down insurance coverage and instead pay the tax penalty for noncoverage. The penalty facing workers is $95. The employee's portion of employer-sponsored coverage will typically cost more, because Obamacare requires greater coverage than many restaurants' current policies.
The experience of the Popeye's chain is illustrative. The company currently offers insurance costing workers just $2.50 per week, yet only 5 percent sign up for the plan. Under Obamacare, those workers would pay about $25 per week — or they could simply pay a $95 fine once a year. By 2016, the individual penalty will be $695. That's still less than the annual out-of-pocket cost of insurance, making this an easy decision for young, healthy workers who would prefer to use their limited funds in other ways. And, should they get sick, Obamacare still requires insurance companies to sell them policies.
Liberals argue that the hassles of Obamacare are worth the price to end the problem of the uninsured and associated cost-shifting. But Obamacare doesn't accomplish that goal. Last summer, the Congressional Budget Office estimated 30 million people would still be uninsured nationally by 2022.
Instead, Obamacare provides increased costs, regulatory hassles, perverse incentives and an uncertain future for all Americans.