Unexpectedly Intriguing!
April 8, 2014

According to the Obama administration, 7.1 million people signed up for health insurance coverage through the federal and state-government run Affordable Care Act marketplaces. By our math, one million of those signups would appear to have come in the final week in which enrollment was scheduled to be open.

What turned the tide for the program's sudden "success" after five and three-quarter months of open enrollment? According to the Los Angeles Times, it was the looming threat of having to pay Obamacare's tax penalties:

California officials often cited the high demand for health insurance in explaining this week's last-minute surge for Obamacare.

But some of the people who waited in line for hours this week said another big reason was to avoid paying the health law's penalty for being uninsured.

Chris Roca, 23, waited in line for more than three hours to enroll in a health plan at a sign-up event in Panorama City. But he said he doesn't expect he'll get much use from his insurance.

“I’m just happy I don’t have to pay the penalty,” Roca said.

The Affordable Care Act requires most Americans to have health insurance in 2014, or pay a penalty of $95 per adult or 1% of their adjusted gross income, whichever is greater. Those penalties increase in future years.

Those penalties would grow to either the greater of $695 or a maximum of 2.5% of one's modified adjusted gross income. By law, those maximum rates would be reached in 2016 and hold steady in all years afterward.

Roca was not alone in his fear of the law's tax penalties in motivating his decision to enroll for health insurance coverage through California's state-government run health insurance marketplace.

College student Hector Escobar showed up at the Cal State L.A. campus during spring break last week just to get Obamacare coverage.

Escobar, who lives in Downey, didn't know about the approaching deadline, but he had heard about the penalty.

“I didn’t want to pay the $90-something for the next year,” he said.

In both reported cases, the "success" of Obamacare depended upon exploiting the financial illiteracy of young Americans. We can show that is the case with the following tool, which we originally developed last September. The default data applies specifically to the health insurance available through Covered California:

Your Household Data
Input Data Values
Your Total Household Income, or Modified Adjusted Gross Income (If Known)
Number of Household Members
Number of Children in Household
Your State's Health Insurance Exchange Data
Select Your State (Select "United States" If Your Territory Isn't Listed)
Monthly Premium for the Second Lowest-Cost "Silver" Plan Available To You
Monthly Premium for the Lowest-Cost "Bronze" Plan Available To You
Monthly Premium for the Health Insurance Plan You're Considering Purchasing

Your Annual Health Insurance Results
Calculated Results Values
Annual Premium (Full Price) of the Health Insurance Plan You're Considering Purchasing
Annual Subsidy Tax Credit You'll Receive For Buying This Health Insurance
Your Annual Out-of-Pocket Costs
For Health Insurance (Premium Only, No Co-Pays or Deductibles)
For the Alternative Tax If You Don't Purchase Health Insurance (And Not Provided by Your Employer)
Potential Savings or Costs If You Choose to Pay the Tax Instead of the Premium
Your Potential Savings (or Costs, if Negative)
The Bottom Line

What we find is that both Roca and Escobar were effectively taken to the cleaners - exploited for their financial illiteracy by the Affordable Care Act's crony coalition of big insurance companies and Democratic Party politicians, bureaucrats and elected officials.

Percentage without Health Insurance Coverage: http://www.cdc.gov/features/dshealthinsurance/index.html

Both are being victimized by paying hundreds, if not thousands more for costly and largely unnecessary health insurance coverage, which even they correctly recognize that they are highly unlikely to ever use, than they would have otherwise had to pay by exercising their right to pay the tax instead. They would both have been better off to follow the head of the Department of Health and Human Services' advice to opt out of buying health insurance through the Affordable Care Act marketplace.

Worse, depending upon the deductible for the health insurance plans they selected, even if they do need it, they might have to spend hundreds, if not thousands of their own money out of pocket before they might gain any meaningful benefit in having health insurance coverage.

The question now is whether these young men, and the thousands of other young Americans like them who were preyed upon for their financial ignorance, will learn enough from the experience to make better choices for themselves six months from now, when a new enrollment period for the Affordable Care Act will begin.

In the meantime, it will be interesting to see to what degree the race and ethnicity, not to mention outright deception, were used by Affordable Care Act's crony coalition to deliberately target financially illiterate young Americans like Roca and Escobar for their exploitation and victimization.

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