The Wyoming pricing of individual health insurance has surprising results. Information received by the Legislature’s Labor, Health & Social Services Committee (of which I am the Senate Chairman) shows many people are able to buy health insurance for 2018 for less. This does not apply to you if you get your insurance through work or Medicare. The announced 48% increase in individual health insurance premiums will reduce premiums for many Wyoming citizens buying individual health insurance through the Obamacare insurance exchange. This sounds impossible but it’s true because of an unexpected quirk in the way Obamacare works. It’s complicated and you will have to look on the exchange website to figure out what it does to you. Some people will not like taking the subsidies involved, but it is how you can get by until Washington fixes the expensive mess it has made in health insurance.
That’s the good news. The bad news is some people will be hurt by premium increases. Those whose yearly incomes are over 400% of the current federal poverty level ($48,240 for an individual, $64,960 for a family of two, $98,400 for a family of four) are not eligible for the federal subsidies causing the premium cost reduction. Their health insurance premiums will go up a lot. Some of those receiving the subsides will receive small increases; some will see varying decreases and a few can get high deductible policies without paying any premium. The real loser in all of this is the U.S. taxpayer as the increased subsidies are going to increase the federal deficit until Washington can get its act together and fix the mess it has made.
A few examples will show what I’m talking about. For someone age 40 the silver plan monthly premium will go up from $471.39 to $795.44. That’s what an individual making more than $48,240 will pay. However that same 40-year-old with a $30,000 annual income will get enough APTC (Alternative Premium Tax Credit) subsidies so their real monthly premium after subsidy will decrease from $214.55 in 2017 to $200.45 in 2018. For a bronze (higher deductible) plan the differences are even more striking. Someone age 22 with an annual income of more than $48,240 will see their annual premium go from $3,735.36 in 2017 to $5,013.48 in 2018. That same person with an annual income of $15,991 will have a zero annual premium for a bronze. Someone age 37 with a $44,917 income will see their yearly premium after the APTC subsidy decrease from $3,515.16 to $1,243. If that same person increased their income by 3,323 to an annual income of $48,240 their yearly premium would rise from $1,243 to $6,206.64, an increase of $4,556.04. Don’t expect fairness from this federal program.
The reason many will see premium reductions relates to how Obamacare computes the main subsidy, the APTC. This subsidy is available to anyone with an income under 400% of the federal poverty level who buys insurance through the exchange. The amount of this subsidy is calculated based of the cost of the second cheapest silver plan in each state. Wyoming’s only company selling individual health insurance used as much of their costs as possible in setting the silver plan rates with the result those premiums went up 60 to 80% with the federal subsidies going up accordingly. Apparently this was entirely legal and proper under the federal law. The APTC subsidies can be used for any plan sold through the exchange including the gold and bronze plans. The cost of those plans did not go up as much as the silver plans with the result there are some real bargains available. For some people the silver plan will remain the best deal because it’s the one where another subsidy can reduce the deductible and co-payments. The whole thing is super complicated and not entirely rational. The only way for you to know how much you will pay is to get on healthcare.gov and see.
I advise people buying individual health insurance to get on healthcare.gov and buy now if it is a good deal for you. We are now in the annual open enrollment period and it ends Dec. 15. If you find a good deal and want to buy, buy sooner rather than later. As the end of the open enrollment period approaches, healthcare.gov could get overwhelmed and you could have trouble getting on. In addition, Wyoming is not the only state where the insurers successfully figured out how the system works. The result is very expensive for the federal government. There is a risk that Congress will figure out how much the process is costing the federal government and put a stop to it. By next year all the states should have figured the system out and a Congressional fix is more likely.