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This is Not a Glitch: ObamaCare Subsidies Not For Everyone

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The U.S. Department of Health and Human Services recently released data showing average premium rates in the federal health insurance exchanges. The initial data confirms what the Texas Public Policy Foundation has long argued: premiums on the exchange will be significantly higher than pre-ObamaCare premiums in Texas. (Click here for a comparison to pre- and post-ObamaCare rates in Texas.)

That is, ObamaCare is increasing the cost of health insurance in absolute terms. It’s true that federal subsidies will offset higher costs for some people, but not everyone. Texans should be aware that depending on age and income, out-of-pocket costs for insurance plans sold on the federal exchange could be significantly higher than what is currently available on the individual market in Texas. This is especially true for young, working people.

As TPPF and others have pointed out, a 27-year-old earning 300 percent of the federal poverty level, or about $34,470 a year, will not get a subsidy. On average, as the chart below demonstrates, a 27-year-old earning as little as $30,000 a year gets no federal help, and a 35-year-old earning that amount only gets $201 a year in subsidies to offset out-of-pocket premium costs that will average more than $2,500 a year for the second cheapest “silver” plan on the exchange. 

These figures are for individuals, and rates will vary depending on where you live, how old you are, and whether you smoke. But bottom line is, young Texans with jobs who are hoping to find cheap health insurance on the exchange should be prepared to pay much more than they would have paid before ObamaCare. This is not a glitch; it’s how the law was designed.

 

 

Methodology: After averaging the monthly premiums for the second-lowest cost silver qualified health plan (QHP) in 26 rating areas statewide using data from aspe.hhs.gov, these values were multiplied by twelve to obtain the average annual premium cost of the plan for each age category. The Kaiser Subsidy Calculator gave the maximum percent of an individual’s income that can be used to pay the cost of a premium, based on age and other factors. Multiplying this percentage by annual income across three categories yielded a maximum dollar amount for each category, and subtracting this number from the total annual cost of the average premium resulted in the maximum federal subsidy amount. All calculations are based on premiums for non-smoking individuals in each age category.