Give me cheaper coverage

By Tom Quiner

Obamacare forces us to purchase gold-plated insurance coverage.

If you recall, earlier this year the IRS said the cheapest coverage we would be permitted to purchase under Obamacare on its health exchanges is $20,000 per year. The exact quote:

The annual national average bronze plan premium for a family of 5 (2 adults, 3 children) is $20,000.

It’s no surprise that most people don’t want coverage that lavish IF they have to pay for it themselves. The USA Today reported this morning on a study on this very subject. The study comes from Liazon. They provide coverage to employees in private companies via health exchanges.

Their chief strategy officer, Allan Cohen, said that when presented with two competing plans, the typical employee sponsored health plan with lots of bells and whistles vs. a lower cost health savings account, six out of ten go with the HSA.

HSA plans have more than tripled in the Obama years as a way to contain insurance costs, says Karen Ignagni, president of America’s Health Insurance Plans. Ms. Ignagni explains:

“HSA plans encourage individuals to take an active role in their health care decisions while stretching their health care dollars.”

Mr. Cohen warns that the coming subsidized products on the Obamacare exchanges will create perverse incentives for people to spend more on health insurance than they need to. Why? Because the exchanges will only offer gold-plated plans, not HSAs.

These plans will be subsidized up to 400% of the poverty level. In other words, if you have a household of four people, you will qualify for subsidized coverage if you earn less than $94,200.

Says Mr. Cohen:

“It also tells the government they should be concentrating on those bronze and silver plans” rather than more cost-effective HSAs.

Human nature is simple: if someone else is picking up the tab, a person will choose gold-plated coverage. If he’s paying for it himself, he selects the cost-effective product with the coverage he needs.

Any way you cut it, someone is picking up the tab.