More good news continues to come Louisiana’s way as policies to improve verification for taxpayer subsidization of government-backed health insurance take hold now aided by the expiration of bonus dollars for it.
Disguised as a Wuhan coronavirus pandemic palliative but in reality a mechanism to encourage more dependency on government and to acquire a greater taste for getting free stuff from government, until starting this year the federal government subsidized on average almost 90 percent of the premium paid for health insurance purchase under a state or federal government market, known as Obamacare. Cooler heads prevailed to remove the extra gift so now the typical exchange user pays closer to 30 percent.
This partly is responsible for a decline in exchange enrollment, although the stepped-up verification also contributes as it catches out disingenuous or inattentive people to prevent them from qualifying for subsidies (roughly a quarter, estimated at around 6 million) which have income means tests. Louisiana so far has seen enrollment numbers drop by more than a quarter, and also has experienced fewer annual enrollees maintaining coverage since signing up at the start of the year. Both the decline in aggregate enrollees and enrollment drop off are among the highest of states.
Understand that only a minority of individuals dropping out in fact are of sufficiently low income that they forgo insurance. Because of the tiered system of subsidies, they proportionately lose fewer dollars’ worth, so the average absolute amounts are skewed upwards by the relatively larger proportion subsidized to higher-income clients.
Aside from the other minority improperly enrolled, this higher-income cohort constitutes the remainder, whose members either decided that with the (on average for that income level) $122 more a month needed it was cost ineffective for them to have insurance compared to other uses to which they could put that (likely as they have excellent health) or that plans in the private market now had better pricing (likely the majority). Disenrollment because of ending subsidization means for most those choosing either they continue to have insurance or shouldn’t have qualified in the first place.
This benefits Louisiana in that, in a state where insurance in all forms generally comes in higher than in most other states, the more subsidization that occurs, the greater pressure accrues to push pricing artificially higher as the system is gamed by sellers and less directly by providers. These dollars can be spent on more economically productive activities if left in the hands of consumers, both in the forms of lower premiums and lower taxes paid/government debt that they must back.
So, with its higher rates of program exit, Louisianans benefit more than most states from this. It’s a good thing for ratepayers and especially for those who pay state taxes.
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