Saturday, October 19, 2013

ACA: The Carrot and the Stick. Potential Purchasers Directed to the Subsidy Before the Sticker Shock?

“What has happened, at least so far, presents itself in several layers. One key problem, which to date has been the most prominent in public, has to do with a late-in-the-game decision to require users to go through a complex account-creation process before even reaching any coverage options. Administration officials apparently went back and forth several times on this question, and the ultimate decision required the creation of a series of patches over an already developed site in a very short time. Most of the problems people have faced so far are a function of that decision, and have had to do with creating user accounts and so getting through the very first steps involved in purchasing coverage. Some journalists and analysts have speculated that this decision was made in order to prevent people from seeing premium costs before they could also see any subsidies they might be eligible for, so that the shock of higher prices could be contained and so that simply curious observers and journalists couldn’t get a picture of premium costs in the various states. This explanation strikes me as plausible, and it struck several of the people I spoke with as plausible, but none of them could confirm it. It may be true, but it’s surely not the only possible explanation. Whatever the cause, that decision has created crippling problems that are still largely unresolved.”

“The calculation of subsidies continues to fail tests, and it’s pretty clear that some actual consumers have made actual purchases with bad information, which will become apparent to them when they get their first bills. If the interface problems are addressed and the volume of purchases increases, this calculation problem could become a huge concern.” - Assessing the Exchanges, NRO, 10/17/2013

“What happens if tens of thousands of consumers get their first insurance bill and discover they’re paying more than they thought? Or get a notice from the IRS that the subsidy they thought they were getting is incorrect? Imagine: pitchforks, tar, and feathers.” - Is the White House Now Thinking the ‘Unthinkable’ about Obamacare?, 10/19/2013,

Links to above articles appear below:

Updated 10/28/2013:

A lot of people may be in for a rude awakening if they foolishly trust the new-and-improved government website to accurately estimate their monthly premiums. What are the actual premiums people will have to pay if and when they're ever able to sign up for Obamacare? Someone unearthed this spreadsheet earlier today, and it's been making the rounds for a few hours now. At first glance, it appears to list every plan and every monthly (pre-subsidy) premium within Obamacare's federal exchanges. Time will tell if this data is genuine -- but weren't these numbers supposed to be hidden behind a registration wall? The idea was to hide the sticker shock from consumers until their government assistance could be calculated to soften the blow. An independent analysis performed by National Journal concluded that the "vast majority" of individual market consumers would see costs rise, even after subsidies are factored in.”

“As President Obama promises to fix, his administration is touting what it calls “improvements” in design, specifically a feature that allows you to “See Plans Now.” White House press secretary Jay Carney has said, “Americans across the country can type in their zip code and shop and browse.” Industry analysts, such as Jonathan Wu, point to how the website lumps people only into two broad categories: “49 or under” and “50 or older.” Wu said it’s “incredibly misleading for people that are trying to get a sense of what they’re paying.” Prices for everyone in the 49-or-under group are based on what a 27-year-old would pay. In the 50-or-older group, prices are based on what a 50-year-old would pay. CBS News ran the numbers for a 48-year-old in Charlotte, N.C., ineligible for subsidies. According to, she would pay $231 a month, but the actual plan on BlueCross BlueShield of North Carolina’s website costs $360, more than a 50 percent increase. The difference: BlueCross BlueShield requests your birthday before providing more accurate estimates. The numbers for older Americans are even more striking. A 62-year-old in Charlotte looking for the same basic plan would get a price estimate on the government website of $394. The actual price is $634.” - Fail: New Obamacare Website Snag 'Dramatically Underestimates' Health Costs,, 10/23/2013


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