New HC rates with Obamacare

[Midpack]

We can assume the basic premise of the ACA will remain. Younger people will subsidize the older people in the plan. The healthy will subsidize the sick. We will all pay for more coverage than we might have selected had we had a choice. You can call that the "social contract" or something else.

I thought so, but when I looked at specifics I noticed that the older you are the more you pay (before subsidies). RI for example, a 65 yo pays triple the premium of a 21 yo not matter which plan you look at (gold, silver, etc.). IIRC 3X is the PPACA legal limit, but I suspect most if not all states will have an increasing rate by age. And presumably younger folks will have lower incomes, and therefore greater tax subsidies, further lessening the 'younger will subsidize the older' assumption. FWIW...

 

[M Paquette]

I thought so, but when I looked at specifics I noticed that the older you are the more you pay (before subsidies). RI for example, a 65 yo pays triple the premium of a 21 yo not matter which plan you look at (gold, silver, etc.). IIRC 3X is the PPACA legal limit, but I suspect most if not all states will have an increasing rate by age. And presumably younger folks will have lower incomes, and therefore greater tax subsidies, further lessening the 'younger will subsidize the older' assumption. FWIW...

I think that what some are calling an 'age subsidy' is the limit of rate differential by age to 3X. Prior to PPACA, in many states that ratio for old to young rates for a given policy exceeded 5X. Limiting the differential to 3X has the effect of, for a given benefit, raising the lowest rate and lowering the highest rate while maintaining the same acturial cash flow.

 

[pb4uski]

For some reason, we do not have different premiums for different ages so the younger folks are getting screwed IMHO. Time will tell as to how it will work. Perhaps the thinking is that those who are younger tend to earn less so their subsidies will be higher all else being equal.

On a different subject - I have a faint recollection that under Obamacare that health insurance was going to be able to cross state lines - was that taken out or does it come along later?

 

[Midpack]

I think that what some are calling an 'age subsidy' is the limit of rate differential by age to 3X. Prior to PPACA, in many states that ratio for old to young rates for a given policy exceeded 5X. Limiting the differential to 3X has the effect of, for a given benefit, raising the lowest rate and lowering the highest rate while maintaining the same acturial cash flow.

Very good point, thanks. I do wonder what the "effective multiple" will be, assuming lower wages/greater HC tax breaks for younger participants in the aggregate. More than 3X, but I have no idea how much more...could it be 5X?

 

[brewer12345]

On a different subject - I have a faint recollection that under Obamacare that health insurance was going to be able to cross state lines - was that taken out or does it come along later?

Not bloody likely. That would require the repeal of the McCarran-Ferguson Act, which ain't happening as far as I can tell.

 

[daylatedollarshort]

On a different subject - I have a faint recollection that under Obamacare that health insurance was going to be able to cross state lines - was that taken out or does it come along later?

In our plan choices on our state exchange, there are some Anthem plans with "Multi State" in the name of the plan, but I don't see any details yet on what that specifically means.

 

[explanade]

Are you sure about free doctors visits.

The plans I've seen out here in CA shows higher copayments when you go from higher plans to lower plans, gold to silver to bronze.

They all have same OOP maximums so it seems like the higher premiums wouldn't be worth it unless you know you're going to be using a lot of services and making copayments.

 

[donheff]

While that's a huge increase, it still seems cheap compared to what health care actually costs from everything I've read. I have to assume costs in 2013 are even higher than 2009.
If my wife and I get coverage for $433/month when/if we go on an ACA exchange, we'll be over the moon pleased...

I've been surprised at how low the rates are on all the exchanges I've looked at, thanks to other members posts here.

+1. When I read rates like the OP posted I have to wonder what was in the policy and how have things changed under the ACA. I would guess that it must have been pretty bare bones and the replacement policy must have more, although still not top drawer. I pay more out of pocket for my Federal policy than the OP pays and I am only contributing 30% of the total cost. Part of the ACA concept is that people who currently have substandard policies will be pushed into more comprehensive policies. That is the price we will pay for universal health insurance. In the case of the ACA it comes out of our pockets (or our employers') in direct payments to insurance companies. Had we gone with a single payer system like Medicare it would have come out of our pockets in the form of higher taxes. Either way, we have to pay to play.

