How Obamacare Disincentivizes Inexpensive Insurance


credit: alles-schlumpf / Foter.com / CC BY-NC-SA

When you subsidize something, you get more of it. Obamacare is set to spend about $23 billion on private insurance subsidies next year, and more than $130 billion annually by 2021. And, so we'll end up as a nation with a lot more health insurance.

But there's one type of insurance that Obamacare doesn't subsidize: the relatively inexpensive, high-deductible insurance plans that can make a lot of sense for a lot of individuals, especially the young and healthy. And that's going to create a significant disincentive to utilize those types of plans, explains Jed Graham of Investor's Business Daily:

For a bit less, $137 a month (after subsidies), a 21-year-old can get bronze coverage [Obamacare's lowest coverage level for non-catastrophic insurance]. Yet while the price is more realistic, the deductible of $5,000 may be so high that young people wonder whether the price is worth the sacrifice.

More good news: Those under 30 will have yet one more option, buying catastrophic coverage. These policies come with an even higher deductible of $6,400, but they are less expensive.

But here's the final piece of bad news: Because such policies come with no federal subsidies, workers earning 250% of the poverty level would pay the exact same $137 a month out of pocket for the cheapest catastrophic coverage as they would for the cheapest bronze-level plan.

The existence of these sorts of incentives will probably drive up overall health spending: The evidence is pretty strong that people with more insurance utilize more health care services (although it's far less evident that they get commensurate improvements in health). It will also drive up costs for taxpayers, as more individuals like Graham describes are likely to take the publicly subsidized insurance option rather than the catastrophic plan at the same price. 

What this really does is highlight how absurd it was for President Obama and others to suggest that the health law would bring down insurance premiums for most people. Even with expanded insurance pools, a big part of the point of the law was not only to get more people to buy insurance coverage, but to get people to buy more insurance coverage — broader and more expensive plans designed to please folks like Health and Human Services Secretary Kathleen Sebelius who think that catastrophic insurance, the kind that's actually focused on protection from major financial shock, somehow doesn't count. 

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  1. And all of those newly insured people are going to be filling up an emergency room near you destroying the health care system

    On any given Saturday night, all 36 beds at UC San Diego Medical Center’s Hillcrest emergency room are likely to be occupied, and incoming patients can often be found lying on gurneys in the corridor. A grimacing patient with a gaping knee wound holds the screen of his mobile phone over the gash for extra illumination one weekend this spring as a doctor stitches him up. “There’s nothing more appalling than being treated in a hallway,” says James Dunford, medical director of the city of San Diego’s Emergency Medical Services system, who also works at Hillcrest. “Soon,” he says, “it’s going to be worse.”

    Dunford anticipates that the Affordable Care Act will bring a surge of patients to his ER and those around the country?the opposite of what’s supposed to happen. The law’s backers argued it would help alleviate stress on overcrowded emergency rooms. The 25 million people expected to receive insurance under Obamacare, they reasoned, would make appointments with a doctor instead of turning to ERs for care.


  2. ‘The 25 million people expected to receive insurance under Obamacare, they *HOPED*, would make appointments with a doctor instead of turning to ERs for care.’

    Obozo is all about hope!

    1. It is almost as if the bill was written by complete morons who had no idea how the system actually worked.

      1. Like Romney and Heritage?

        1. Yep, like them.

        2. “Like Romney and Heritage?”
          You left out Obozo and Pelosi, but we knew you would.

          1. Of course our little sock puppet monkey did. Three years ago, this was the greatest thing ever. Obama’s legacy that would ensure a permanent D majority. Now it is someone else’s idea that was forced upon Obama.

            What a sad pathetic existence people like Shreek’s handlers must lead. And it is only going to get worse for them.

        3. You mean Romney was in Congress in 2010? I had no idea. I thought this bill was written by Max Bauchus and signed by the village idiot in the White House.

