Obama care reality
Like a hiker who has overlooked several "Danger: cliff ahead" signs, the Obama administration stepped back suddenly last week, delaying the individual mandate for those with canceled policies.
The reversal came in response to complaints from middle-class shoppers on the ObamaCare exchanges who have found themselves on the wrong side of the law's subsidy cliff.
For those earning more than 400% of the poverty level — about $62,000 for two-adult households — ObamaCare provides no premium subsidies.
This is no minor issue. A primary rationale of ObamaCare's insurance reforms limiting age-rating and precluding pricing based on health status has been to ensure that people will be able to afford health coverage when they need it most.
Yet, it's hard to argue that the law measures up for those whose earnings put ObamaCare subsidies just out of reach. An IBD analysis finds that middle-class households in their late 50s and early 60s could spend 25% or more of their income on health care — before their deductible is exhausted and ObamaCare's benefits kick in.
Covered California's shop-and-compare tool shows that a 58-year-old couple in Los Angeles County with $65,000 in income buying a bronze plan would have to spend $19,400, including $9,400 in premiums and a $10,000 deductible.
Individuals can deduct medical expenses above 10% of income. Even so, the couple could still face a health care bill equal to 25% of income, before any benefits.
Employer Care Cheaper
The problem isn't simply that health insurance is expensive, but that middle-class households buying insurance via the ObamaCare exchanges will be treated poorly relative to those covered by employer plans.
Employer-sponsored insurance premiums are fully excluded from taxable income. Further, employer coverage tends to come with lower deductibles and without age-rating, meaning premiums don't rise with age.
ObamaCare's measure of income does exclude contributions to a retirement plan.
Still, for some solidly middle-class households in their 50s and early 60s, ObamaCare will mean either paying more than they can afford, going with minimal or no coverage, or working less to qualify for subsidies.
This shouldn't have come as a surprise to the administration. IBD has been writing — and the Congressional Budget Office has been confirming — for more than three years that ObamaCare would give "older households without access to employer care a big incentive not to earn too much" to qualify for subsidies.
Read More At Investor's Business Daily: http://news.investors.com/politics-obamacare/122613-684287-obamacare-middle-class-subsidy-cliff-for-...