Obamacare ‘Glitch’ Allows Some Families To Be Priced Out Of Health Insurance

obamaHuffington Post – by RICARDO ALONSO-ZALDIVAR

WASHINGTON — Some families could get priced out of health insurance due to what’s being called a glitch in President Barack Obama’s overhaul law. IRS regulations issued Wednesday failed to fix the problem as liberal backers of the president’s plan had hoped.

As a result, some families that can’t afford the employer coverage that they are offered on the job will not be able to get financial assistance from the government to buy private health insurance on their own. How many people will be affected is unclear.

The Obama administration says its hands were tied by the way Congress wrote the law. Officials said the administration tried to mitigate the impact. Families that can’t get coverage because of the glitch will not face a tax penalty for remaining uninsured, the IRS rules said.

“This is a very significant problem, and we have urged that it be fixed,” said Ron Pollack, executive director of Families USA, an advocacy group that supported the overhaul from its early days. “It is clear that the only way this can be fixed is through legislation and not the regulatory process.”

But there’s not much hope for an immediate fix from Congress, since the House is controlled by Republicans who would still like to see the whole law repealed.

The affordability glitch is one of a series of problems coming into sharper focus as the law moves to full implementation.

Starting Oct. 1, many middle-class uninsured will be able to sign up for government-subsidized private coverage through new health care marketplaces known as exchanges. Coverage will be effective Jan. 1. Low-income people will be steered to expanded safety-net programs. At the same time, virtually all Americans will be required to carry health insurance, either through an employer, a government program, or by buying their own plan.

Bruce Lesley, president of First Focus, an advocacy group for children, cited estimates that close to 500,000 children could remain uninsured because of the glitch. “The children’s community is disappointed by the administration’s decision to deny access to coverage for children based on a bogus definition of affordability,” Lesley said in a statement.

The problem seems to be the way the law defined affordable.

Congress said affordable coverage can’t cost more than 9.5 percent of family income. People with coverage the law considers affordable cannot get subsidies to go into the new insurance markets. The purpose of that restriction was to prevent a stampede away from employer coverage.

Congress went on to say that what counts as affordable is keyed to the cost of self-only coverage offered to an individual worker, not his or her family. A typical workplace plan costs about $5,600 for an individual worker. But the cost of family coverage is nearly three times higher, about $15,700, according to the Kaiser Family Foundation.

So if the employer isn’t willing to chip in for family premiums – as most big companies already do – some families will be out of luck. They may not be able to afford the full premium on their own, and they’d be locked out of the subsidies in the health care overhaul law.

Employers are relieved that the Obama administration didn’t try to put the cost of providing family coverage on them.

“They are bound by the law and cannot extend further than what the law provides,” said Neil Trautwein, a vice president of the National Retail Federation.


4 thoughts on “Obamacare ‘Glitch’ Allows Some Families To Be Priced Out Of Health Insurance

  1. This country is twisting itself into pretzels trying to protect the right of private insurance to tax this country into a depression. All these different risk pools and different deals – it boils down to who has the connections to shift their costs onto someone else. It seems to me – now that buying insurance is mandated by law – the law must provide equal protection of the law.

    There should only be one insurance risk pool. In theory, we pay either in premium or taxes, one way or another for all the care consumed. Why do we let gangsters continue to play shell games with its cost? Add up the billions in profits to each company – and that’s just what they don’t offshore or otherwise hide from taxation – add up the financial cost of Wall Street’s gaming of the system, remove all the profiteering and let’s see what’s left of real companies providing real services and products. Other countries pay a small fraction of what we pay and have health care coverage that protects from bankruptcy and lets them get on with their lives.

    So-call reform did nothing to rein in the profiteering costs built into soaring healthcare prices. Did they even do anything about the opaque supply chain cartels? Did they first demand a transparent, competitive, free market exchange where hospitals can buy the best, cheapest products instead of being back-roomed into kickback schemes? It’s all crooked and Congress created it. They can uncreate it.

    The insurers are piling big costs into the exchanges because most people will get subsidized and thus think it’s a good deal, except who knows how much this winds up costing taxpayers as it creates another financial black hole for money to disappear into. Wait until this hits in the fall. It’s going to be worse than the fiscal cliff and the debt ceiling.

  2. I lost my job in 2009, then applied for early withdrawal on SS when I turned 62. I have been looking for private health insurance, and there is no way I can afford the monthly premiums. They may as well be car payments at that price.

  3. Cathleen, you’ve fallen into another one of those “glitches.” It’s a catch-22. You don’t make enough money to qualify for subsidies. You must take Medicaid. But in some states Medicaid isn’t even taking new patients, and you must not have any savings or assets to speak of to qualify.

    Meanwhile the premiums for “non-group” people like you and me are going up as much as 200 to 300% this year, according to the WSJ. So there is no way that people without group insurance who are working class, retired, unemployed, under-employed can afford this monstrosity. The only thing they offer us is to be fined/taxed for not having insurance because “people with income below 133% of Federal Poverty Level would generally be eligible for Medcaid and thus ineligible for exchange subsidies…” (CBO, 2009.) I think we will be eligible for the fine, tho.

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