Of course we can always start all over again -- hello pre-existing condition exclusions and ER care.

 

[davidfin]

I Fire'd January 1, 2013 and went from company paid health care to purchase on my own. Wow, $3500 deductable $12K out of pocket limit HSA plan at $890/month for myself and DW. Largest single budget item. CoverOregon (insurance exchange) calculator estimates premium for same coverage will drop in half or more. This is based on subsidies since our income has dropped significantly living on a proportion of savings. Healthcare under the affordable care act is not means tested just income tested. There is a lot of miss information out there. Do your research.

 

[Running_Man]

The Bronze plan yes will have low rates, but don't most of these plans make you the first full $2000 of charges as a deductible in the plan before the plan pays only 60% of your charges (other than preventative medicine) up to $6000 in out of pocket charges along with $45 co-pays, unless your net income is less than $28,000?

So that if you have $12,000 in actual medical charges, you will pay $6,000 plus premiums of $1,000 - $2,000 resulting in a need to budget 600-700 per month as an individual for this "low cost" insurance. I think people looking at the premium charges and not looking at cost of insurance will be shocked next year when they go to the doctor and realize they have no effective insurance. These plans are really more of a catastophic type plan.

Obamacare: Is a $2,000 deductible 'affordable?' - Jun. 13, 2013

 

[Mulligan]

The Bronze plan yes will have low rates, but don't most of these plans make you the first full $2000 of charges as a deductible in the plan before the plan pays only 60% of your charges (other than preventative medicine) up to $6000 in out of pocket charges along with $45 co-pays, unless your net income is less than $28,000?

So that if you have $12,000 in actual medical charges, you will pay $6,000 plus premiums of $1,000 - $2,000 resulting in a need to budget 600-700 per month as an individual for this "low cost" insurance. I think people looking at the premium charges and not looking at cost of insurance will be shocked next year when they go to the doctor and realize they have no effective insurance. These plans are really more of a catastophic type plan.

Obamacare: Is a $2,000 deductible 'affordable?' - Jun. 13, 2013

I'm afraid many of the naive buying out there will not understand this. They will not have the money to cover the deductible even if they are getting the coverage practically free. I freely on my own had a $5500 deductible, and zero co pay after meeting deductible. However my premium for this was only $88 and I was getting a HSA tax break. Based on other states premiums I do not see how I will be under $300 for a bronze at my age of 49.

 

[Fermion]

So what are you supposed to do with ACA if you move from state to state constantly (ie, traveling around in an RV)? I haven't really seen a firm answer here.

 

[brewer12345]

So what are you supposed to do with ACA if you move from state to state constantly (ie, traveling around in an RV)? I haven't really seen a firm answer here.

In that case you would want a provider with a national provider network. On blm land you are likely to bleed out before you get to a doc anyway.

 

[Htown Harry]

The PPACA include a section on "multi-state plans".

OPM's Multi-State Plan Program (MSPP) is a new program established under §1334 of the Affordable Care Act, which directs the U.S. Office of Personnel Management (OPM) to contract with private health insurance issuers to offer at least two Multi-State Plans (MSPs) in each state which are available to eligible individuals and small businesses and offered through the Health Insurance Marketplace (Marketplace).

Here's a FAQ, although it appears somewhat dated:

Insurance FAQs

This is a much more recent article, from this month, that attempts to explain what this means to a person residing in different states during the year.

6 Things Boomers Need to Know About Obamacare - Yahoo Finance

Reading the snippets that come up in Google search, I get the impression multi-state plans were not a top priority for October 1.

4. You need to enroll in the ‘right’ state
Each state will have a health-insurance marketplace, and people must sign up for insurance in the state of their primary residence. Plans will include coverage for any emergencies that happen when you’re traveling out-of-state.

