King v. Burwell: Two American Health Insurance Markets?

Firms Socializing the Price of Health Insurance and King v. Burwell

“More and more businesses are figuring out that continuing to offer health benefits puts them at a competitive disadvantage vis-à-vis firms who socialize the cost of health care by shifting their employees onto Obamacare exchanges. These crafty firms, however, probably don’t realize they are putting their employees at enormous risk. If they are operating in one of 36 states where Obamacare might come to a screeching halt in the second half of 2015, their workers could lose their subsidized Obamacare plans as early as July.

This is what will happen if the Supreme Court decides in favor of the petitioner in the Obamacare case of King v. Burwell. This case addresses the question of whether or not the federal government can pay subsidies to insurers in states that did not establish their own health-insurance exchanges.

The Court will hear oral arguments on March 4, and is expected to announce its decision in June or July. If it finds in favor of King, tax credits to health insurers via the federally operated exchanges in 36 states will likely stop within a few weeks. Enrollees would then face the true premiums of their policies for the first time. Many would not be able to afford them.

Enrollees are likely unaware of this possibility, because the exchanges were designed to camouflage the subsidies. The Obama administration likes to pretend that it has actually lowered the cost of health insurance in the individual market. Thus, the exchanges are designed show applicants only the premiums net of subsidies.

According to a recent report from the Department of Health and Human Services, the agency headed by the very same Sylvia Burwell named in the lawsuit, the average Bronze plan for a single person in 2015 is $265 per month. Silver, the most popular plan, has an average premium of $336 per month. Platinum, the most expensive, costs $439. However, the agency also notes that 8 of 10 returning enrollees will be able to get a plan for less than $100, regardless of the metal level they selected in 2014.

A 27-year old single woman earning a little over $25,000, for example, would pay a maximum of $148 for the second-lowest-cost Silver plan. However, the actual premium of that plan is $222. So, if the Supreme Court knocks out the subsidy, her premium will jump by $74, an increase of 50 percent!” - Administration should fully disclose risks to enrollees in Obamacare exchanges, The Hill, 02/06/2015

Link to the entire article appears below:

http://thehill.com/blogs/congress-blog/healthcare/231918-administration-should-fully-disclose-risks-to-enrollees-in

ACA/Obamacare: Math Quest Subsidies

“The government may be paying incorrect subsidies to more than 1 million Americans for their health plans in the new federal insurance marketplace and has been unable so far to fix the errors, according to internal documents and three people familiar with the situation.

The problem means that potentially hundreds of thousands of people are receiving bigger subsidies than they deserve. They are part of a large group of Americans who listed incomes on their insurance applications that differ significantly — either too low or too high — from those on file with the Internal Revenue Service, documents show.

The government has identified these discrepancies but is stuck at the moment. Under federal rules, consumers are notified if there is a problem with their application and asked to upload or mail in pay stubs or other proof of their income. Only a fraction have done so, according to the documents. And, even when they have, the federal computer system at the heart of the insurance marketplace cannot match this proof with the application because that capability has yet to be built, according to the three individuals.

So piles of unprocessed “proof” documents are sitting in a federal contractor’s Kentucky office, and the government continues to pay insurance subsidies that may be too generous or too meager. Administration officials do not yet know what proportion are overpayments or underpayments. Under current rules, people receiving unwarranted subsidies will be required to return the excess next year.

The inability to make certain the government is paying correct subsidies is a legacy of computer troubles that crippled last fall’s launch of HealthCare.gov and the initial months of the first sign-up period for insurance under the Affordable Care Act. Federal officials and contractors raced to correct most of the technical problems hindering consumers’ ability to choose a health plan. But behind the scenes, important aspects of the Web site remain defective — or simply unfinished.”

“Because the computer capability does not yet exist, the work will start by hand, according to two people familiar with the plans. It will focus at first not on income questions, but on another roughly 1 million cases in which people enrolled — or tried to enroll — in health plans and ran into questions about their citizenship status. Throughout the sign-up period that ended earlier this spring , flaws in HealthCare.gov blocked many naturalized citizens or permanent legal residents, requiring them to submit immigration documents that are, like the income information, caught in a backlog.

The work of sorting out inaccurate incomes — and inaccurate subsidies, as a result — will likely begin sometime this summer, two individuals familiar with the plans said.”

“Of the various technical problems that remain with HealthCare.gov, the difficulty in straightening out discrepancies affects an especially large number of consumers. Of the roughly 8 million Americans who signed up for coverage this year under the health-care law, about 5.5 million are in the federal insurance exchange. And according to the internal documents, more than half of them — about 3 million people — have an application containing at least one kind of inconsistency. These inconsistencies have arisen as the information listed on their applications has been cross-checked, via a newly built federal data hub, with the Social Security Administration and other federal agencies, as well as incarceration, IRS and immigration records.

