Obamacare’s Exemptions From Insurance Mandate Will Leave Millions Uninsured
By BETSY MCCAUGHEY
On Jan. 30, the Obama administration unveiled a long list of exemptions from the ObamaCare insurance mandate. Flaws and contradictions in the law will cause millions of people to be uninsured. The administration also estimated that the cheapest family plan will cost $20,000 by 2016. This new information indicates that the Affordable Care Act is failing in both goals: making insurance affordable and covering the uninsured.
Children are the biggest victims. The hastily drafted law, passed before it was read, overlooked them.
The law says that beginning in 2014, employers with 50 or more full-time employees must offer coverage or pay a penalty. The law’s sloppy drafting left it unclear whether that meant worker’s coverage or family coverage.
The law says coverage must be “affordable,” meaning the employee cannot be asked to contribute more than 9.5% of his salary. For example, a worker earning $40,000 a year cannot be required to pay more than $3,800.
What about the kids? The average family plan is expected to cost at least a whopping $20,000, according to a newly released IRS analysis.
In this example, if the employee’s contribution is limited to $3,800 the employer’s tab would be $16,200, adding about $7.40 an hour to the cost of that employee. Wisely, the IRS announced on Jan. 30 that employers don’t have to pay for dependents.
The CBO’s prediction that only 30 million people will be uninsured by 2016 incorrectly assumed children would be covered by employers. But employers insuring their workforce for the first time to avoid a penalty are unlikely to do that.
So how will the kids be covered? On Jan. 30, the IRS shocked the law’s advocates by announcing that insurance exchanges will not provide subsidies for a child whose parent is covered at work. These children — it’s unknown how many millions of them — will qualify for an exemption. That means their parents won’t be penalized by the IRS for not insuring their child.
Also exempt are millions of people who will stay uninsured because their state is wisely choosing not to loosen Medicaid eligibility. President Obama promised to help solve the problem of the uninsured by making private health plans more affordable. But the law took a different approach, making states expand Medicaid. In June 2012 , the U.S. Supreme Court ruled that the federal government could not command states to loosen their rules.
States have always set their own Medicaid rules based on what state budgets and taxpayers could handle.
The CBO advised Congress that the court’s decision would increase the uninsured by only 4 million because most states would compromise with the Obama administration to gradually expand Medicaid. The CBO misread the administration. Secretary Sebelius rejected any compromise or gradualism.
More than half the states are refusing or undecided, though two governors, Jan Brewer of Arizona and Jon Kasich of Ohio, relented this week. Even so, the impact on the uninsured could be 8 million, double the CBO’s initial estimate.
The biggest setback to ObamaCare is a majority of states are refusing to set up insurance exchanges. An exchange will be like a DMV office, website and toll free number that sell only the government-mandated plans — like a supermarket that only sells cereal. Exchanges are supposed to handle enrollment and hand out taxpayer-funded subsidies to most enrollees.
Here’s the glitch. The law says that in states that refuse, the federal government can set up an exchange. But the law empowers only state exchanges, not federal ones, to hand out subsidies. The IRS says it will disregard the law and offer subsidies in all 50 states. But Oklahoma has sued to stop that. The federal courts will decide. Without subsidies, the health plans would be unaffordable for as many as 8 million people who live in the affected states.
All in all, at least 40 million people could still be uninsured in 2016, only 9 million fewer than before ObamaCare was enacted. Flaws and contradictions in the law beset it. The president says Congress should hurry through another huge bill — comprehensive immigration reform. This time Congress should read the bill before voting on it.
• McCaughey is author of “Beating Obamacare” and a former lieutenant governor of New York.