Snowbirds who split their time between states will likely have multistate plans to choose from on the marketplaces. Details for these plans will become available later this month, when the Office of Personnel Management announces the contracts, according to a spokesperson. Some may be regional plans that cover a large metropolitan area that crosses state boundaries. But it’s possible that a given multistate plan may not meet the needs of someone who spends, say, half the year in New York and the other half in Florida.

Currently, some snowbirds are served by what’s known as a “wraparound network,” whereby a claims-management company contracts with the primary insurer to lease a provider network that the insurer’s members can access when they travel outside the primary network area, said Terri Welter, principal at ECG Management Consultants, a Seattle-based consulting firm to the health-care industry. While it’s not clear yet, it’s possible this type of system may continue with some plans on the exchanges, she said.

 

[MichaelB]

The ACA is about many things, but young subsidizing old and healthy subsidizing sick are not among them. In fact, in the "other" insurance market, which includes group policies and covers about 90% of private insurance in the US, individual premiums do not differ because of age, health or pre-existing condition (in most cases). Premiums differ due to coverage. Insurers are not allowed to exclude, everyone can join if they are eligible members of the insured group, and all group members get the same price for the same coverage.

Price discrimination for the same coverage is present in the individual and very small small group market, the target of the exchanges, and covers around 10% of the marketplace. Even after all the ACA measures are implemented, policies in the exchanges will still price to age far more than most group policies. The discrimination is reduced but still exists.

If anything, the ACA is trying to make individual and very small insurance look more like the large group insurance. The question here is not why a grandfathered plan premium is rising, even when it is not implementing yet many of the ACA mandates. The real question is why is the current premium below the US average for group insurance, and what is changing within that policy to drive a price increase without a corresponding change in coverage.

 

[samclem]

The ACA is about many things, but young subsidizing old and healthy subsidizing sick are not among them.

The ACA does both of these things, I'm not sure why you write this.
- Young subsidizing the old: The ACA, by law, says that the rates charged old people cannot be more than 300% of the rates charged young people. If rates were allowed to reflect expected claims experience the rates charged a typical 60 year old would be much more than 3x the rates charged a typical 28 year old. Rates on the current individual market reflect this.
- Healthy subsidizing the sick: This is clearly the intended result when there is no medical underwriting, I'm not sure how it is possible to deny it.

Let's be honest with each other. We can differ about the desirability of various aspects of the law, but the fundamentals of how this law is supposed to work are not in dispute.

 

[jasg]

3.5k deductible 257 premium, 50% Coinsurance, 5k max out of pocket, 2M lifetime I believe.

I have a similar Regence policy for $337. I go on Medicare in Feb so it is sort of academic but they have dropped that policy and recommend a Bronze policy for $605.

The key point here is that my existing policy is a catastrophic coverage and comes nowhere close to ACA minimum standards. There are catastrophic policies under ACA but only if you are under 30.

The fact is that catastrophic policies are a bet that only works for the few of us who have the assets to cover the high deductibles and/or are in good health. In my case, being close to Medicare made the bet better. I actually expect to spend more than now per month in Medicare once I factor in Parts C and D...

 

[Mulligan]

The ACA does both of these things, I'm not sure why you write this.
- Young subsidizing the old: The ACA, by law, says that the rates charged old people cannot be more than 300% of the rates charged young people. If rates were allowed to reflect expected claims experience the rates charged a healthy 60 year old would be much more than 3x the rates charged a healthy 28 year old. Rates on the current individual market reflect this.
- Healthy subsidizing the sick: This is clearly the intended result when there is no medical underwriting, I'm not sure how it is possible to deny it.

Let's be honest with each other. We can differ about the desirability of various aspects of the law, but the fundamentals of how this law is supposed to work are not in dispute.