The income information is significant because the government for the first time is providing subsidies to help working-class and middle-class Americans buy private health plans. Under the federal rules, an application is “flagged” for special checking if the income someone says that they expect this year is at least 10 percent above or below the most recent income in their IRS tax returns.”

“The federal rules say that consumers have 90 days after applying to try to prove that their information is correct and, if an inconsistency is not resolved by then, whatever the federal records show is assumed to be correct. By now, about one-third of people with inconsistencies have passed their 90-day window. But because of the trouble verifying incomes, the government has not lowered or raised anyone’s subsidies.

Making sure that incomes — and subsidies — were accurate became a prominent issue during budget negotiations last year, as House and Senate Republican opponents of the health-care law warned of potential fraud. Health and Human Services Secretary Kathleen Sebelius promised to thoroughly vet the salary information that people submitted as part of their health insurance applications.” - Federal health-care subsidies may be too high or too low for more than 1 million Americans, Washington Post, 05/16/2014

Upon further review, consider for a moment Healthcare.gov and the segue to the pricing page. The questions asked on the website, just prior to finding pricing is: “What is your household's expected income for 2014?” If one asks a question about "expected" income, one might find some interesting answers.
　

　
Link to the entire Washington Post article appears below:

http://www.washingtonpost.com/national/health-science/federal-health-care-subsidies-may-be-too-high-or-too-low-for-more-than-1-million-americans/2014/05/16/8f544992-dd14-11e3-8009-71de85b9c527_story.html





Update 05/21/2014: Yes, Some People Will Have to Pay Back Their Obamacare Subsidies, heritage.org


http://blog.heritage.org/2014/05/21/yes-people-will-pay-back-obamacare-subsidies/?utm_source=heritagefoundation&utm_medium=email&utm_term=picture&utm_content=140524&utm_campaign=Saturday










　


　

　

ACA/Obamacare: When the Taxing Authority Pays Its Own Imposed Tax. Huh? No Way! Way!

"President Obama's promise that Americans could keep their health insurance if they liked it was the most infamous of the Affordable Care Act's sketchy sales pitches. But many of the law's most damaging aspects are less known, buried in thousands of pages of regulations.

Consider the "fee"—really a hidden sales tax—that all health-insurance companies have been forced to pay since the first of this year on premiums for policies sold to individuals and small and medium-size businesses. The health-insurance tax—known as HIT in business circles—is expected to generate revenues of about $8 billion this year and as much as $14.3 billion by 2018, according to the legislation.

The Congressional Budget Office and the Joint Committee on Taxation predict that insurance companies will pass the cost on to customers, as any company subject to such a tax would. In other words, millions of Americans lucky enough to keep their current health insurance under ObamaCare will be paying much higher premiums because of this tax, with the added cost rippling through the economy and stifling job creation.

The National Federation of Independent Businesses projects the health-insurance tax will add an additional $475 per year for the average individually purchased family policy—nearly $5,000 over the course of a decade. Small businesses will take an even bigger hit, with the cost of an employer-provided family policy rising a projected $6,800 in the next decade." - ObamaCare's Hidden Hit On Businesses, WJS, 04/01/2014 (1)


The insurer indeed passes on the tax as part of total premium. The tax is then shown as revenue by the government as it taxes the insurer. The insurer has collected the tax as part of the total premium charged.

What if the government imposes the ACA/Obamacare tax, the insurer passes on the tax, then the government pays its own imposed tax? How so?

Many lower income married couples with children in the household, children that are already on Medicaid or CHIP, qualified for subsidies through ACA/Obamacare that were greater than or equal to the bronze or silver plan premiums. That is to say, the premium paid by these couples is zero dollars [full premium subsidy].

Hence the couple have zero premium payments and the subsidy (taxpayer dollars) pay the entire premium. However, the insurer still passes on the tax within the premium. The government then sends the insurer the premium subsidy which in this case is the total premium as the married couple pay zero dollars.

One ends this exercise as follows:

(1) the tax imposed by the taxing authority becomes part of total premium as the insurer passes through the tax,

(2) the insurer is then sent the subsidy, equivalent to the total premium, by the taxing authority,

(3) which means the tax is paid by the same authority imposing the tax.

If the tax imposed indeed represents $8 billion and as much as $14.3 billion by 2018, those estimates would need down-sized as a taxing authority imposing a tax, a tax that the same taxing authority simultaneously pays, can not be considered revenue. It might be considered foolishness, nitwitery or dupery, but it can not be considered “revenue”.


　
Notes:

(1) ObamaCare's Hidden Hit On Businesses, WJS, 04/01/2014

http://online.wsj.com/news/articles/SB10001424052702304418404579469412924624586?KEYWORDS=obamacare%27s+hidden+hit+on+business&mg=reno64-wsj