Nice summary from Ways and Means on proposed changes to ACA released today...

[photoguy]

What is the actual cost difference between insuring a 20 year old vs 60 year old? At a 5:1 ratio is the 60 year old being subsidized (or expected to be subsidized)?

I know this depends on the insured population, which is different for ACA vs employer based plans, but I'm interested in any figure at all for which there is data.

 

[MRG]

What is the actual cost difference between insuring a 20 year old vs 60 year old? At a 5:1 ratio is the 60 year old being subsidized (or expected to be subsidized)?

I know this depends on the insured population, which is different for ACA vs employer based plans, but I'm interested in any figure at all for which there is data.

I don't know. I do believe that the insurance companies know the number.

I spent a little time around insurance companies, they attempt to know what everything costs.

 

[Johanson]

How does raising the HSA limit help poor people though? If your family income is $30,000 a year, does it matter if you can contribute $6,000 or $18,000 to an HSA?

I think it will drive down costs because some people will forgo all plans except the ones with the highest deductible and will pay for all of their medical needs, except for extreme catastrophic care, out of pocket. I know I will!

You can wheel and deal with medical people. A couple of years ago, I called the last clinic I went to and told them I know I have strep throat and that I needed antibiotics. I also said I didn't want to come in because I only have major medical. I had a doctor call me back and I told her that I used to get strep as a kid and I knew I had it now. I also said I avoid antibiotics like the plague. She gave me a prescription and that's all it cost me.

 

[samclem]

You're suggesting they can charge more but won't?

No--obviously they'll charge old people more than young people. They use more medical care. Look, the old max difference between young and old was 1:3. Now it will be 1:5. Apparently, your assumption is that the premiums for young people is the "anchor" rate or the "right" rate, and so now old people will pay a lot more. What if the "anchor" rate was the one that old people previously paid and now youngsters will be getting their insurance for 1/5th of that rate instead of 1/3rd of that? Insurers had to spend 80% of what they collected on care, and there's no doubt that average oldsters use a lot more care than youngsters, so that means the premiums charged to oldsters had to be a lot closer to the aggregate cost of the care actually delivered than was the case for youngsters.

Your statement was that "this plan would allow insurers to charge higher premiums to older people than is currently the case." I hope you can see that is not necessarily true, not in "dollar" terms, only in relative terms (i.e. in relation to what young people pay).

Let's also remember that we're talking only about the individual insurance market, which is not where most people get their health insurance.

 

[explanade]

So young people will be paying 1/5 of what they're paying now?

If they can promise that, they'd probably get a huge amount of support.

 

[scrabbler1]

I'm just wondering - with all of the good discussion in this thread about the ACA and recent activity in the congress, have any of you written to your senators and members of congress? I sent out a letter to all 3 of my legislators back in late January. Most of my views I am preaching to the choir, but I know there isn't 100% agreement. In my letter, I offered my perspectives on the unequal tax treatment of HI premiums, my experience with the ACA's exchange policy I bought in 2014, and my actuarial knowledge from 23 years working in the field. I closed with 3 main suggestions about how to fix the ACA.


It would be nice if I received a reply which was more than a form letter with the typical, "thank you for your views....."

 

[samclem]

So young people will be paying 1/5 of what they're paying now?

You know that's not even close to what I wrote. This discussion can be productive if we apply ourselves.

 

[explanade]

You wrote it. What if money grew on trees?

 

[bamsphd]

What is the actual cost difference between insuring a 20 year old vs 60 year old? At a 5:1 ratio is the 60 year old being subsidized (or expected to be subsidized)?

Found your answer:

“Average spending among people who are 64 years old is about 4.8 times as high as average spending among people who are 21 years old,” the Congressional Budget Office said last year, citing research by actuaries.

source this New York Times article.

 

[bamsphd]

Medicare does not 'go away' when the Part A Trust Fund runs out. They will still collect payroll taxes (Part A) and premiums (Part B) beyond that point. Those revenue streams will allow Medicare to meet most of its Part A obligations and all of its Part B obligations after that time.

Yes, but pruning benefits and/or means testing become much more politically feasible once the "Trust Fund" runs out.

I try to plan for "worst case for my family" scenarios, and this affects the political probabilities we might encounter a worst case scenario.

 

[Johanson]

I went off my parent's medical insurance when I turned 19, I think, and didn't have insurance again until I got my job the month before I turned 24 at Megacorp. I actually got really sick with strep right after I started with Megacorp and had no insurance. My mother called her clinic, they got me in right away, gave me a shot in the ass, charged me about $40 (October or November of 1988) and I was back to work the next Monday after missing 2 days of work. My boss was a small richard and I still work for Megacorp. He doesn't. My point being that insurance just drives the costs up!

