http://www.economicpolicyjournal.com/2013/10/peter-schiff-on-real-shock-of-obamacare.html
The real cash cows are the young men, not covered by parents, who make more than 4 times the poverty level. But their only incentive to sign up is to avoid the penalty. But at just one percent of income, the penalty just won't be a deciding factor. Most young men will save money by dropping insurance, paying the tax and incidental doctor visits out of pocket, and then only adding the insurance if and when something really bad happens.
The subsidies in Obamacare kick in and kick out very abruptly. People finding themselves on the wrong side of a dividing line will face difficult choices that hurt the plan's finances. The San Francisco Chronicle recently profiled a California couple in their early 60s making about $64,000 per year who would be able to qualify for a $14,000 annual subsidy by reducing their income by $2,000 dollars per year. It's easy to imagine such individuals reducing their hours or their pay to qualify. Of course this type of behavior modification has not been anticipated by preparing premium and budget projections. It is no accident that the government has offered no serious projections about how much in healthcare subsidies it should expect to pay out over the coming years.
In truth, the premium levels themselves are based on nothing but assumptions. It is true that those lucky enough to actually get through the website's technological maze have seen (unsubsidized) premiums that are lower than similarly constituted plans in the private market. But those low prices are only possible because no one knows what the new pool of insurance holders will look like. They assume it will look like the pools that already exist. But they won't.
Of course, the incentives for the young and healthy to drop out, and for the sick, old and the heavily subsidized to drop in will mean that the post-Obamacare pool will have very different actuarial arithmetic than the current pools. But all of that is as yet unknown. The numbers we see now were put there just to make us feel good. But once the economics kicks in, look for them to rise quickly.
The real cash cows are the young men, not covered by parents, who make more than 4 times the poverty level. But their only incentive to sign up is to avoid the penalty. But at just one percent of income, the penalty just won't be a deciding factor. Most young men will save money by dropping insurance, paying the tax and incidental doctor visits out of pocket, and then only adding the insurance if and when something really bad happens.
The subsidies in Obamacare kick in and kick out very abruptly. People finding themselves on the wrong side of a dividing line will face difficult choices that hurt the plan's finances. The San Francisco Chronicle recently profiled a California couple in their early 60s making about $64,000 per year who would be able to qualify for a $14,000 annual subsidy by reducing their income by $2,000 dollars per year. It's easy to imagine such individuals reducing their hours or their pay to qualify. Of course this type of behavior modification has not been anticipated by preparing premium and budget projections. It is no accident that the government has offered no serious projections about how much in healthcare subsidies it should expect to pay out over the coming years.
In truth, the premium levels themselves are based on nothing but assumptions. It is true that those lucky enough to actually get through the website's technological maze have seen (unsubsidized) premiums that are lower than similarly constituted plans in the private market. But those low prices are only possible because no one knows what the new pool of insurance holders will look like. They assume it will look like the pools that already exist. But they won't.
Of course, the incentives for the young and healthy to drop out, and for the sick, old and the heavily subsidized to drop in will mean that the post-Obamacare pool will have very different actuarial arithmetic than the current pools. But all of that is as yet unknown. The numbers we see now were put there just to make us feel good. But once the economics kicks in, look for them to rise quickly.