2.5 Million Americans Qualify for Obamacare Tax Credits But Still Buy Private Insurance

Two and a half million Americans qualified for Obamacare subsidies but decided to forego the exchanges and pay more for private health insurance, according to a report from the Department of Health and Human Services.

Estimates show that between five and nine million Americans purchase coverage through the individual market instead of the Obamacare marketplace. The HHS report estimated that 6.9 million individuals currently purchase health insurance in the individual market.

Of those 6.9 million Americans, 2.5 million could qualify for tax credits to lower the cost of their health care coverage. Additionally, 1.1 million are eligible for help with deductibles and out-of-pocket costs.

“The 2.5 million consumers with incomes that could qualify them for tax credits represent about 36 percent of all off-Marketplace consumers or nearly half of the 5.1 million off-Marketplace consumers with income above 138 percent of poverty who are eligible to enroll in Marketplace qualified health plans,” the report stated.

The report suggested that Americans are forgoing the Obamacare exchanges because they are unaware of the money offered by the federal government.

“First, many consumers remain unaware of the financial assistance available to them through the Marketplace,” the report stated. “Second, some consumers with incomes that may make them eligible for financial assistance may not have qualified to receive tax credits in previous years.”

“Both of these explanations suggest continued education and encouragement of consumers purchasing individual market health coverage to come to the Marketplace to shop for 2017, even if they did not qualify for tax credits in previous years,” the report continued. “If premiums in their area are rising, they may now be eligible for tax credits, which may compensate for some or all of the increase.”

Sally Pipes, a health policy expert who is president and CEO of the Pacific Research Institute, said many Americans would rather pay more for private insurance than choose a plan through Obamacare that offers less choice.

“[Private health insurance] is more expensive but people get the kind of coverage that they want,” Pipes said. “What good is coverage if the premiums and the deductibles are so high you can’t afford to use the coverage?”

“People want choice in the types of plans they want to have, a deductible that they can afford and they want to have access to the doctors and hospitals that they want to see, not the ones that are limited under the exchange plans,” Pipes said. “And of course, next year, 2017, premiums are going to be up on average 22 percent for people on the exchanges—the average deducible for a bronze plan for a family will be just over $12,000—middle income people can’t afford that.”

Major health insurers such as Aetna, UnitedHealth and BlueCross BlueShield have announced that they will scale back their participation in the Obamacare marketplaces, leaving states with fewer options. Next year, residents in five states—Alabama, Alaska, Oklahoma, South Carolina, and Wyoming—will have only one choice of insurer through the Obamacare exchanges.

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