If the young are not supposed to help subsidize the old, why does every article I read express concern that if the young do not purchase the health insurance, it will create a death spiral in premium costs where more and more people drop out if premiums rise from the lack of healthy youthful participants?
I would also agree that the intent is to have the healthy subsidize the unhealthy (though that is pretty much what insure is about anyways). Otherwise why would they eliminate the higher deductible plans that a healthy person would purchase that had plenty of assets to handle the deductible?

 

[Malcolm2]

Well, yes, until the fines become 2.5% of their income. I was making $70,000 a year at age 27. The fine for not having HC would be $1750 plus I would be out of pocket $5000 or so when I get a compound fracture in my arm riding dirt bikes

It would be unusual for someone making $70K not to have access to a health plan via their employer, therefore you would get a large (or some) subsidy from them and the economics change. Most fines will be nowhere near $1750, and there is the rub. If you are 26, making just over the subsidy limits, and are healthy how far up the priority chain will it be to pay $3500 per year to get a policy with a $4K deductible? At the bottom I think.
Many younger folks will just pay the tax and write it off like the SS tax. I have spoken to quite a few in my recent work and have yet to find any that think it is that important (i.e. top 5 controllable expenses) unless married or with health issues. When you look at the high deductibles it becomes even less attractive for them. "Maybe after rent, taxes, food, school loans, car payments...etc" is the response I get.
How would you answer a 26 year old male who asks why he should pay for such a policy to subsidize someone with a $1M IRA who engineers his income down to get a subsidy. I don't know a good response.

 

[Fermion]

How would you answer a 26 year old male who asks why he should pay for such a policy to subsidize someone with a $1M IRA who engineers his income down to get a subsidy. I don't know a good response.

The person with the $1M IRA probably paid a good amount of tax during their career, which perhaps went to subsidize the schooling of said 26 year old, or paid for his/her father's government pension.

During our high earning years we were not allowed to deduct tuition, were not allowed to contribute to a deductible IRA or a Roth IRA, and there were a few other denied deductions. Arranging low income for ACA is payback time.

 

[Mulligan]

The person with the $1M IRA probably paid a good amount of tax during their career, which perhaps went to subsidize the schooling of said 26 year old, or paid for his/her father's government pension.

During our high earning years we were not allowed to deduct tuition, were not allowed to contribute to a deductible IRA or a Roth IRA, and there were a few other denied deductions. Arranging low income for ACA is payback time.

Somehow methinks, no matter how truthful your comment may be, that reason will not motivate him much to go buy the insurance...

 

[Fermion]

Somehow methinks, no matter how truthful your comment may be, that reason will not motivate him much to go buy the insurance...

yeah, probably not

We will just have to increase the penalty a bit to the point where they do see the need to get insurance. 10% ought to do it.

 

[jclarksnakes]

yeah, probably not

We will just have to increase the penalty a bit to the point where they do see the need to get insurance. 10% ought to do it.

Be careful what you wish for. The young already hate us. They may be putting bounties on our heads soon.

 

[daylatedollarshort]

How would you answer a 26 year old male who asks why he should pay for such a policy to subsidize someone with a $1M IRA who engineers his income down to get a subsidy. I don't know a good response.

I think the main question is why should he get health insurance. The answer is because even 26 year olds aren't immortal and that medical bills in the US. for a serious illness or car accident can be over $1M a year.

A low income 26 year old would get a subsidized plan, and a 26 year old in my zip code making $47.5K would pay ~3K a year for a plan with a 2K deductible.

Your question is like why should I pay my property taxes now that my kids are out of school.

 

[samclem]

How would you answer a 26 year old male who asks why he should pay for such a policy to subsidize someone with a $1M IRA who engineers his income down to get a subsidy. I don't know a good response.

Well, there are really two questions:

1) "Why should I buy health insurance?" Because if you don't you could wind up in bankruptcy due to unforeseen medical bills, and insurance also allows you to get better rates for many services than you'd be able to get as a cash customer.

2) "Why should I pay so much more than the true value of my coverage in order to subsidize that old, rich guy?" That's a great question. The short answer is: Those in power have passed a law that takes away your other options for insurance, they think this is best for you.