Kaiser Health Network: Going Part-Time to Afford Obamacare Premiums Is No Big Deal

An article published at the Kaiser Health News website earlier this week showed how skyrocketing Obamacare premiums have caused one married woman to switch from full-time employment to part-time.

The article identified something the establishment press almost never does, namely the specific dollar amount of an Obamacare premium. But reporter Rachel Bluth was untroubled by the implication that thousands if not millions of Americans might be making similar decisions.

To the extent that they cover this at all, the establishment press and even many center-right outlets usually only mention one-year percentage increases without identifying specific examples or giving any kind of longer-term perspective. The establishment press also quickly reminds readers and viewers that most people enrolled get government subsidies. But what about those who don't?

Thanks to this incomplete and often dismissive coverage, few people who aren't directly affected understand that after four years of huge increases, monthly health insurance premiums have gone up by as much as 150 percent or more in many areas of the country. Four years of 30 percent increases, which haven't been at all unusual, would cause a 186 percent increase, or a near-tripling of costs.

Unsubsidized Obamacare premiums are now so obscenely high that they can eat up to 40 percent or more of a person's or family's gross income. After adding in the effect of deductibles, which can be as high as $7,000 or more per person, many of those who choose to get covered end up having to pay out more than 50 percent of their gross income before any insurance coverage (other than the relatively minor freebies like annual physicals) kicks in.

I have compiled a list of examples of the percentages of income a couple whose ages are both 62 and whose earnings are just $1 above the 400 percent of poverty subsidy eligibility threshold will have to pay in Obamacare premiums in each of the 50 states and DC in 2018. I did that using the Kaiser Family Foundation's 2018 Calculator, and also got estimates from that same source of how much of a subsidy the couple could receive if they reduced their income by that single dollar to that 400 percent threshold. I obtained these estimates for the most populous zip codes in the most populous cities or towns in each state. The complete table for all 50 states is here.

The table below only shows the 20 examples I obtained where annual premiums would be 40 percent or more of such a couple's income, and where $7,000 in non-covered costs incurred would cause total healthcare-related expenditures to be 51 percent or more of their income:

Obamacare2018SelectPremiums

It should be obvious that situations such as these and others seen in the more complete table are severely distorting personal and family financial decision-making. Many individuals and families face these choices:

  • Not getting coverage and taking what people in the pre-Obamacare era once saw as an intolerable risk.
  • Getting coverage and going broke.
  • Reducing their income just to get the huge subsidies seen above.

Couples and families whose relationships are otherwise sound also, as seen in columns I wrote at another website seven and four years ago, have considered divorce. Some surely have divorced.

Almost no one in the press discloses the horrific unsubsidized premiums seen above — and when they do, they focus on the people involved and ignore the bigger picture, namely that there are millions of individuals and families facing these stark choices.

The Kaiser Health News article by Bluth, which was also carried in the New York Times, is a perfect example of such news coverage. Bluth, a web reporter for KHN, illustrated what one couple in Tennessee is doing in response to these developments, but utterly failed to look at the larger implications of the decisions they made (bolds are mine):

Middle-Class Earners Weigh Love And Money To Curb Obamacare Premiums

Anne Cornwell considered two drastic strategies in her quest to get affordable health insurance premiums last year for herself and her retired husband.

One was divorce. Another was taking a 30 percent pay cut. She chose the latter.

That maneuver slashed the Chattanooga, Tenn., couple’s premiums from exorbitant to economical. Instead of $2,100 a month — the amount she had been quoted for 2017 — their premiums are just $87 monthly, her lost income more than compensated for by qualifying for insurance subsides.

Cornwell’s solution — completely legal — reflects how a growing number of Americans are incorporating strategies for affording health insurance into financial planning, adapting money and salaries to yield better choices — much as people place money into 401(k) plans to save for retirement while reducing their taxable income.

So "adapting money and salaries to yield better choices," i.e., working less or not working at all, is just another financial planning strategy. Rachel Bluth never considered how literally stupid the Obamacare health insurance "market" must be if it's causing otherwise hard-working people to make unfortunately rational decisions like the one the Cornwells made.

What if there is only one breadwinner and his or her work duties make it impossible to cut back, but they must have coverage because of one or the other spouse's medical conditions? In that case, the choices may be limited to getting divorced or going broke.

What if the Cornwells were both employed? In many cases, it would make "Obamacare sense," i.e., not common sense, for one of them to stop working just to get the subsidy.

It should be easy to see how thousands if not millions of such decisions made by individuals and families throughout the country might be holding back economic growth.

Continuing (links are in original):

... upper-middle-class people like Cornwell and her husband are expected to pay full price, feeling the blunt force of what experts and health economists agree are unbearable escalations.

Between 5 and 7 percent of Americans with insurance — about 17.6 million — buy it on the individual market. Of those, 7.5 million, or nearly half, don’t get subsidies, according to insurance industry consultant Robert Laszewski. Many in this latter group are professionals who work for small companies or have jobs where they work solo, for themselves.

So 7.5 million Americans who don't get subsidies when buying Obamacare insurance are essentially paying the premiums of those who are receiving them.

This is bare-naked redistribution of billions of dollars of income — and even redistribution of wealth, when individuals and families who need coverage dip into savings and investments to pay their premiums — disguised as a health-insurance scheme. It's also redistribution of risk towards many middle- and upper middle-class Americans who have decided not to purchase coverage and pay the tax penalty because they simply can't afford it.

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Today's jobs report from the government showed that the economy has in 2017 continued to add full-time jobs at a faster pace than the average seen during the nearly seven years since employment stopped shrinking in February 2010. The economy has added 2.579 million full-time jobs in the past 11 months. The total for all 12 months in 2016 was only 1.548 million.

Many factors have contributed to this improvement, including increased business confidence and a bit of a pullback in the federal government's regulatory overreach.

But while this is good news, one has to wonder how much better the situation could be — and for that matter how much stronger the overall employment numbers could be — if it weren't for the powerful disincentives against full-time work, or even working at all, built into Obamacare.

It's clear that the establishment press doesn't want news consumers to think about any of this, and that center-right and other alternative media outlets have unfortunately failed to give these realities and the individual and big-picture concerns the attention they deserve.

Cross-posted at BizzyBlog.com.


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