Are People Dropping Health Insurance Because the Obamacare Fine Is Gone?

The LA Times tells us the story of a California woman who decided to go without insurance this year:

Without an Obamacare penalty, many are planning to drop health plans. The consequences could be dire

Dana Farrell’s car insurance is due. So is her homeowner’s insurance — plus her property taxes. It’s also time to re-up her health coverage. But that’s where Farrell, a 54-year-old former social worker, is drawing the line.

I’ve been retired two years and my savings is gone. I’m at my wit’s end,” said the Murrieta resident. So Farrell plans — reluctantly — to drop her health coverage next year because the Affordable Care Act tax penalty for not having insurance is going away.

….Farrell is among millions of people likely to dump their health insurance because of a provision in last year’s Republican tax bill that repeals the Obamacare tax penalty, starting in 2019, by zeroing out the fines….Some people who from the start hated the Affordable Care Act, or Obamacare as it is often called, will drop their coverage as a political statement. For people such as Farrell, it’s simply an issue of affordability.

Since Farrell started buying her own insurance through the open market in 2016, her monthly premium has swelled by about $200, she says, and she bears the entire cost of her premium because she doesn’t qualify for federal ACA tax credits. Next year, she says, her premium would have jumped to about $600 a month.

Obamacare’s individual mandate forced everyone to buy insurance. If you didn’t, you had to pay a fine of about $800. Republicans reduced the fine to zero, which means—presumably—that lots of people who were buying insurance solely to avoid the fine will probably skip it this year.

But how many? The Congressional Budget Office predicted 4 million people would drop insurance. Based on enrollment figures so far, that’s obviously way too high. Obamacare enrollment this year looks like it will end up maybe a million less than 2018, and that’s not all due to the mandate going away. Some of it because of the improving economy and some of it is for miscellaneous other reasons. Still, the end of the mandate is clearly having an effect.

But this particular story also includes one of the usual mysteries of Obamacare reporting. Dana Farrell says she’s retired and her savings are gone. She’s at her “wit’s end.” And yet, she doesn’t qualify for Obamacare subsidies. What’s up with that? You can qualify for subsidies with an income up to about $50,000. The story doesn’t say, but presumably this means she’s a victim of the Obamacare subsidy cliff: she has a pension of around $60,000 or so, which is just above the subsidy cutoff, and therefore has to pay the full freight on a premium of $7,000 per year. That’s a big chunk of money.

And it’s almost certainly why she’s foregoing insurance. The Obamacare penalty of $800 had nothing to do with it. I’m willing to bet both my cats that this is a story of the subsidy cliff and a savings account that ran dry, not the individual mandate fine.