How exactly does Medicare handle high medical costs?

[aja8888]

......... someone who didn't even buy a policy this year and elects to pay the fine, can purchase a policy next year if he/she develops a chronic condition which is expensive to treat.

Isn't this what was going on in Mass. under "Romneycare"? If so, how was that resolved so that the ACA would not see any or little of this? Is it the annual fines that are supposed to deter this?

In any event, not buying under the ACA can be resolved by just visiting the ER. Heck, ER's are so crowded here, there are several hour waits, even if you have real insurance.

FWIW, and I have no personal skin in the game (but DD does). Over the holidays I asked about 20 people I know, and also asked their adult children when I saw them, how they are fairing with the ACA. Here are some startling answers:

1. College student -19 years old (my step-granddaughter). - no insurance and parents never mentioned the ACA (very disheartening to us).
2. Work associate (very educated, MBA, etc) - his adult son never applied and has no insurance. I asked what is he going to do...answer was "I need to get him (son) looking into this".
3. Parents of step-granddaughter - One is self employed, both have no insurance (sad). Both age 40+, educated, etc. Actually did not know what the ACA was..that was surprising.
4. Close friend (divorced) with two adult daughters - one got insurance under the ACA. Other tried but got frustrated and gave up. His ex has no policy and is on Medicaid.
5. Balance of other folks were employed with policies from employer or on Medicare.

I did not run into anyone who is in the forgotten group here - too low an income for ACA coverage and no Medicaid eligibility due to no Medicaid expansion here in TX. Those folks are ER bound I guess.

 

[FIRE'd@51]

That's right. People buying individual policies don't usually "save" very much at all switching to the more comprehensive policy. Now if the employer is paying the higher premiums - than the more comprehensive policy is much preferred.

What about those getting a subsidy? Isn't that similar to the employer paying part of the premium?

 

[FIRE'd@51]

Isn't this what was going on in Mass. under "Romneycare"? If so, how was that resolved so that the ACA would not see any or little of this? Is it the annual fines that are supposed to deter this?

I believe this was a problem in the beginning. People were paying the fine and then signing up when they needed a procedure and then dropping the insurance (stop paying the premium) after treatment. I think it was solved by raising the fines and maybe by instituting waiting periods. Perhaps someone from Massachusetts will chime in with a more detailed answer.

Never underestimate the ability of people to game the system. Heck, the multi-millionaires on this forum have figured out how to manage their income so as to qualify for the biggest possible subsidy. Wait til the press starts aggressively covering this.

 

[audreyh1]

What about those getting a subsidy? Isn't that similar to the employer paying part of the premium?

No - because the same $ subsidy applies across all plans. You don't get a higher subsidy if you choose a more expensive plan.

Now on cost-sharing - there your only option is a Silver plan AFAIK. So you don't get to choose a more expensive plan either.

 

[FIRE'd@51]

No - because the same $ subsidy applies across all plans. You don't get a higher subsidy if you choose a more expensive plan.

Now on cost-sharing - there your only option is a Silver plan AFAIK. So you don't get to choose a more expensive plan either.

So one could go from a Bronze plan to a Silver plan if they developed a chronic condition.

 

[audreyh1]

So one could go from a Bronze plan to a Silver plan if they developed a chronic condition.

Yeah, but it might not save you any money.

 

[FIRE'd@51]

If you look at the pricing, the rise in monthly payment costs to the end user will roughly equal the reduction in deductible/max out-of-pocket costs from the higher grade plan. Persons doing this will effectively be paying the pro-rated difference in deductible over the course of the year.

Actuaries tend to be pretty thorough at this sort of thing...

If this is the case, no one should sign up for anything but a Bronze plan, regardless of their health. In fact, why bother to offer Silver, Gold, and Platinum plans? It will be interesting to see the breakdown of the enrollees in the different metals.

 

[audreyh1]

If this is the case, no one should sign up for anything but a Bronze plan, regardless of their health. In fact, why bother to offer Silver, Gold, and Platinum plans? It will be interesting to see the breakdown of the enrollees in the different metals.

That's the conclusion I came to based on my analysis - but that was for my state where 20% coinsurance seems to be the max and max OOP was very close for most plans.

Some folks might be attracted by lower deductibles and copays in the higher priced plans, but then comparing the premiums should give them pause. However, I did notice some folks rejecting a bronze plan out of hand because of the higher deductible and the information that it was designed to "only" cover 60% of costs. But if you crunched the total cost numbers there didn't seem to be that much difference between the plans in the worst case scenarios.

Cost-sharing benefits would push some of the subsidized folks toward a silver plan.

 

[audreyh1]

No - because the same $ subsidy applies across all plans. You don't get a higher subsidy if you choose a more expensive plan.

Now on cost-sharing - there your only option is a Silver plan AFAIK. So you don't get to choose a more expensive plan either.

BTW my earlier comment was if the employer were paying the premium, not part of the premium.

If the employer only pays part of the premium then the employee suddenly becomes much more cost conscious about the policy unless the more expensive plans are more heavily subsidized.

 

[MichaelB]

If this is the case, no one should sign up for anything but a Bronze plan, regardless of their health. In fact, why bother to offer Silver, Gold, and Platinum plans? It will be interesting to see the breakdown of the enrollees in the different metals.

For an individual making after tax purchase this makes sense. If an employer is paying the policy, even self employed, it makes sense to purchase as much coverage as possible because it is fully deductible. The different levels of coverage would reflect varying $ of benefit the employer is paying.

 

[M Paquette]

If this is the case, no one should sign up for anything but a Bronze plan, regardless of their health. In fact, why bother to offer Silver, Gold, and Platinum plans? It will be interesting to see the breakdown of the enrollees in the different metals.

I do believe you have it surrounded.

Pricing for all the plans I evaluated look like the cost of catastrophic care, plus prepayment for some anticipated usage. That is, the Bronze plan annual cost is about the cost of catastrophic care, plus the cost for a physical, some labs, and vaccinations, for the 'typical' adult. Moving up to higher tiers, the plans have costs that are effectively prepaying for several physician visits, prescriptions, and other services.

If some really have a lot of time on their hands, and are a heavy user of medical services, they could write a spreadsheet that would let them pick an optimal plan for their (high) use of medical services, taking copays and deductibles into account.

Folks in reasonably good health can just go with a Bronze HSA plan and bank the savings over that Platinum plan for use against future medical expenses or Medicare premiums.

 

[NW-Bound]

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