The Obamacare Bait and Switch in Ohio: What's Going On With Your Subsidy

December 11, 2014

If you bought health insurance last year and were eligible for a subsidy, chances are you were pretty happy.

If not, you are probably holding on to your pre Obamacare health insurance plan for dear life.

As we barrel down hill, full steam ahead into year two of the health care reform fun, the one constant throughout the entire process has been the unpredictability of the new law.

The one question I asked myself last year and also heard other well know pundits contemplate was, will the subsidies increase each year to keep pace with renewal rates (Spoiler Alert: A renewal rate is what you get each year for your health insurance policy and it will almost always be more expensive) or will they stay the same.

However, none of us thought this this was going to happen.

They went down.

Why Are Subsidies Decreasing?

That’s a great first question and to be honest, no one I’ve talked to has even admitted to it happening yet alone been able to tell me why.

I can’t say I’m surprised about that.

But here’s an example of what person with a family of three (ages 55, 53, 22) was paying in 2014 for health insurance versus their new rate in 2015.

2014 Rate

  • Full Price: $845
  • Subsidy: $777
  • Actual Cost: $65

2015 Rate

  • Full Price: $938
  • Subsidy: $500
  • Actual Cost: $438

If you want me to give you my best guest, the government either discovered one of two things.

One, they wrote checks bigger than their federal reserve bank account could cash last year and need to tighten up the leaky money faucet.

Two, this is the more diabolical one, they offered inflated subsidies in the first year to get you into the system only to pull the rug out from under you once you got comfortable. (See bait and switch)

Which, in my opinion, you would have thought they might be a little more patience before making you uncomfortable. Unless they thought they would have a harder time justifying the decrease outside of the first renewal year.

Again, this is all purely speculation.

What Can You Do About It?

This advice will probably be unpopular, but it’s an important reminder.

Not much.

Regardless of how much subsidy you lose, you will still be getting the best deal in town.

If you made the right choice last year, there’s a very good chance that company is still going to be your best option this year.

While Ohio’s Health Insurance Marketplace has increased its number of players, those players, from what I can tell, haven’t worked hard enough to beat the best.

There might, what appears to be, exceptions on the surface but once you actually get down to it, you will find otherwise.

A Little More Tough Love

Much like someone who has always had health insurance through their employer, you probably got spoiled this past year.

I’m also surprised at how fast it happened, especially for those who were buying their own health insurance before the law change.

Yes the law was supposed to make your health insurance more affordable, but it didn’t. It actually got more expensive.

The affordability you experienced this year was no more real than your favorite middle aged Hollywood celebrity’s attractiveness.

The Bottom Line

I’m very sensitive and understanding to just how much health insurance costs and your ability to afford it.

But as long as we are all playing this game called Obamacare, we are at the mercy of the federal government increasing desire to constantly throw as many curveballs as possible our way.

You and I could have had much more time to prepare for this had they did the respectable thing and announced the decrease ahead of time.

Instead we are left to scramble at the 25th hour to make sense of it all.