Health Plans Up Significantly in 2014

[scrabbler1]

It makes sense that rates should rise.

• The elimination of lifetime caps
• Not being able to screen people for pre existing conditions
• limitations of being able to increase rates based on age
• Substantially increasing the procedure and benefits (e.g. free contraception.)

All of these increase the cost for an insurance company to provide medical insurance. Now the quality of the product is higher so it certainly makes sense for the cost to be.


How much of an increase in premium we will see I have no idea, but they almost certainly will rise.

I agree that those items will put upward pressure on rates. But there will be a big influx of younger, healthier, uninsured people via the mandate. That will put some downward pressure on rates. How well will these effects offset each other I do not know.

 

[gerrym51]

This is all very interesting information. I was under the impression that the AFA (obamacare?) was supposed to reduce average medical cost by something like $2500 annually for the folks as well as being able to keep your own doctor. Now I hear that costs are going up, not down. Gotta do more reading...

the key thing is average. it reduces the price for people between 55 and 65.

it increases it for the people below.

users between 55-65 use services(and money) 5-6 times more than younger users.

obamacare passes more costs onto younger users

 

[Shegens]

I was going to ask a similar question. I want to retire this year. I'm 58 and have being working for Duracell, and now P&G, for 36 years. Our insurance is through BC/BS and Anthem and the rates are very low. When I retire I will get retiree medical insurance through Gillette or P&G. The Gillette coverage is better so I plan to go with that. The rates for this year start at $174 a month or up depending on my health, which is good. My husband is 75 and will be covered at $59 a month since it will be supplemental to Medicare.

Will my retiree insurance go up significantly next year? I'm hearing that it won't and that it will double and I don't know what to believe. Anthem won't tell me anything and the HR department at work doesn't know.

 

[travelover]

........

• Substantially increasing the procedure and benefits (e.g. free contraception.)

........

No doubt true in general, but I think that contraception was more of a political issue. Child birthing has to be more expensive than birth control pills.

 

[Animorph]

I was going to ask a similar question. I want to retire this year. I'm 58 and have being working for Duracell, and now P&G, for 36 years. Our insurance is through BC/BS and Anthem and the rates are very low. When I retire I will get retiree medical insurance through Gillette or P&G. The Gillette coverage is better so I plan to go with that. The rates for this year start at $174 a month or up depending on my health, which is good. My husband is 75 and will be covered at $59 a month since it will be supplemental to Medicare.

Will my retiree insurance go up significantly next year? I'm hearing that it won't and that it will double and I don't know what to believe. Anthem won't tell me anything and the HR department at work doesn't know.

The price to Gillete and P&G won't double I'm sure. But since you are on subsidized retiree insurance provided by those companies you are at their mercy as far as what they'll pass on to you.

 

[Shegens]

The price to Gillete and P&G won't double I'm sure. But since you are on subsidized retiree insurance provided by those companies you are at their mercy as far as what they'll pass on to you.

Thanks so much! Our current deductible for an individual is only a little over $500. I expect that might go up but I'm hopeful that the premiums will not, not as much as some anyway. I have talked to several people that retired early the first of this year and the average premium for them (employee and spouse) averages between $400 and $500 a month. My pension from Gillette will cover that. I also have a lump sum pension coming from when Kraft owned us along with my 401K and the P&G profit sharing. Profit sharing is P&G's pension plan.

I'm beginning to find out that we actually have much better retiree premiums than most. P&G is large enough that if they continue like they have been we won't have an extreme rate hike but I am concerned enough to be cautious.

 

[dgoldenz]

As a health insurance agent, I can confirm that this is true, and would add that the estimates of increases stated are on the low side. My average client is a family with parents about 40 years old with two kids and spending an average of $300-600/month. In 2014, the cost for this family with no subsidy will likely be well over $1,000/month, which most people simply can't afford and will not pay. Just because you make $100k combined doesn't mean you're going to be able to spend $15k/year on health insurance, not including any costs that apply towards the out-of-pocket maximums.

California's "health exchange" website is now active and features this fun calculator - Health Insurance Calculator | Covered California

A married couple age 60 making $62,000 can expect a monthly premium of $1,723, a tax credit of $1,232/month and estimated final premium of $491/month. A married couple age 60 making $62,500 can expect a monthly premium of $1,723 , a tax credit of $0, and estimated final premium of $1,723/month. Any econ majors want to calculate that marginal tax rate? That is for a policy with a $12,800 annual out of pocket max, which is higher than most of the individual plans offered today. Only $20k/year in premiums and $13k out of pocket? Sounds pretty affordable. Surely everyone eligible for a salary increase from $62k to $63k would love to have such a promotion.

