Trump making Obamacare even cheaper for millionaire early retirees.

Trump making Obamacare even cheaper for millionaire early retirees.


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This article was first posted July 1, 2017.


Back in March, Retire Early outlined a strategy where multi-millionaire early retirees are getting their Obamacare for $50/month and asked, "How much cheaper can Trump make their insurance? (See link: Obamacare Repeal? My amazing story of drastically lower premiums.)

https://www.vox.com/health-care/2017/5/26/15702322/insurance-ceo-says-trump-made-obamacare-more-expensive

Blue Cross Blue Shield North Carolina has requested a hefty 22.9 percent Obamacare rate increase for 2018. As Dylan wrote in yesterday's VoxCare, most of this increase is due to the fact that the health plan does not expect the Trump administration to keep paying the law's cost-sharing reduction subsidies.

This is one of the first tangible examples of Trump administration actions driving up Obamacare premiums. The North Carolina plan has said it would only raise premiums 8.8 percent if it had assurances that the Trump administration would keep funding that program.
But the White House has been very ambiguous on this point, only committing to making this month's payment leaving the rest of this year and 2018 in limbo. As a direct result, Blue Cross Blue Shield North Carolina is asking for a very big rate increase.

One unintended consequence of this move is that if you are a wealthy and healthy early retiree living off capital gains you can likely get an Obamacare Bronze Plan for the monthly premium of zero dollars per month.

This year I'm paying $54/month for my Obamacare plan. For 2018, my preliminary analysis of the Trump plan shows I could get my current Bronze policy for a premium of zero dollars while realizing an additional $5,000 to $10,000/year in capital gains. This is possible because the tax subsidies are pegged to the premium on the 2nd cheapest Silver Plan available in your zip code. Silver Plans also happen to be the ones that get the additional cost sharing reductions (CSR). So if you jack up the premium on the Silver Plan as North Carolina Blue Cross is doing, a healthy customer could opt for the much cheaper Bronze plan which won't be hit with the premium increase for losing the CSR.

Actuaries from the Kaiser Family Foundation have helpfully done the analysis. (See link: Estimates: Average ACA Marketplace Premiums for Silver Plans Would Need to Increase by 19% to Compensate for Lack of Funding for Cost-Sharing Subsidies




Resources for additional information.

Commonwealthfund.org -- Essential Facts About Health Reform Alternatives: Eliminating Cost-Sharing Reductions
http://www.commonwealthfund.org/publications/explainers/2017/apr/cost-sharing-reductions

Time Magazine -- Bitter Pill: Why Medical Bills Are Killing Us
http://healthland.time.com/2013/02/20/bitter-pill-why-medical-bills-are-killing-us/

How Millionaires Get Obamacare Subsidies Intended to Aid the Poor, by Dan Mangan,CNBC,January 26,2016
http://www.nbcnews.com/business/personal-finance/how-millionaires-get-obamacare-subsidies-intended-aid-poor-n505386

Why I'm Not Worried About Obamacare Premium Increases, Retire Early Home Page, November 2014
http://www.retireearlyhomepage.com/obamacare_2015.html

CBO estimate of health insurance premiums under Obamacare, Nov. 30, 2009
http://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/107xx/doc10781/11-30-premiums.pdf

Health Care Reform in Indian Country
- Indexing Adjustments Related to Certain ACA Provisions , October 30, 2016

http://www.tribalselfgov.org/wp-content/uploads/2015/03/TSGAC-Memo-Applicable-Percentages-Thresholds-and-Payments-for-ACA-Prov....pdf

Health Insurance Premium Credits in the Patient Protection and Affordable Care Act (ACA)
- Congressional Research Service, June 13, 2012

http://www.fas.org/sgp/crs/misc/R41137.pdf

Kaiser Family Foundation - Health Reform Subsidy Calculator
http://healthreform.kff.org/SubsidyCalculator.aspx#incomeAgeTables

Federal Register - Health Insurance Premium Tax Credit
https://www.federalregister.gov/articles/2012/05/23/2012-12421/health-insurance-premium-tax-credit

IRS - Affordable Care Act Tax Provisions
http://www.irs.gov/uac/Affordable-Care-Act-Tax-Provisions

Actuarial Value and Cost-Sharing Reductions Bulletin
http://cciio.cms.gov/resources/files/Files2/02242012/Av-csr-bulletin.pdf

Plan Levels and Standardization of Coverage
http://www.acscan.org/pdf/healthcare/implementation/background/PlanLevelsStandardizationofCoverage.pdf

Commonwealth Fund -- Choosing the Best Plan under Obamacare
http://www.commonwealthfund.org/~/media/Files/Publications/Issue%20Brief/2012/Aug/1626_Lore_choosing_best_plan_HIE_actuarial_ib_v2.pdf



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