Support the Timberjay by making a donation.

Serving Northern St. Louis County, Minnesota

Buying through MNsure? Better take a sedative first

Posted

What do you get when you impose a complex and wide-ranging law with more than a few glitches, and then refuse to make any changes that could address its shortcomings? You get the ever-worsening mess known as the Affordable Care Act.

Let me tell you just how strange this whole thing has become. I did some comparison shopping on the MNsure website this week to get an advanced look at the new insurance rates that will take effect in 2017. In short, the new rates are eye-popping.

The el-cheapo UCare bronze plan that my wife Jodi and I bought for 2016 went from $657 a month to $1,221 a month, or $14,652 a year. And that is for an insurance plan with a $13,900 deductible, which means we would need to spend $28,552 before we would see any actual benefit from our insurance, beyond a free wellness visit or two.

Now, one of the principles of the Affordable Care Act was supposed to be affordability, as you might have guessed. In theory, you were supposed to be able to buy a silver-level plan for about ten percent of your annual income, which to most people would be considered affordable.

But the theory isn’t met by reality these days. If you assume a fairly typical household income of $65,000 for two middle-aged (age 55) adults in Minnesota, you would qualify for no subsidy whatsoever under MNsure. At the same time, the cheapest silver plan you can buy in St. Louis County for next year has a monthly premium of $1,477 a month, or $17,724 a year, which would entail 27-percent of that same household’s income. Add in the thousands of dollars in deductibles and co-pays that this same couple would need to cover if they actually utilized any medical services and it easily pushes the actual cost of such a plan to one-third of their household income. That’s not affordable—it’s soul-crushing, and it would prompt most healthy people to abandon their insurance and pay the fine for going uninsured.

But here’s where it gets weird, in addition to just being scary. If this couple makes $65,000 a year, they qualify for no subsidy, which means they would have to pay (read: flush) the entire $1,221 a month from their own pockets. But if they make just $64,080 a year, they qualify for a whopping $1,032 per month in premium assistance, or $12,384 a year. That’s the cutoff. At $64,090, they qualify for no subsidy, so that extra ten bucks of income would cost them over $12,000 in premium support in 2017.

In other words, if you’re this couple, you’re going to want to do everything possible to limit your annual income to $64,080 or less. Now, you could forget about the premium support and just try to earn more money, but you’d have to reach $77,000 in income just to make up for the loss of your insurance support.

Now the magic number here is going to be different depending on your situation. Your family size and the relative ages of everyone in the family will factor into the equation, but the bottom line is that for those whose household incomes are close to the cutoff for premium support, it really, really pays to understand how this works. You’re going to need to learn how to play the game, just to survive.

And, yes, it shouldn’t be this way. These are not the kinds of disincentives we should be putting on the 85,000 Minnesotans currently buying private health coverage through MNsure.

Under normal circumstances, this would be one of those market distortions that appear over time and would get fixed. Any major piece of legislation has its flaws, that often aren’t immediately apparent. Once they are exposed, legislatures or Congress normally go about the business of fixing them. In this instance, any number of adjustments could end the market distortion I just described.

But that doesn’t happen with the Affordable Care Act, because the Republicans who control Congress won’t make adjustments designed to improve the law. They only want to repeal it, and until they can do that they want to keep all of the problems in place (and getting worse with time), so they can rail against them. It’s about scoring political points, rather than making life better for Americans affected by the law. It’s indicative of the dysfunction that grips Washington these days.

I realize this scenario doesn’t affect most people, who typically still get insurance through their employers. And most of the folks added to the insurance rolls as a result of the Affordable Care Act have qualified for Medicaid, a single-payer system for the low income. For those folks, the Affordable Care Act has been a godsend. They don’t have to hassle selecting a new health plan every year. They don’t have to worry about enormous premiums, deductibles, or co-pays. They’re among the lucky ones eligible for a comprehensive single-payer system, and it almost certainly costs the government less to provide care to a typical individual through Medicaid than to provide a premium subsidy that allows that same person to purchase insurance through the private sector. This, most frustrating portion of the new law, was a bone tossed to the insurance industry, in part to keep them from using their lobbying clout to scuttle the whole thing. And it leaves those of us faced with using the system the law created, pulling our hair out. Medicare can’t come soon enough for this baby boomer!