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Cost of Obamacare to explode because more people getting subsidies than are paying

Tuesday, March 25, 2014 by: J. D. Heyes
Tags: Obamacare, subsidies, unsustainable budget

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(NaturalNews) Supporters of Obamacare are pointing to a new study by the Gallup polling firm that purports to show the "success" of the law due to a decrease in the number of previously uninsured people, but a closer look at the data reveals that's bad news for taxpayers.

According to the Gallup findings, which were released March 10, the percentage of uninsured fell to 15.9 percent, down from the 18 percent Gallup recorded last year.

As Gallup noted:

The uninsured rate for almost every major demographic group has dropped in 2014 so far. The percentage of uninsured Americans with an annual household income of less than $36,000 has dropped the most -- by 2.8 percentage points -- to 27.9% since the fourth quarter of 2013, while the percentage of uninsured blacks has fallen 2.6 points to 18.3%. Hispanics remain the subgroup most likely to lack health insurance, with an uninsured rate of 37.9%.

That was good news to a number of Obamacare supporters, especially in the media, including Jon Terbush over over at The Week, who wrote a kind of "in your face" blog post touting the Gallup findings:

In other words, demographics with some of the highest uninsured rates -- the very demographics ObamaCare is intended to benefit most -- are seeing significant improvements in their rates of coverage.

Only part of the story

True, the law was intended to provide coverage for Americans who did not or could not previously obtain it. But that is compartmentalizing the issue; Obamacare was written to require coverage for all Americans, young and old, poor and wealthy. What's more, architects of the law and the administration were counting on the inclusion of millions of enrollees who wouldn't, essentially, cost the government money.

Why does this matter? Because an increase in the amount of low-income Americans into the system without an offsetting number of higher earners means that Obamacare will become a net drain on the treasury, not the break-even proposition that the president and his allies promised.

Consider that one of the more expensive aspects of Obamacare is its government-provided subsidies; the law allows enrollees who are earning 400 times the official poverty level to qualify for government (read taxpayer) subsidies, in order to help them pay their monthly premiums (and the government currently has no reliable data to even show how many enrollees have paid, and to whom!).

That amount was supposed to have been offset by enrollees who did not qualify for subsidies, and who therefore had to pay full price for their premiums.

Another finding: While enrollment for young adults in the 18-34 year-old range has also increased, according to administration figures only about 25 percent of Obamacare sign-ups are from this age demographic. The administration had hoped enrollment in this key age group to be closer to 40 percent -- because younger people tend to be healthier and, hence, cost less to cover.

With the March 31 deadline to sign up approaching, the administration's Health and Human Services, which manages Obamacare, is reaching out to parents to get them to convince their young, healthy kids to enroll.


Even the uninsured aren't rushing to sign up, as a March study by research firm McKinsey & Company indicates. The reason: cost. Obamacare has caused insurance premiums and deductibles to rise because of its minimum coverage requirements. So those who must pay full premium prices are having difficulty doing so; as such, they are balking at buying plans.

Overall, as The Washington Post noted, the demographic enrolling the fastest remains those in lower income brackets. Again, that raises the cost of Obamacare's benefits, because lower income people qualify for subsidies. This finding makes sense when you consider that the demographic enrolling the fastest is the 18-34 age group; young people just starting out don't make top wages.

Obamacare's defenders, as The Week has attempted to do, will portray these latest enrollment figures as "proof" that the law is "working as planned." But that's deceptive, because that assessment fails to consider all aspects of the law and how its designers intended it to work.

President Obama once promised the nation, in a speech before Congress, that he would not sign a healthcare reform measure that "would add one dime to the deficit." In fact, as the Government Accounting Office has estimated, Obamacare will eventually add $4 billion to $6 billion to the deficit over the next 20 years, and this in an era when the GAO has said that the federal budget "remains on an unsustainable course."







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