Another Obamacare Disaster is Set to Hit an Unwary Public

Events set in motion months ago regarding ObamaCare are about to inflict significant damage on the American public.

The administration decided earlier this year to automatically renew the insurance policy of anyone who currently has coverage through a federal exchange if he or she doesn't return to the website to select a new plan or update personal and income information.

The decision helps the administration avoid the potential embarrassment of a large number of people dropping coverage by not renewing their policies. But it will cause serious problems for many who listened when the administration said that there's no reason to return to the exchange because they'll be automatically renewed in the same or a similar policy.

The administration's decision will hit those Americans in the wallet, good and hard.

First, most Americans' income fluctuates from year to year, particularly those with relatively low incomes. Subsidies are based on estimated income, and those who don't update their information will get subsidies based on estimates from when they enrolled in late 2013 or early 2014.

Expecting a year-old estimate to be good for the following year is almost certainly unwise. Individuals whose income rises in 2015 are going to get more subsidies than they should, and at tax time they will have to pay back those excess subsidies. Many people are going to be in for a surprise when tax filing season arrives.

Second, the benchmark "silver" plan upon which subsidies are based is changing in most states, with new, lower-cost entries trying to gain market share by undercutting the previous benchmark plan. Meanwhile, the old benchmark plans are raising premiums because they weren't getting a good return on investment or were even taking losses.

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