ObamaCare’s Brutal Individual Mandate Test Begins


The just-started enrollment period for ObamaCare exchange plans in 2016 is likely to yield one of two dismal outcomes. In the first, enrollment soars as people sign up in droves for the cheapest plan available to avoid the individual mandate tax penalty, whose minimum bite will spike from $325 to $695.

Although the law’s strongest backers might celebrate this, it’s not clear why: Millions of modest-income individuals who opt for bronze would get policies with deductibles as high as $6,850. Yet the Obama administration’s own analysis reveals that among those still uninsured, 80% have less than $1,000 in savings.

Thus, landing in the hospital could torpedo the finances of many who buy bronze plans — exactly what ObamaCare was supposed to fix.

The second scenario, in which enrollment sees only modest growth, as the Department of Health and Human Services projects, is even bleaker.

Penalty Better Than ‘Coverage’?

HHS says that most exchange enrollees will be able to get coverage for no more than $900, meaning that it won’t cost much more than the mandate penalty and for many it will cost less.

Why would people spurn coverage if the alternative is throwing out a nearly equal sum of cash? The jarring message would be that people are simply too stretched to pay that much for insurance — especially for a very-high-deductible plan. If the government is going to collect from them at tax time in 2017, they’ll worry about it then.

It’s hard to imagine that the Democratic Party, which rails against income inequality, is prepared to tax away about 3% of pre-tax income from modest-wage earners unless they buy coverage which may be of little use to them.

Consider the options for single 27-year-olds earning $24,000 a year, or just over 200% of the poverty level, who live in St. Louis.

The cheapest coverage available is the lowest-cost bronze plan from Coventry, a division of Aetna (NYSE:AET), for $960. But 4% of income for someone of modest means is a lot to spend for a plan that won’t cover much before the $6,850 deductible is met.

Keep in mind that after-subsidy premiums in St. Louis are close to the national average. A 27-year-old in Miami earning $24,000 would have to pay nearly $1,300 for the cheapest bronze plan from Ambetter, which is affiliated with Centene (NYSE:CNC).

ObamaCare also offers a catastrophic option, supposedly to make coverage more affordable for so-called young invincibles in their 20s. But the cheapest catastrophic plan in St. Louis, from Anthem (NYSE:ANTM), would cost a 27-year-old just under $2,500.

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