ObamaCare continues to fail – Let's face it, insurance costs are unmanageable for many middle-class Americans

The HealthCare.gov website (AP Photo/Pablo Martinez Monsivais)

Open enrollment in the 39 states that use the federal HealthCare.gov insurance exchange looks like it will end with a whimper this Saturday. Through the first month, sign-ups are down 11 percent compared to the same period last year.

It's easy to see why. The cost of insurance is unmanageable for many middle-class Americans.

ObamaCare's very structure is to blame for the high cost of exchange coverage. For one, all health plans must cover 10 essential health benefits, even though some of them – like maternity care and substance-abuse treatment – are by no means necessary for every person. Providing such generous coverage is expensive.

Insurers also can't offer discounts to healthy individuals; they must charge people of the same age in the same region the same amount, irrespective of health status or history.

And premiums for older people can be no more than three times what they are for young people, despite the fact that claims costs for the elderly are about five times higher than for the young. So insurers have to raise premiums across the board to cover their costs.

Consequently, it shouldn't be surprising that average premiums roughly doubled between 2013 (the year before ObamaCare went into effect) and 2017.

The Trump administration is trying to make more affordable insurance options available.

In Nebraska, the average benchmark premium more than tripled, from $249 in 2014 to $838 in 2019. The average premium in Iowa ballooned from $253 to $762.

Those with the lowest incomes – up to 138 percent of the federal poverty level, or about $12,000 for an individual – don’t have to worry about these price surges because they have access to Medicaid. But middle-income Americans have been walloped by these price hikes, and this year will be no better.

ObamaCare tried to help the middle class pay for insurance by providing premium subsidies to those who make up to four times the federal poverty level – just over $100,000 for a family of four. But those subsidies often aren't enough.

Consider a family of four in McLean, Virginia, with an annual income of $90,000 – $100,00 ($90,000 less than the median household income in that area). With the help of a monthly tax credit of about $1,000, those who select the most affordable plan available through HealthCare.gov will pay monthly premiums just north of $350.

Not terrible, right? But the plan's deductible is $14,000. In other words, that family could fork over 14 percent of its yearly income in out-of-pocket costs before their insurer pays any expenses.

Middle-class families earning just enough to make them ineligible for any subsidies fare even worse. Imagine that same Northern Virginia community, with an identical family that's making $101,000 per year. That family doesn't get a subsidy. Its estimated monthly premium starts at nearly $1,400, and its annual deductible is $14,000. If the family wanted a plan without a deductible, the monthly premium would exceed $2,000.

Families all over the country are facing similar predicaments. A family of three in Cheyenne, Wyoming, with an annual income of $84,000, makes slightly more than the cut-off for receiving subsidies. Its cheapest premium option is almost $1,300 per month – about 20 percent of its total income. And the deductible is $9,000.

In a worst-case scenario, that family will spend more than $24,000 before its insurance kicks in. That’s nearly 30 percent of its pay for the whole year.

The Trump administration is trying to make more affordable insurance options available. It has promulgated new rules allowing insurers to sell short-term health insurance plans that last up to 364 days, and to renew those plans for up to three years.

Short-term plans don't have to adhere to ObamaCare's cost-inflating regulations, so they have lower premiums – 80 percent lower, on average, than ObamaCare-compliant plans.

In 2019, enrollment on HealthCare.gov will almost certainly decline for the third straight year. ObamaCare's exchanges have failed to provide the affordable health coverage that middle-class Americans are clamoring for. Short-term plans may be their refuge.