Would anyone buy an Obamacare plan without a huge subsidy?
- For people not getting a subsidy, if you combine the average premium and the average deductible last year, they had to pay $25,000 before getting any benefits from the plan.
- Narrow provider networks exclude the best doctors and the best hospitals.
- The relationship between buyer and seller is asymmetric – once the buyer has selected a plan, he is locked in for 12 months. Sellers can change their provider networks every day of the week – leading to tragic consequences for families with special needs.
In fact, almost no one has been buying Obamacare without a subsidy:
- Prior to the pandemic, the unsubsidized part of the market was in a “death spiral,” as healthy people were leaving in droves.
- To stem the carnage, Democrats in Congress passed huge subsidies for higher income buyers in the American Rescue Plan Act – a very regressive measure expected to cost $17,000 a year for every high-income buyer induced to return to the market.
- When the subsidy expires later this year, expect the death spiral to return.
Although Obamacare promised to provide everyone with high quality private insurance, it has turned out to be little more than Medicaid expansion.
- Although we were spending more than $50 billion a year in subsidies, prior to the pandemic the expansion of individually owned private coverage was anemic.
- When you consider the reduction in employer coverage (largely due to Obamacare), the $50 billion was money down the drain.
- And folks with private insurance in the individual market are finding that their plans look very much like Medicaid with a very high deductible.
See John C. Goodman, Obamacare: Promises Made, Promises Broken; and Brian Blase, Reality Check: The Increasing Cost of Papering Over Obamacare’s Problems