THE WEEKLY STANDARD has long observed that Obamacare, which President Obama pitched as a great deal for Americans of all stripes, is really only for the near-poor and near-elderly—at the expense of the middle class and the young. While only a small minority has benefitted from the 2,400-page overhaul, a large majority has been hit with higher costs and diminished freedom.
Obamacare is slated to cost more than $1.7 trillion over the next decade (for its insurance-coverage provisions alone) in large part because it funnels massive sums of money to the chosen few. Take a 64-year-old couple living in Miami and making $23,500 a year. As Jed Graham writes in an Investor’s Business Daily op-ed—which contrasts Obamacare with Scott Walker’s conservative alternative—that couple can get insurance through Obamacare that is worth about $24,000 while paying for only $936 of it themselves. The remaining $23,000 or so is financed at their fellow Americans’ expense. In other words, Obamacare essentially doubles the couple’s income (while funneling half of it to an insurance company).
As Graham details, the published price of such “silver” Obamacare insurance is about $15,000, with almost all of that covered by a taxpayer-funded premium subsidy. However, Obamacare also provides an additional taxpayer-funded subsidy that dramatically lowers the couple’s potential out-of-pocket costs, reducing their deductible from a potential $10,000 to $1,000. As Graham writes, this “effectively turns the silver plan to platinum, raising its implied price-tag to about $20,725.” If that weren’t enough, Obamacare also bans insurers from charging young people less than one-third what they charge older people (in defiance of actuarial science), which raises costs for the young and lowers them for the old. As Graham writes, “Removing age-rating restrictions would raise the cost of equivalent coverage for a 64-year-old couple by roughly 17%, to $24,175.” So the couple is getting $24,000 “platinum” insurance for $936.
Meanwhile a 40-year-old single woman, also living in Miami, who makes $35,000 a year, gets $0 under Obamacare. She’s too young and too middle class. If she were in her twenties or thirties and made $35,000, or more, she’d still get nothing. A man with the same income would also get nothing. If any of these people were to decide not to pay Obamacare’s inflated prices next year and simply forgo insurance, they’d get fined $875 for violating Obamacare’s unprecedented individual mandate. In short, Obamacare makes the near-poor richer and the middle class poorer.
But not all of those who are poorer become richer. If the couple making $23,500—and getting roughly $24,000 in insurance almost entirely at others’ expense—loses $8,000 in income, their Obamacare subsidy would actually drop rather than rise. In fact, it would drop off a cliff, to $0. Moreover, the couple wouldn’t even be eligible for Medicaid. Their ineligibility for Medicaid is attributable to Florida’s (wise) decision not to extend Medicaid under Obamacare, but their ineligibility for an insurance subsidy is due to Obamacare’s irrational design.
In vivid contrast to such byzantine redistribution, Scott Walker has proposed a simple, understandable conservative alternative that would lower costs and restore freedom. Under Walker’s plan—which is based on the alternative advanced by the 2017 Project (which I run)—the couple in question would get a $6,000 tax credit to buy health insurance of their choice, the 40-year-old woman would get a $2,100 tax credit to buy insurance of her choice, and those under 35 would each get a $1,200 tax credit to buy insurance of their choice. The structure of Walker’s tax credits, which would go directly to individuals and not to insurance companies, would encourage people to shop for value. Any portion of the tax credit they didn’t use would go into a health savings account (HSA) they would own.