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November 07, 2013 1:31 PM Running the Numbers on Obamacare and the Individual Insurance Markets

By Ed Kilgore

You have to give Byron York some credit. He’s one of the few conservative writers who isn’t just ignoring the impact of Obamacare’s premium tax credits in affecting the “rate shock” that people already in the individual health insurance market are supposedly about to experience.

So today York tries to run the numbers on who will and won’t benefit from the subsidies and concludes “losers” may well outnumber “winners:”

[O]f 29 million people who might enter the Obamacare exchanges, about 17 million would be eligible for subsidies. That’s about 59 percent who would be eligible for taxpayer-paid assistance, versus 41 percent who are not. That’s a majority on the subsidy side, but not a huge one. Then figure that some of those who are eligible for help will only be eligible for very small subsidies. For example, a family of four in St. Louis, Mo., with one parent who earns $48,000 and another who earns $37,000 would be eligible for a subsidy — all of $13 per year to pay for an $8,088 policy — that is virtually no help at all. (The numbers come from the Kaiser Foundation’s online subsidy calculator.)
Out of the 59 percent who are eligible for subsidies, then, some portion will receive subsidies that do not cover the increased cost of their new coverage. For them, Obamacare will be a net loss. So, it’s unlikely Obamacare will actually help the full 59 percent of those eligible for subsidies by Kaiser’s estimate. The bottom line is, Obamacare could very well hurt substantially more than 41 percent of the people who are currently uninsured or purchase coverage on the individual market. That’s not exactly making the system work “better for everybody.”

But York misses a few rather important details. For one, the Obamacare subsidies are based on limiting out-of-pocket costs and will adjust upwards if premiums are higher than expected. For another, many of those not qualifying for subsidies may well not experience premium hikes at all, and most others will be offered better insurance coverage than they can obtain today.

But the most important missing item here is the one conservatives struggle with most: the millions (hard to calculate, but still a lot of people) with pre-existing conditions that either lock them out of policies, freeze them in less-than-stable jobs to maintain employer-based coverage, or force them to rely on very expensive barebones policies from state-run risk pools.

Whether they qualify for a subsidy or not, the guaranteed issue element of Obamacare is of immense value to these people. So they need to be included front-and-center in any calculus of “winners” and “losers” under Obamacare.

Ed Kilgore is a contributing writer to the Washington Monthly. He is managing editor for The Democratic Strategist and a senior fellow at the Progressive Policy Institute. Find him on Twitter: @ed_kilgore.

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