"Loyal Obama Supporters, Canceled by ObamaCare" is the headline ProPublica put over its illuminating dispatch about a San Francisco couple who volunteered at the phone bank for Obama's re-election and now are going to be worse off because of ObamaCare. They "have been paying $550 a month for their health coverage — a plan that offers solid coverage, not one of the skimpy plans Obama has criticized," ProPublica reports. "But recently, Kaiser informed them the plan would be canceled at the end of the year because it did not meet the requirements of the Affordable Care Act. The couple would need to find another one. The cost would be around double what they pay now, but the benefits would be worse."
ProPublica has a follow-up article today about the case. One key point stands:
what is Hammack going to do? If his income were to fall below four times the federal poverty level, or about $62,000 for a family of two, he would qualify for subsidies that could lower his premium cost to as low as zero. If he makes even one dollar more, he gets nothing.
That's what he's leaning toward — lowering his salary or shifting more money toward a retirement account and applying for a subsidy.
Certain upper-income people have a certain amount of discretion over how much money they earn each year. If ObamaCare means those people intentionally lower their taxable earnings to qualify for the subsidies, the statistics will show a reduction in "income inequality," but there won't be much or any actual reduction in inequality, because Mr. Hammack will just have a bigger retirement account, more leisure time, or more cash in his business that he can pay himself in the future. It does seem that the perverse incentives of this law weren't carefully considered by its supporters, unless their actual goal was to force people who didn't need subsidies before to earn less money so they become dependent on government assistance.
Another example of poorly thought-through or perverse incentives comes (via Mickey Kaus) in an article from the Atlantic about the marriage penalty in ObamaCare:
Any married couple that earns more than 400 percent of the federal poverty level—that is $62,040—for a family of two earns too much for subsidies under Obamacare. "If you're over 400 percent of poverty, you're never eligible for premium" support, explains Gary Claxton, director of the Health Care Marketplace Project at the Kaiser Family Foundation.
But if that same couple lived together unmarried, they could earn up to $45,960 each—$91,920 total—and still be eligible for subsidies through the exchanges in New York state, where insurance is comparatively expensive and the state exchange was set up in such a way as to not provide lower rates for younger people. ..."I guarantee you that in six months I will either be divorced or I will have a full-time job," she says.
Maybe these issues can be fixed by phasing out the subsidies more gradually or extending them more generously, but those choices would also have effects on the budget impact of the law, which the Obama administration sold as a deficit-reducer (a selling point that may in the end turn out to be about as phony as "if you like your plan you can keep it.") The one person who turns out to have been prescient here is then-Speaker Nancy Pelosi, with her comment that "we have to pass the bill so that you can find out what is in it." Americans are finding out!