Obamacare & Out-of-Pocket Costs

HealthPocket compared annual out-of-pocket spending limit for the Bronze Plan and other new Obamacare plans to the out-of-pocket limits for 9,752 existing health insurance plans to determine the extent to which this new limit represents increased financial protections for the consumer. The results showed a highly regionalized benefit of the new limit. Moreover, the study also revealed a significant number of health insurance plans currently fail to include their deductible amount within their healthcare out-of-pocket limit

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4 responses to “Obamacare & Out-of-Pocket Costs”

  1. Bob Rosenblatt says :

    Hello, I write about Medicare and health costs and would like to interview (Kev) you and Steve. I covered Steve when he was with AARP and I was a reporter for the Los Angeles Times. Please send me phone numbers and direct e-mail addresses for both of you.

  2. Maggie Mahar says :

    Thanks for a very interesting, well-researched post. I appreciate the fact you use unbiased sources.

    But when you write: “Given recent predictions that premiums will rise due to broader ACA benefit requirements and an influx of beneficiaries with pre-existing conditions . . .” you are, I’m, afraid, repeating misinformation that has been spread by highly biased sources– some columnists at Forbes, and Douglas Holtz Eakin’s AMerican Action Forum among them. (Holtz Eakin’s, who was McCain’s health care advisor is strongly opposed to “Obamacare” and the AAF recently issued a report filled with false numbers. I’ll be writing about it sometime this week.

    , The truth is that some people will see their premiums rise, others will see their premiums fall.I have written about this here http://www.healthinsurance.org/blog/2013/01/22/the-future-of-your-health-insurance-premiums/

    If your current policy is what some call a “junk policy” filled with holes, then under the ACA your premiums will be higher because all policies sold both in the individual and small business Exchanges will be required to cover all Essential Benefits,offer prevent care at no cost, etc.

    But if the policy you now have is comprehensive coverage you may find yourself paying less for insurance. Much depends on you income, your age, the state you live in, your gender and your health. http://www.healthinsurance.org/blog/2013/01/22/the-future-of-your-health-insurance-premiums/

    For instance, today insurers in most states can charge customers in their 50s and
    earlyo 60s five to six times as much as they charge a 30-year old. Under the ACA
    they can charge them only 3 times as much.

    In addition even when maternity benefits are excluded, one-third of all health plans charge women at least 30 percent more than men., accIn 36 states, “92 percent of best-selling plans charge 40-year-old women more than 40-year-old men,” the Center reports, and “only 3 percent of these plans cover maternity services , http://www.healthinsurance.org/blog/2012/04/28/health-reform-a-huge-victory-for-women/

    As for the “influx” of patients suffering from pre-existing conditions:
    — Eleven states already prohibit hiking premiums because of pre-existing conditions. If you live in Colorado, Connecticut, Maryland, Maine, Massachusetts, New Jersey, New York, Oregon, Vermont, or Washington, you won’t wind up paying more for this reason.

    — Also keep in mind that 16 percent of today’s uninsured are children, 55 percent are under 34; and 73 percent are under 44.The vast majority of those who are under 44 are relatively healthy. Most Americans suffering from expensive chronic conditions are over 44. (Many are over 65 and on Medicare)Many of those who are under 65 have managed to get a job with a large employer who offers them
    comprehensive insurance and can charge them no more than healthy employees.
    If they possibly can they will take a job with good benefits–even if wages are low–in order to avoid enormous medical debt.

    Ninety percent of those who are now uninsured will qualify for subsidies, which is why 20-somethings and 30-somethings will join the exchanges. This “influx” of new, younger customers should slice average premiums in the individual market “by 7% to 10%” says CBO – even before you factor in the tax credits.
    (I’ve written about this, citing sources, here http://www.healthinsurance.org/blog/2013/01/03/will-health-insurance-premiums-skyrocket-in-2014/

    Turning to palns offered by large employoers: by law, today they cannot discriminate against women or those suffering from pre-existing conditions, and most cover all or nearly all “essential benefits’. Thus, CBO says that the ACA will probably have a “negligible” effect on large group premiums (other than normal inflation. health care inflaiton has slowed, but we can still expect premiums to rise by at least 2% to 3% a year) . But even this is not clear. Under the ACA large employers will have to offer preventive care without co-pays or deductibles. This could cause them to lift premiums.