As of now, 2014 expected pricing has been released in two states, CA and TX. In both states, the 2014 cost of coverage is literally 3x the current cost. Many of these plans will likely have limited regional networks and restricted pharmacy coverage.

Here's a link to Humana's plans in Texas - https://www.humana-one.com/secured/individual-health-insurance-quotes.aspx

Try inputting some fake info and getting a quote, you can use zip code 77005. All of the 2014-compliant plans are labeled with Bronze, Silver, Gold, or Platinum. Notice the price of all of the other existing plans in comparison to the 2014 ones.

Example: 60-year-old couple with two kids. Current plans - $635-1,987/month. 2014 plans - $1,693-5,236/month.

Example 2: 28-year-old couple with two kids. Current plans - $271-949/month. 2014 plans - $1,162-3,589/month.

Humana did not go through the trouble of creating these plans and getting the pricing approved by the state DOI for no reason. Small group health insurance plans are also going to see large price increases since PPACA states that group policies can no longer be medically underwritten starting in 2014, and the same 3-1 age banding premiums and unisex rates must apply to small group coverage.

 

[Shegens]

Thanks for the info!

Where would my company subsidized retiree insurance play into this? My husband is 75 and on Medicare. All I need to supply for him is supplementary insurance. I am 58 and will have P&G retiree insurance as primary until I'm 65. It might have been in your reply but I didn't see it. I am checking the link you provided. I am also in TN and normally things are much cheaper here, I hope.

 

[Shegens]

OK, I checked the Humana site and entered my information for Tennessee. My premium for this year would be $440.00 a month with a $1000 deductible. The premium goes down from there with a higher deductible. My husband has Medicare. It wouldn't let me get a quote for next year but so far this premium is compatible with my P&G subsided premium. Our retiree insurance is through United Health Care.

Insurance really bumfuzzels me.

 

[gerrym51]

OK, I checked the Humana site and entered my information for Tennessee. My premium for this year would be $440.00 a month with a $1000 deductible. The premium goes down from there with a higher deductible. My husband has Medicare. It wouldn't let me get a quote for next year but so far this premium is compatible with my P&G subsided premium. Our retiree insurance is through United Health Care.

Insurance really bumfuzzels me.

family income is included in MAGI- even if just 1 person of 2 in family did you enter correctly

 

[dgoldenz]

Thanks for the info!

Where would my company subsidized retiree insurance play into this? My husband is 75 and on Medicare. All I need to supply for him is supplementary insurance. I am 58 and will have P&G retiree insurance as primary until I'm 65. It might have been in your reply but I didn't see it. I am checking the link you provided. I am also in TN and normally things are much cheaper here, I hope.

Your retiree group coverage probably won't be effected much, if at all, since it is such a large company and likely a self-funded plan. The link I posted applies only to plans in certain parts of Texas, not Tennessee. Humana has not released 2014 "metal" plan rates in any other states that I'm aware of.

 

[MichaelB]

As a health insurance agent, I can confirm that this is true, and would add that the estimates of increases stated are on the low side.
./.
As of now, 2014 expected pricing has been released in two states, CA and TX. In both states, the 2014 cost of coverage is literally 3x the current cost. Many of these plans will likely have limited regional networks and restricted pharmacy coverage.

To clarify, when you say you expect the cost of coverage to increase 3x, are you referring to all plans, or just the least expensive ones that have lowest underwriting risk?

 

[dgoldenz]

To clarify, when you say you expect the cost of coverage to increase 3x, are you referring to all plans, or just the least expensive ones that have lowest underwriting risk?

I'm referring to the guaranteed pricing of 2014 policies in relation to what a healthy person could qualify for currently. Obviously it will not be 3x in all places for all ages, but for younger/healthier people, the rate increases will be shockingly high.

 

[Mulligan]

I humored myself by using DGoldenz link to California. My totals... I would pay $530 a month with maximum $6400 out of pocket not including premiums, so I could be on the hook for over $12,000 a year in expenses. My current plan, $76 a month, $5500 deductible, so maximum out of pocket is about $6500. Since I am healthy and don't consume healthcare, my minimum increase would over 600%. What a great deal! I already have my bags packed and can't wait to move out there! This certainly increases my desire for my grandfathered plan to hold up. But the more I think about the more I believe I am in danger. You think the government is going to want to be on the hook for all the subsidies and all the unhealthy people joining first because of their medical needs, while the healthy people all stay tucked away inside their grandfathered plans? My guess, is the government will do everything they can to extract us to provide some "rate relief" consumers to help defray the costs at their expense.
My comment is not intended to disrespect anyone's needs for this, but as reminding one of the original premise of this from the outset, was you would
be allowed to keep your insurance if you wanted to. I think this will be made hard to do.

