What happens if—when?—Americans can no longer buy health insurance on the Obamacare exchanges? Will they still have to pay the Obamacare penalty for being uninsured?
It’s not a rhetorical question.
According the Associated Press, Aetna’s decision to pull out of the exchanges in all but a few states means that residents of one rural Arizona county will have no Obamacare option.
And many more consumers could soon be facing the same problem.
The Dallas Morning News reports, “Last year, at least 50 of the state’s [Texas] 254 counties had only one insurer to offer an individual market plan.”
But that story ran before Scott & White, an insurer connected to the Baylor health system, announced it would pull out of 58 Texas counties. As a result, “There are 23 Texas counties that offered both Aetna and Scott & White health plans last year that will have neither option in the next,” according to a subsequent Morning News story.
But at least there’s Blue Cross, right? “Blue Cross and Blue Shield of Texas currently offers health insurance plans on the federal marketplace in most of the state,” the Morning News adds. “If it were to stop, more than fifty areas would have no Obamacare option at all. That insurer responded saying no final decisions have been made about 2017.” [emphasis added]
Oh, did I mention that Texas Blue Cross asked for a 60 percent increase to its premiums for 2017? Oklahoma Blue Cross wants a 50 percent increase and Arizona BC has asked for a 65 percent increase. New Mexico’s Blues abandoned the exchange last year after being denied a 50 percent increase, while Minnesota’s BC has dramatically pared back its offerings.
It’s hard to overstate the importance of these changes. The Blues historically have a commitment to offering comprehensive coverage to as many as possible. As Investor’s Business Daily puts it, “If any insurer could cope with ObamaCare, it should have been Blue Cross Blue Shield.” So you know there’s a problem.
Unless you’re the White House, in which case everything’s great!
Centers for Medicare and Medicaid Services Acting Administrator Andy Slavitt tweeted that health insurers needed to get with the times. That means realizing that “the economics are compelling” and that “in the meantime, vast majority of consumers have & will have affordable options & most will be protected from rate increases.”
Translation: You stupid health insurers just don’t understand what a business opportunity you’re missing out on.
No one ever accused the Obama administration of having any business sense, which is one reason so many voters were initially attracted to Donald Trump.
So back to the question: Would people have to pay the Obamacare-mandated fine if no health insurers are offering coverage in their areas? I think the answer is no.
There is a provision in Obamacare that says if you cannot find an Obamacare-qualified policy for less than 8 percent of household income after taxpayer-provided subsidies, you’re exempt from the mandate to have coverage.
If there are no Obamacare-qualified plans available to individuals in a given area, then those individuals can’t buy one for less than 8 percent of their income.
But there’s a caveat: Aetna says, “The company will continue to offer an off-exchange individual product option for 2017 to consumers in the vast majority of counties where it offered individual public exchange products in 2016.”
If those off-exchange policies are available in your area, I think you would still be subject to the mandate, but only if you could find a policy for less than 8 percent of your household income.
Thus, a family with the median household income of $57,000 would have to be able to buy a family policy for less than $4,560. A family with $100,000 income would have to find one for less than $8,000. That’s unlikely, because Obamacare has driven the cost of health insurance so high, which means that most families with no access to qualified policies will have get-out-of-Obamacare-jail-free cards.