    The fact is that we really can’t predict premiums under the ACA. HHS hasn’t yet
    published rules that will have a major effect on how insurers set premiums in the Exchanges. For instance, how much more can they charge for a plantium plan? (It would be in ian nsurers’ interest to set a high price for a platinum plan in hopes of avoiding customers who will choose that plan because they know they will need a great deal of care. Also, will a plan that covers 1 adult and 1 child be twice as expensive as an individual plan– or 1.5 times as expensive? Will a plan that covers 2 adults and 1 child be less expensive than a plan that covers 2 adults and 2 children?

    We know that in the Exchanges customers under 30 will be able to sign up for a
    high dedutible plan. How much will it cost? Pricing of those plans (which may well be popular) will affect how an insurer prices his other plans.

    In the Exchanges, insurers will be competing mainly on price, while simultaneously trying to attract a large share of the youngest and healtiests customers. They will have many pricing decisions to make —but they cant’ make them until they see the HHS rules.

    Just the other day I interviewed a well-known benefits consultant with 37 years of experience and he said that any predictions as to whether premiums will be higher–and how much higher– are “baloney.” He agreed that all we can say with confidence is that some people will see their premiums rise, while others see
    their premiums fall.

    He also agreed that we’ll see a huge influx of younger people joining the Exchanges because so many will receive good subsidies. The notion that 20-soemthings snd 30-somethins don’t buy insurance because they think they’re invincibleis a myth. Polls show that they don’t buy insurance because they can’t afford it. Subsidies will make all of the difference–but again no one can predict exactly how many will join the Exchanges, and whether that will come close to offseting the cost of insuring those suffering from pre-existing conditions.
    the cost of those suffering from pre-existing condtitions. .

    Sorry to go on at such length, but I think it’s important to counter the fear-mongering about premiums skyrocketing under the ACA.

    I’m glad to see somone addressing the question of out-of-pocket costs
    in an objective way. I’ll probably write about your post on my blog (www.healthbeatblog.com)

    Would love to compare notes on some of these issues. You can contact me
    at maggiemahar2@gmail.com

    ——————————————————————————–

    • kevcoleman says :

      Maggie,

      Thanks so much for the comment. I deeply appreciate the breadth of your comments and thought you put into them. Below are my thoughts on a few of the issues you raised. I look forward to continuing this discussion.

      With respect to premium increases, I would not characterize all people predicting increases as fear-mongering or even belonging to a specific political persuasion. In my own conversations with people following American healthcare reform, I have heard the premium increase talk from people who are far apart ideologically. That doesn’t necessarily mean they are correct in their predictions but it does confirm, for me at least, that this is a discussion deserving merit. For myself, it’s important to me to be politically neutral and I try to avoid citations that I believe have no justification other than a political agenda.

      You correctly point out that different segments of consumers will see different premium effects. Groups such as people with poor health and people in their early twenties will probably have very different perspectives on premiums. This situation is analogous to what I saw when researching declination rates as well as the new ACA out-of-pocket limits. Effects are more localized and segmented as opposed to universally experienced.

      I am inclined to avoid the term “junk policy” to generically refer to existing health plans whose benefit designs are not co-extensive with the Essential Health Benefits of an ACA qualified health plan. People’s health status, life stage, and risk tolerance can inform what collection of benefits are acceptable. As a husband and father I have a different perspective on health insurance than I did when I was younger and single. I do agree with you that there are ‘junk policies’ in the market but my own personal definition is more restrictive (e.g. no annual out-of-pocket limits, poor provider network, etc.).

      From an actuarial perspective, I do think it is hard to argue that broadening the average health plan benefit design and eliminating insurance rejections based on health status/pre-existing conditions will not introduce inflationary pressures on premiums. There I said it. It is now on the Internet for people in the future to evaluate based on what unfolds in 2014 and beyond. However, on the other hand, I will balance this belief in the inflationary factors with the ACA’s state empowerment to review rate increase proposals of 10% or more and also the Medical Loss Ratio ceiling, both introducing pressures in the opposite fiscal direction.

      Here’s the million dollar question for all of us watching the healthcare market: When these aforementioned upward and downward premium forces meet in the form of the 2014 qualified health plans, what will happen to unsubsidized premiums? I think that your benefits consultant is right in believing no one knows exactly what will happen. I certainly don’t. With that said, you also mentioned in your reply the states that prohibit declinations based on pre-existing conditions. What is interesting for me on that list are the states’ individual rankings for average health insurance premium within the individual & family market.

      Thanks again for the great comments as well as the links for all the readers to follow. You’ve given everyone much to consider.

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