 

[FUEGO]

I'm referring to the guaranteed pricing of 2014 policies in relation to what a healthy person could qualify for currently. Obviously it will not be 3x in all places for all ages, but for younger/healthier people, the rate increases will be shockingly high.

So what are we talking in dollar terms? $300/mo in 2014 vs $100/mo now? 3x sounds scary but $200 more per month isn't nearly as scary.

Comparing the best pricing for healthy to the guaranteed issue pricing is misleading. How does the 2014 pricing compare to state high risk pool rates (if they have them in the jurisdictions you are referring to)?

 

[dgoldenz]

So what are we talking in dollar terms? $300/mo in 2014 vs $100/mo now? 3x sounds scary but $200 more per month isn't nearly as scary.

Comparing the best pricing for healthy to the guaranteed issue pricing is misleading. How does the 2014 pricing compare to state high risk pool rates (if they have them in the jurisdictions you are referring to)?

I do believe $300 is 3x $100. $200/mo extra spent on health insurance is also $200/mo that is not spent in other areas of the economy. For families the increase in premiums will be significantly higher than $200/month in most states, especially those states on the lower end of the cost scale for individual policies.

Comparing the best pricing for healthy people to guaranteed-issue pricing is not misleading since the existing policies are obtainable at the current rates, meanwhile in 2014 only the guaranteed-issue pricing will be available. There have been rumors that many insurance companies will dump their entire block of existing business on 12/31/13 so that they don't have to reprice the policies to comply with 2014 rules and have a bunch of pissed off customers complaining that their rates doubled or tripled. This is a very real issue and it's going to crush the middle class.

Even people that qualify for subsidies could see their cost increase. For example, let's take a family of 4 making $90k and assume they qualify for a subsidy limiting their cost to 9.5% of income, or $712/month. That same family may only be paying $400/month now, increasing their cost by $300/month even with taxpayers subsidizing the other $400+ per month since the real cost of the policy will be $1000+ per month, and more likely in the $1300-1500 per month range.

 

[rbmrtn]

Proposed rates may not be the final rates. In CA, the insurance commissioner does not have the power to approve or deny rate increases, so the insurer can do what they want. In NY they have authority and have denied/reduced the proposed increases.

New York health insurance will cost $500 million less due to prior approval - The Business Review

 

[FUEGO]

Even people that qualify for subsidies could see their cost increase. For example, let's take a family of 4 making $90k and assume they qualify for a subsidy limiting their cost to 9.5% of income, or $712/month. That same family may only be paying $400/month now, increasing their cost by $300/month even with taxpayers subsidizing the other $400+ per month since the real cost of the policy will be $1000+ per month, and more likely in the $1300-1500 per month range.

$300/mo increase doesn't seem too scary for folks making $90k/yr. That is a hypothetical loss of 4% of their gross salary. Just a little more damaging than going a year without a cost of living raise from your employer in a 3%/yr inflationary environment. Thanks for providing the context.

As for worries the money is disappearing, that money is going somewhere in the economy (insurers and their staffs, drs, nurses, hospitals, etc).

 

[brewer12345]

I do believe $300 is 3x $100. $200/mo extra spent on health insurance is also $200/mo that is not spent in other areas of the economy. For families the increase in premiums will be significantly higher than $200/month in most states, especially those states on the lower end of the cost scale for individual policies.

Comparing the best pricing for healthy people to guaranteed-issue pricing is not misleading since the existing policies are obtainable at the current rates, meanwhile in 2014 only the guaranteed-issue pricing will be available. There have been rumors that many insurance companies will dump their entire block of existing business on 12/31/13 so that they don't have to reprice the policies to comply with 2014 rules and have a bunch of pissed off customers complaining that their rates doubled or tripled. This is a very real issue and it's going to crush the middle class.

Even people that qualify for subsidies could see their cost increase. For example, let's take a family of 4 making $90k and assume they qualify for a subsidy limiting their cost to 9.5% of income, or $712/month. That same family may only be paying $400/month now, increasing their cost by $300/month even with taxpayers subsidizing the other $400+ per month since the real cost of the policy will be $1000+ per month, and more likely in the $1300-1500 per month range.

