There is a subtle lesson here …

see if you can find it.

Okay, I’ll do it for you. California instituted a penalty for not having health insurance. It also added additional subsidies significantly higher than federal levels. As may be expected, more people are enrolling.

Now look at the last two paragraphs. Human nature strikes again. Use more subsidies not to lower the monthly cost but to buy more coverage. The higher subsidy could have put $500 more into the average individuals pocket each month to be used for out-of-pocket costs, if necessary. Instead it was used to buy a higher level of coverage thus assuring higher premiums in a quest to avoid OOP cost regardless of the economics. It’s not so much seeing the importance of health insurance, it’s more like seeing the opportunity to leverage other people’s money to my best advantage …not a criticism, just human nature when it comes to health care.

Some of the new state financial aid is available to low-income customers, but California became the first state to offer subsidies to middle-income people: those whose incomes are between 400% and 600% of the federal poverty level, or about $51,000 to $76,000 a year for an individual and $104,800 to $157,200 for a family of four. Those thresholds are too high to qualify for federal aid but low enough to make health insurance a financial burden.

The average state assistance for this group is about $500 a month, Lee said.

About 625,000 people qualified for the new state subsidies, including 32,000 middle-income enrollees, Lee said.

The subsidies vary by income, household size, location and age. Some went to low-income residents who also qualify for federal tax credits.

Evette Tsang, an insurance broker in Sacramento who serves mostly Chinese-speaking immigrants, said her clients used their state subsidies this year to purchase more comprehensive silver-tier plans with higher premiums rather than the cheaper bronze plans with lower benefits.

“After these few years, they start to see the importance of health insurance,” Tsang said. “Before, they only wanted bronze, but now they’re going to silver.”

Source: California Healthline


  1. Paradoxically, I like Quinn because I don’t always agree with him, and this is one of these times. I don’t think that upgrading from a bronze to silver plan is necessarily an irrational decision. The higher deductables and maximum annual cost, higher copays and other restrictions on the bronze plans are significant burdens on policy holders. In theory, the $500 per month maximum payout is worth more going into your pocket, but the unexpected spike of a major out of pocket bill can be catastrophic since most people will not put the subsidy aside for a rainy day (the triumph of human nature over rational planning, as I am sure RD will be quick to point out).


    1. I looked at it as people who were smartly upgrading their insurance. They totally understood the purpose of insurance, that is to limit financial risk. But these were people who already had insurance. Instead of giving money to people with insurance, limited as it may be, they should have took the extra money and made sure people who did not have any insurance got insurance. The money would go farther. All this did was added more available services and did not lower costs for anybody. I would even qualify under what was stated here if I lived in California and I can afford a silver plan now. The cost of this is being bore by the people who are paying their taxes. Tax me let and maybe I could afford a better plan if I want it.

      Instead of ensuring that everybody got a hamburger to eat, they gave money for steak to some people and there are still people without a hamburger. Everybody paid for this to happen.


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