A controversial announcement this week details the President’s plan to end cost-sharing subsidies for health insurance providers. The pending executive order will reverse a prior act of Congress that mandated government subsidies to lower premiums for families and individuals under certain income brackets. President Trump believes the move will create a ripple effect across the health insurance industry, lowering premiums across the board and making health insurance more affordable for Americans.
Ending Subsidy Payments
The change will disproportionately affect individuals who were subsidized, including individuals making less than $30,000 per year and families making less than $60,000 per year. This includes people living in poverty, students, the disabled, seniors, and many retirees. Nearly 6 million Americans qualify for subsidies across the United States, costing the government around $7 billion in 2017.
Republican leaders have been calling for the end of subsidy payments since ObamaCare’s creation, but leaders from both sides are expressing extreme concern over the potential fallout from suddenly ending the payments. Monthly premiums will rise substantially for people who fall within the subsidization bracket, making health insurance effectively unaffordable for that cross-section of America.
The change is of particular concern to older Americans, who are significantly more likely to experience pre-existing conditions and/or chronic illness than younger individuals. For these patients, a diagnosis of Diabetes, high blood pressure, or even osteoarthritis could effectively cause premiums to shoot through the roof. In some cases, it may even make a portion of people essentially uninsurable.
Comparing Insurance Numbers
As scary as this change may be for challenged Americans, it might also be a motivating factor for Americans who maintain a lower income in order to qualify for subsidies like this. The fact of the matter is that the way the current system is set up, using government resources can allow you to double the amount of cash on hand you have.
Let’s look at Indiana, for example. The scenario is a 35 year old woman of two children under the age of five. A woman who relies on subsidies and makes $20,800 gross a year and a woman making $47,903 a year with no subsidies can each live the exact same lifestyle. The difference? The woman making $47,903 a year has cash in hand of $11,254.53 while the woman making $20,800 a year has cash on hand of $25,528. Yes, you read that right. Healthcare subsidies (not including deductibles and copays subsidized healthcare receivers don’t have to deal with) account for almost $10,000 of that cash in hand difference.
President Trump isn’t trying to end healthcare for Americans; he’s trying to even the playing field so that more Americans have more cash that they have earned in their pockets. A tweet from the POTUS saw the leader turn the blame to the inherent failure of ObamaCare to address the needs of the population.
“The Democrats ObamaCare is imploding. Massive subsidy payments to their pet insurance companies has stopped. Dems should call me to fix!”
Keep in mind that those who are disabled fall into completely different categories. Being put into the disability status automatically qualifies them for specific subsidies.