 

[razztazz]

The cost is not the problem. The price is the problem. What would you have done if the "cost" was too high and you were aced entirely out of treatment? Then lost your job. Then ended up with a heart condition caused by untreated step?

There are of course rhetorical questions.

 

[Johanson]

The cost is not the problem. The price is the problem. What would you have done if the "cost" was too high and you were aced entirely out of treatment? Then lost your job. Then ended up with a heart condition caused by untreated step?

There are of course rhetorical questions.

If I were that weak genetically, I probably should have died and not procreated. I'm ok with that.

 

[simple girl]

I watched the tutorial that Paul Ryan presented today. My ears perked up when he started talking about state risk pools - something discussed here.

It sounds like you can get "regular" insurance as long as you're not sick. But if you get cancer, you'll be moved to the state risk pool insurance. He gave an example of a small company with a pool of 40 people. 36 are healthy and 4 have cancer... the four are moved to the state run risk pool in order to keep the costs down for the remaining 36.

Still digesting what this means... Sounds great (lower costs) for the healthy - but heaven forbid you actually need the insurance because you get heart disease or cancer...

So, the current bill does not allow underwriting for pre-existing conditions, but it does have a provision for high-risk pools in it. According to what I have read, Ryan is saying the AHCA is just the first step in a 3 part plan to repeal/replace the ACA. I believe they are laying the groundwork for a return to high risk pools.

However, only time will tell.

 

[simple girl]

I'm just wondering - with all of the good discussion in this thread about the ACA and recent activity in the congress, have any of you written to your senators and members of congress?

I call all 3 of my members of Congress at least once a week regarding protecting the ACA. I have also submitted my personal story to my representative pleading with him to not bring high-risk pools back.

 

[donheff]

I am curious about premium differences in employer based plans in the US. I always assumed most of them were similar in structure to my plan but I never actually looked into it. Under the Federal employee plan, I paid the same rate as anyone else in the plan with breakouts for single or family, and more recently for self plus one. I continue to pay those same equal premiums in retirement while on Medicare Part A (instead of a supplement). This is similar to proposals for Medicare for all -- everyone pays the same tax rate and gets insurance for life. The young are thus paying for more than they receive but they will eventually get old and reap the benefits on other side of the equation.

Do all current private sector plans follow a similar same premium approach or do some of them use the 1:3 ACA limits?

 

[MichaelB]

Do all current private sector plans follow a similar same premium approach or do some of them use the 1:3 ACA limits?

In general, large employer group plans are "must insure", which means all employees must be covered, and charge one premium to all participants, without distinction to age or gender. There are many cases of married couples, working for different employers, both employers paying for family coverage.

 

[ShokWaveRider]

Unfortunately, EVERYONE who pitched the so called AHCA NEVER talks about those who currently get a subsidy. A lot of us here. $4000 will do nothing towards my Annual Healthcare premiums of $15k.

Why don't they implement Phases 2 & 3 BEFORE Removing what we have now? Seems typical reverse logic to me. It seems this plan as it is today hurts those who need it most, and benefits those who need it less.

FACT (not Alternative ones) If you cannot afford the current premiums WITHOUT the current Subsidy/cost Sharing, and you are in say the $25k - $35k income bracket getting a decent subsidy. You will NEVER be able to afford the proposed Mythical "Cheaper" Plans with a $4000 Tax credit. My insurance would be $2500pm without the subsidy. It is just about affordable with it.

So what will happen? People will either go without, or opt for high deductible plans and use the emergency rooms. Very costly.

One other point HSA plans are only good for those who have money to put in an HSA plan to start with.

 

[donheff]

In general, large employer group plans are "must insure", which means all employees must be covered, and charge one premium to all participants, without distinction to age or gender. There are many cases of married couples, working for different employers, both employers paying for family coverage.

Thanks Michael. From what I saw of other people's HI I guessed that practice was either required or prevailed.

 

[MichaelB]

Thanks Michael. From what I saw of other people's HI I guessed that practice was either required or prevailed.

One of those things I find confusing is why so much effort is put into creating an individual insurance market that is highly segmented, pricing it with it such granularity, and allowing such easy opt-outs, while the two largest insured groups (3/4 of all population), which are much more effective at providing coverage, do just the opposite - no opt outs, one price for all. Medicare does have a little price variability, very little compared with the individual market. Both of those markets are heavily subsidized, but that doesn't affect the basic approach.

 

[NW-Bound]

+1

Are people in the individual market sicker than people working for the government or megacorps? Are there more regional variations? Are there any statistics about this?

