Despite promises, Obamacare subsidies for the young come up short
Unless you are covered on your parent's insurance plan, it appears that most young people - especially in urban areas - will not be able to afford Obamacare insurance.
A CNN analysis shows that because of the way the subsidies have been designed, even those under 30 making a modest income won't be eligible for any federal subsidies.
One of the basic tenets of Obamacare is that the government will help lower-income Americans -- anyone making less than about $45,900 a year -- pay for the health insurance everyone is now mandated to have.
But a CNN analysis shows that in the largest city in nearly every state, many low-income younger Americans won't get any subsidy at all. Administration officials said the reason so many Americans won't receive a subsidy is that the cost of insurance is lower than the government initially expected. Subsidies are calculated using a complicated formula based on the cost of insurance premiums, which can vary drastically from state to state, and even county to county.
That doesn't change the fact that in Chicago, a 27-year old will receive no subsidy to help offset premiums of more than $165 a month if he makes more than $27,400 a year.
In Portland, Oregon, subsidies for individuals making just $28,725 a year phase out for those younger than 35 years old.
And Obama administration officials had promised that the threshold for government assistance would be higher.
Subsidies are based on a formula set by law, applying to individuals with annual incomes of one to four times the poverty level -- or $11,490 to $45,960.
The percentage people have to pay for insurance increases on a sliding scale, with those making $11,490 paying no more than 2% of their income, and those making $45,960 paying no more than 9.5% unless they choose to select a more expensive plan.
Back in April, Health and Human Services Secretary Kathleen Sebelius told a congressional subcommittee that any individual making under that $45,960 threshold -- or four times the poverty level of $11,490 for an individual -- would qualify for "an upfront tax subsidy."
"Somebody who's making $25,500 would definitely qualify for a subsidy if he or she is purchasing coverage in the individual market," Sebelius added.
Despite the secretary's assurance, a 25-year-old living in Nashville, Tennessee, making $25,500 will not qualify for a subsidy, for example.
A young person, single, making $25,000 a year takes home about $1400 a month. How much will they have left to pay for health insurance after they take care of the rent, gas, electric, phone, and perhaps a car payment? The IRS will take the Obamacare fine out of their refund check if they don't get insurance, so they're socked coming or going.
This is one more manifestation of a growing crisis, where many people are going to be stretched thin paying for mandatory health insurance. That out of pocket cash going to pay for coverages they don't want or need is going to affect their quality of life, and impact the economy as millions of people are going to have less disposable income.
Hat Tip: Ed Lasky