Obamacare premiums in Colorado are on average significantly higher for customers accepting taxpayer premium subsidies, according to an analysis by the Denver Post.
According to data from the Colorado Obamacare exchange, total premium costs before subsidies for all four levels of Obamacare plans — bronze, silver, gold and platinum — are between 21.7 percent and 26.8 percent higher than health insurance plans bought by customers who didn’t receive subsidies.
“The rates and plans do not change if a customer is receiving financial assistance or purchasing without financial assistance,” an exchange spokeswoman told The Denver Post. “Income doesn’t factor into the premiums.”
It’s not all that surprising that customers who aren’t picking up the tab for their health insurance would be more likely to pick a pricier plan. But some portion of the trend can be attributed to the structure of the health-care law itself.
Those under 400 percent of the federal poverty level are eligible for some amount of subsidy, or advanced premium tax credit. But only those who purchase silver heath insurance plans, the second-lowest health-care plans, are eligible for cost-sharing on out-of-pocket costs as well as premiums.
And on Colorado’s Obamacare exchange and those nationwide, bronze plans have the lowest deductibles and the highest out-of-pocket costs, sparking high deductibles, co-pays and coinsurance — meaning those who are already eligible for subsidies will likely get a better deal by taking advantage not only of premium tax credits, but cost sharing on their personal health costs as well.
The exchange has not done an official analysis on subsidized vs. non-subsidized premium costs and would not confirm the figures, but told The Post the method behind their analysis was correct.
While 54,000 Coloradoans bought unsubsidized coverage on the state-run Obamacare exchange, another 78,000 sign-ups received premium subsidies. The smaller group of customers going without a premium tax credit are paying $15 million more every month for their coverage than the total cost — both customer- and taxpayer-paid — of subsidized plans.
Given millions-strong discrepancies in income information nationally, some of the subsidy levels could simply be wrong. After reports emerged that over two million Obamacare customers had submitted applications with income-related discrepancies, the Obama administration is now contacting hundreds of thousands with warnings to resolve the questions or risk losing their insurance or subsidies, The New York Times reported Sunday.
The Obama administration had promised an income verification system which would verify eligibility for Obamacare subsidies, which function as advanced premium tax credits based on customers’ projected income for the next year. The federal government issues payments to insurers based on their estimates of consumers’ expected subsidies and customers have to hope they guessed right on their annual earnings.
The widespread problems are putting millions at risk for owing the IRS next year, if they’ve overestimated their subsidy eligibility. If such discrepancies are widespread, it could change the average price of subsidized plans, but absent a federal fix to the subsidy problem customers will have to wait until next tax season to find out.
The total cost of Obamacare subsidies will cost $900 billion over ten years. So far this year, the federal government has already paid $4.7 billion in unverified subsidies to insurance companies.