          Suck it asshole. Not a single Republican voted for this monstrosity. You fucking own it. Your butt buddy and idol Obama will forever be remembered as the idiot who destroyed the US healthcare system. You will never see another liberal Congress in your lifetime thanks to this mess.

          1. Your butt buddy and idol Obama will forever be remembered as the idiot who destroyed the US healthcare system.

            Nuh uh! Obama tried to save it, but the darn market kept failing! It was president Hillary Clinton who will be remembered as the savior who brought us single payer! Now no one goes bankrupt for medical bills anymore because no one ever sees a doctor! It’s a workers’ paradise! We’re all poor and there’s no one to envy!

            /sarcasmic of the future

          2. How did that referendum on Obamacare in 2012 turn out?

            You know, the one where you kept predicting an easy Romney victory?

            1. Since Romney wrote Obamacare, I guess it was a pretty big rejection of it, right?

              And how is that re-election working out for their dipshit? How 2014 looking?

            2. You’re making the fatal mistake in assuming that typical Obama supporters are actually well informed about of Obama’s policies.

              I didn’t want to believe it, but most low information black voters pretty much voted for him because he’s black.

        4. Like Romney and Heritage?

          Remember my guy has immunity if implements an idea conjured by TEAM STUPID.


          (The sound made as shreeky returns to fellating Team Obama)

          PS: CHRISTFAG

          1. Unsurprisingly, the only creatures found in nature capable of unhinging their jaws to such an extent are snakes.

        5. Like them, but not them.

      2. They don’t need to know how it works. They only need to know how they feel it should work.

    2. Though many of its supporters may have had high hopes for ObamaCare, its authors were not stupid.

      ObamaCare was designed to fail and these are not unintended consequences.

      The authors of ObamaCare have been explicit about its being a step to single-payer or socialized medicine. They knew that the US was not quite “ready” four years ago, and drafted legislation that will create conditions that will cause the electorate to clamor for single-payer or socialized medicine in the future.

      1. Bullshit. The health insurers got on board so they could increase market share and lock out single-payer.

        If they do a good job they will next “manage” Medicare as an HMO and cut costs using the “death panels” – aka the cost containment board.

        1. The insurance companies got on board because they knew that Obama was not above using the FBI and IRS to go after his opponents. Pretty much any large health care provider or insurance company can be indicted for something at any time. The medicare regulations are that complex and that vague.

          Knowing what we know now about how the IRS and DOJ were and are still being run, it is no surprise at all why the insurance companies got behind it.

        2. Palin’s Buttplug| 5.31.13 @ 11:32AM |#
          “Bullshit. The health insurers got on board so they could increase market share and lock out single-payer.”

          This from the financial genius who informs us that the insurance premiums can’t be rising in response to Obozoscare, since it isn’t fully in place!
          That should give you some idea of what dipshit’s opinions are worth.

      2. That gives them way too much credit. They are really that stupid. No way they were smart enough to think that far ahead. These people are low IQ political hacks. What happened was they promised a big health care bill. Then started writing it and quickly realized they had no idea what they were doing and what they were writing was going to be a complete disaster. But they knew not passing it would disillusion their low information supporters and doom Obama in 2012. So they passed it with the effects to be felt after the 2014 election figuring they would get Obama re-elected and worry about the mess later.

        Don’t give them too much credit. These people have animal/shreek level intelligence. That is the only intelligence they have is a feral sense of political survival. When this thing explodes next year, they have no plan other than do their best to survive.

      3. You have an opinion of their intelligence I do not share.
        There was no plan; there was stupidity all around, but a hope that the promise of free shit would keep those idiots in office one more election cycle.
        Beyond that, well, there is a bottonmless pit of stupidity from which they’ll draw some other fantasy.

        1. there is a bottonmless pit of stupidity from which they’ll draw some other fantasy

          this is the slogan of the decade century.

        2. I agree with Sevo. I don’t think that it is all a plan to crash the whole thing and bring in single payer. That may well be the effect, but I don’t think any of them are clever enough to actually make a grand conspiracy like that work. Not that it makes a whole lot of difference if the outcome is the same. But “the road to hell is paved with good intentions” can account for a lot.

