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Obamacare Makes It Easier than Ever to Free-Ride

May 1, 2014 in Economics

By Michael F. Cannon

Michael F. Cannon

Even if Obamacare really has enrolled 8 million Americans through its health insurance exchanges, that’s not good enough. For the exchanges to work, people must enroll and stay enrolled.

If too many enrollees drop out, premiums will climb until the exchanges collapse.

For the health insurance exchanges to work, people must enroll and stay enrolled.”

The experts are already worried. An estimated third of those who sign up for Exchange plans haven’t paid their first premium. In Texas, an estimated 58 percent haven’t paid. As many as 5 percent stop paying after the first month. Rising premiums and skimpy coverage may lead even more enrollees to drop out But the most important factor might be that Obamacare itself makes it safer and more attractive than ever for healthy people to drop their coverage and wait until they get sick to re—enroll.

Before Obamacare, choosing not to buy health insurance, at least for a time, was already a pretty safe bet for most healthy people. You saved thousands of dollars per year, and the odds of having unmet medical needs or unpaid medical bills were low.

Under Obamacare, choosing not to buy health insurance can save you even more, and the downside is much, much smaller.

First, the savings. Obamacare increases premiums for healthy people – in some cases, even if you qualify for a subsidy. So dropping coverage will save you even more money than before. (You can avoid the toothless penalty for people who don’t obtain coverage by ensuring the IRS won’t owe you a refund.)

Second, Obamacare makes being uninsured a low—risk proposition than before. If you receive a serious diagnosis like diabetes or cancer while uninsured, Obamacare requires exchange plans to cover you, at the same premium as healthy people, no later than the following January. In many cases, you can get coverage even sooner. For example:

  • If you live in one of the 25 or so states implementing Obamacare’s Medicaid expansion, like California, you can get coverage immediately by temporarily reducing your income below 138 percent of the federal poverty level, about $16,000 for single adults. Once January rolls around, you can enroll in an exchange plan and boost your income back to where it was. Depending on how often the state verifies Medicaid eligibility, you could return to your previous income even sooner.
  • If you don’t live in a Medicaid—expansion state, you can get …read more

    Source: OP-EDS

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