Following the Supreme Court’s creative reading of Obamacare in its King v. Burwell decision, politicians rejoiced, including those in Wyoming. Governor Matt Mead said in a Press Release:
“This decision allows 17,000 people in Wyoming to continue to receive a tax credit for health insurance and avoids many potential complications of those individuals losing that credit. Simply stated, this ruling maintains the status quo.”
Governor Mead neglected to mention that Wyoming’s roughly 17,000 insurance subsidy recipients won’t have these subsidies for long. Why? Because to make Obamacare appear deficit neutral, Congress limited how much these subsidies will pay in the years ahead and this means starting in 2019, patients will be responsible for covering a greater share of their premiums.
What does this mean for you? If you get an Obamacare insurance subsidy, it covers a portion of your premium based on your income: the less you make, the more it covers. If you and your spouse only make $15,730 annually, you receive a subsidy that covers 98% of your premium, while a couple making $62,920 is eligible for subsidies that cover 90.5% of their premiums.
However, under changes set to take place in 2019, individuals and families will likely pay a significantly higher proportion of their premium. When subsidy costs exceed half a percent of Gross Domestic Product (the Congressional Budget Office predicts this will happen in 2018), the subsidy will no longer increase as premiums go up. Instead, they will rise with the rate of inflation, which increases more slowly than premiums. The American Action Forum estimates that a couple earning $62,920 annually will have to pay 75 percent more in contributions by 2023, adding $4,344 to their annual premium.
As Obamacare continues to raise premiums, subsides will cover less and less of the cost of insurance. Wyoming’s premiums increased a whopping 33 percent in 2014 and 6.5 percent in 2015. Next year, insurance premiums are expected to increase by another 24 percent. One insurer, Time Insurance, wanted to raise premiums by 58 percent! Obamacare’s subsidies could be out the door sooner that we think, leaving patients stuck with an unaffordable bill.
But that’s not all. Two financing programs used to cushion insurance companies against Obamacare’s costs will expire at the end of 2016. Without them, premiums will rise even further.
Known as reinsurance and risk corridors, these programs subsidize insurers that cover large numbers of patients with more chronic health conditions who are more expensive to treat. The Obama Administration hoped that by compensating insurers for accepting very costly patients, insurers wouldn’t need to raise premiums across the board to pay for them.
However, after these programs expire, health insurers will still be required to cover millions of less healthy individuals. The Centers for Medicare and Medicaid Services estimated without this cushion, insurers would raise premiums by as much as 15 percent. The average Wyomingite could see their annual premiums jump by $1,000 when these programs expire.
Obamacare imposes enormous costs on patients and insurers, while simultaneously spending billions of dollars to hide these costs from the public. Over the next four years, both patients and insurers will lose their subsidies and face the full price of the Obamacare misadventure.