          1. The problem with crash it and bring on single payer is that the government is broke. They don’t have the money for single payer. So what happens when it crashes is anyone’s guess. But I don’t think single payer is in the realm of possibility anymore. There is just no money for it.

          2. If 54% of Americans oppose Obamacare, would they really support a raw single payer system?

            Single payer will never come to pass. Americans just about faint when gas prices inch above 4 USD a gallon. We have more illegal aliens than some native population of smaller countries. The cost is going to be astronomical.

  3. Let’s increase demand without increasing supply!

    1. That way, things will get cheaper, right?

    2. “The first lesson of economics is scarcity: There is never enough of anything to satisfy all those who want it. The first lesson of politics is to disregard the first lesson of economics.”

      ? Thomas Sowell

  4. A $5000 deductible for a person in their 20’s should be cheap. I know – they should put in an exchange where providers can bid on such policies. Like the exchanges that are in the ACA.

    1. So my premiums next year when I have two healthy adults and a hopefully healthy baby on my high-deductible plan should be fairly small, right?

    2. “A $5000 deductible for a person in their 20’s should be cheap.”
      Obozo (and dipshit) are all about hope!

      “I know – they should put in an exchange where providers can bid on such policies. Like the exchanges that are in the ACA.”
      So we have a hope such policies should be cheap and a hope they’ll be available in the hoped-for exchanges!
      Right on message there, dipshit.
      Oh, and:
      “Affordable Care Act makes high deductible, low cost health plans, LESS affordable”

    3. Funny how there already is something like that, minus all the regulation mandates and other things that restrict choices and drive up costs ehealthinsurance.com

      1. And we are free to continue using it.

        1. Then why have the government exchanges in the first place?

          1. Because it’s a lie.

        2. Palin’s Buttplug| 5.31.13 @ 11:46AM |#
          “And we are free to continue using it.”

          Do you get paid by the lie, dipshit?
          “Most individual health insurance isn’t good enough for Obamacare”

          1. So ehealthinsurance is being shut down?

            Quit lying.

            1. Palin’s Buttplug| 5.31.13 @ 12:04PM |#
              “So ehealthinsurance is being shut down?”

              Bring that goal post back here!
              Do you think that sort of claptrap convinces anyone of anything other than that you’re a lying, mendacious asshole?
              Go fuck your daddy

            2. No, but $5000 deductible catastrophic insurance is being made illegal. Instead we have to get insurance with more first dollar coverage, which costs more.

              The worst part of this is that the law mandates various first dollar coverage and routine coverage, but not catastrophic. So low-wage employers are responding by offering insanely horrible plans that cover the cheap stuff but don’t cover the low probability catastrophic stuff.

    4. These exchanges have always been the most baffling thing for me. I can’t think of a single justification for why the government needs to create an online marketplace for buying insurance. It’s like saying the government needs to take over Expedia and Amazon.

      1. Shhhh, you’ll give folks ideas.

    5. You could get policies like that for cheap before Obamacare. Before I had a job with insurance, I think I paid $100/month. Now, to get a plan that will allow you to avoid the penaltax, it’s getting a lot less cheap.

    6. They were. About $85/month in 2007 when I first bought one.

    7. Of course, deductible and age are NOT the only things, or even the most important things, that affect premiums. The scope of coverage, co-pays, networks, guaranteed issue, community rating, etc. are far more important and Obamacare works against those in their 20s on all those factors.

      1. Yep – State and federal mandated benefits – and the administrative fees the constantly changing regulatory environment incurs – really drive costs.

  5. The beautiful sunny weather today has put me in the mood for chaos. I can’t wait to grab a beer and watch things burn.

  6. For your enjoyment: Watch a Louisiana legislator skitter away like a startled cockroach from a TV camera, after she claimed people who oppose Barack Obama’s health care law are motivated by racism.


    1. This deserves a hat tip

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