Just curious: what will happen with insurance agent commissions when PPACA takes effect? Will you guys lose out on a ton of individual business as people flock to the exchanges and eschew using an agent?

 

[dgoldenz]

Proposed rates may not be the final rates. In CA, the insurance commissioner does not have the power to approve or deny rate increases, so the insurer can do what they want. In NY they have authority and have denied/reduced the proposed increases.

New York health insurance will cost $500 million less due to prior approval - The Business Review

New York is the most expensive state in the country for health insurance so a reduction in cost there is no surprise. Their DOI is a nightmare for insurance companies so there is limited choice of carriers/plans. Their current laws require companies to charge the same price regardless of health or age, so a 25 year old pays the same price as a 64 year old, which is why the individual health insurance market in NY is pretty much non-existent.

$300/mo increase doesn't seem too scary for folks making $90k/yr. That is a hypothetical loss of 4% of their gross salary. Just a little more damaging than going a year without a cost of living raise from your employer in a 3%/yr inflationary environment. Thanks for providing the context.

As for worries the money is disappearing, that money is going somewhere in the economy (insurers and their staffs, drs, nurses, hospitals, etc).

Tell that to the people making $90k/year that are still struggling. $90k/year doesn't go that far in a high cost of living area, and it's still an extra $300/mo that isn't available for other discretionary spending or savings. Taxes also have to be raised to cover the subsidized part of the premium. If the premium is $1200/mo and the family was previously paying $400/mo and is now forced to pay $700/mo, that means $500/mo has to come from taxpayers. Please don't tell me that the extra $800/mo will have no effect on both an individual and national level because it obviously will. There's no free lunch.

 

[dgoldenz]

Just curious: what will happen with insurance agent commissions when PPACA takes effect? Will you guys lose out on a ton of individual business as people flock to the exchanges and eschew using an agent?

Nobody knows what commissions will be yet. If they are done the same way as Medicare Advantage then agents will still be able to make money, but if states decide that any policies bought through the exchange with a subsidy disqualifies the agent from receiving a commission, there will be a rapid exodus of agents from the business. A lot of agents already quit selling health insurance when commissions were cut in half back in 2010 when the law was passed.

Health insurance is still incredibly confusing for people and the average person will still seek out the help of an agent. Medicare Advantage and Medicare supplement plans are guaranteed-issue and there is a huge market for agents there because all of the rules/regulations and different plans are so confusing. Rather than spending time doing medical underwriting assessments, agents will probably spend more time helping people figure out their subsidies and which plans will have the lowest total expected cost over the course of the year factoring in the premiums plus the known deductible/Rx expenses.

There is about 0% chance that buying a health insurance policy in 2014 will be as simple as ordering something from Amazon as some have claimed.

 

[brewer12345]

There is about 0% chance that buying a health insurance policy in 2014 will be as simple as ordering something from Amazon as some have claimed.

Why? If all individual plans sold in the new world are standardized, what is so difficult to understand?

 

[Shegens]

Right now, the cost of insurance in 2014 is my main concern and possible deal breaker. It's been a while but when P&G took over we had plant meetings about retiree insurance and what would happen. Apparently Gillette agreed to let people over a certain age and seniority keep the Gillette retiree medical insurance at reasonable cost. We have a choice between the two. Gillette's insurance was much better than P&G's. I'm not saying P&G's isn't good but Gillette was through United Health Care and the deductibles were lower but the premiums were slightly higher. I was very happy with United Health Care. They were very good to pay medical costs. BC/BS, not so much. This year P&G allowed us a choice during enrollment between BC/BS and UHC since so many people liked UHC better.

 

[dgoldenz]

Why? If all individual plans sold in the new world are standardized, what is so difficult to understand?

They are not going to be standardized, they just have to meet the actuarial value requirements and include the Essential Health Benefits, so each company will still have different benefits. Medicare supplement plans are standardized and most people use an agent to buy those too. Few people will understand the subsidies or plan benefits and will need help...just the way it is.

 

[george76]

There is about 0% chance that buying a health insurance policy in 2014 will be as simple as ordering something from Amazon as some have claimed.

I am curious how this has worked in Massachusetts with Romneycare. From what little I have admittedly seen, the process there seem pretty straight forward. And isn't this what the ACA is more or less derived from?