How Affordable Is the Affordable Care Act?

The Department of Health and Human Services recently released a report making the case for how Obamacare’s premium subsidies have made health insurance more affordable for individuals. But those who do not qualify for federal subsidies appear to find exchange coverage anything but affordable.

As some have noted, a separate HHS report released in May highlighted the fact that during the 2014 open-enrollment period, 13.5 million individuals were found eligible to purchase coverage on state or federal exchanges. Of these, about 8.7 million qualified for federal insurance subsidies. That means nearly 4.8 million individuals were not eligible for subsidies. And while more than three-quarters of the 8.7 million who did qualify for subsidies (or 6.6 million) selected an insurance plan, only 1.2 million of those who did not qualify for subsidies selected a plan.

In other words, only about one-quarter of those not receiving federal insurance subsidies decided that the options offered were worth selecting a plan. It’s possible that even fewer decided to pay their first month’s premium. (Worth monitoring as more data become available: Are unsubsidized individuals not paying insurance premiums at greater rates than those receiving federal subsidies?)

Several studies suggest that Obamacare’s package of mandated benefits and other regulations have increased premium levels substantially. Advocates of the Affordable Care Act say that federal subsidies have made coverage more affordable, but others have argued that using government spending–more than $1 trillion in exchange subsidies and $1.8 trillion in spending on new coverage overall–to mitigate the effects of regulation presents a solution in search of a problem.

So while supporters of the law might argue that taxpayer subsidies have made health insurance more affordable for individuals, evidence suggests that Obamacare has made insurance less affordable for those who do not qualify for subsidies. And insurance subsidies may not be affordable for taxpayers as a whole over the long term.

This post was originally published at the Wall Street Journal Think Tank blog.