 

[donheff]

One of those things I find confusing is why so much effort is put into creating an individual insurance market that is highly segmented, pricing it with it such granularity, and allowing such easy opt-outs, while the two largest insured groups (3/4 of all population), which are much more effective at providing coverage, do just the opposite - no opt outs, one price for all. Medicare does have a little price variability, very little compared with the individual market. Both of those markets are heavily subsidized, but that doesn't affect the basic approach.

I was thinking the same thing. I suspect the fact that employers typically subsidize a large portion of the premiums probably accounts for a lot the difference. With no age distinction and no supplements young folks might balk more than they do under ACA. Older folks see the need for coverage and feel compelled to pay up no matter what, hence the angst amount a group of ER types like us. No easy answer outside of a single payer solution IMO. But that's not in the cards soon so we have to deal with what we get.

 

[LARS]

One of those things I find confusing is why so much effort is put into creating an individual insurance market that is highly segmented, pricing it with it such granularity, and allowing such easy opt-outs, while the two largest insured groups (3/4 of all population), which are much more effective at providing coverage, do just the opposite - no opt outs, one price for all. Medicare does have a little price variability, very little compared with the individual market. Both of those markets are heavily subsidized, but that doesn't affect the basic approach.

I have always felt we should scrap employer based HI system.

Instead it should be replaced by one national market for all individuals/families. Individuals then have portable HI irrespective of employer.

And this not to say single payer. For those that are working, have employer make payments to individuals (above their normal wages) to additionally compensate/help cover employee's HI. The individuals then use this money to help buy HI.

Non working individuals would pay their own way just as now.

Give/don't give subsidies based on public policy, but it has nothing to do with structure of HI marketplace.

This way a truly national insurance pool, which spreads risk over 300 million odd people is achieved. Presumably with significant savings to the system.

 

[daylatedollarshort]

So, the current bill does not allow underwriting for pre-existing conditions, but it does have a provision for high-risk pools in it. According to what I have read, Ryan is saying the AHCA is just the first step in a 3 part plan to repeal/replace the ACA. I believe they are laying the groundwork for a return to high risk pools.

However, only time will tell.

From what I've read, the high risk pools would be for those who cannot afford the premiums in the individual market place. So to we will all have "access" to health insurance, though it might just cost a zillion dollars a year for premiums.

In California, pre-ACA, the high risk pool qualifications were that health care customers had to be without insurance for 6 months to qualify and then there was a long waiting list to get in and limited coverage. So they weren't really a viable option for anyone who had other choices or assets to protect.

 

[bamsphd]

As I understand it, from the employer's perspective there are age rating differences in premiums. I know that is true in the small group market. Many large companies "self insure" only hiring insurance companies to "administer" their plans, in which case age rating is a mute point. However, at least for COBRA everyone gets the same price regardless of age, which is why COBRA tends to be a great deal for older individuals and a horrible deal for the young.

While 3:1 was the old ACA federal default age rating ratio, and the current bill proposes 5:1 as the new default, states can override that. New York and Vermont use a 1:1 ratio in both the individual and small group markets.

States also vary in the maximum tobacco rating ratio. Not every state follows the ACA's 1.5:1 maximum tobacco rating ratio. (I don't think the current bill tweaks that.)

Note that these are all maximum's. I know of at least one insurance company in Maine that does not charge extra for tobacco usage. I also believe there is no legislative requirement for an insurance company to charge older individuals more when setting their premiums. Though obviously if one company didn't age rate while all the others did, that company would become a very expensive option for young people who could presumably get a better deal from companies which do age rate.

Here is a link for more details on State Specific Rating Variations.

While I have enjoyed the ACA's 3:1 ratio and would now obviously love a uniform 1:1 rating for all health insurance, I also remember when I paid $25/month ($74/month in 2017 dollars) for health insurance as a young man, back when women paid more, underwriting controlled if you could get insurance, and pre-existing conditions were not covered.

My current thinking is that having no age ratio limits is probably reasonable. I prefer the free market when possible. However, assistance for those who have difficulty affording insurance must take differences in premiums into account. The current bill doubles the credit, but premiums can be five times as great, that combination seems problematic. However, from a CBO headlines perspective it makes total sense. It is cheaper to cover young people than to cover old people, but the CBO headlines will simply be about how many people are covered. If you gain two young adults at the cost of one old adult the coverage numbers have gone up. Despite hurting my personal situation, I'm not sure that is a bad thing.

I was shocked to learn Nearly Half Of U.S. Births Are Covered By Medicaid. However, I definitely want society to insure children (and fetuses) have health care coverage before they are old enough to work. While I'm not certain we should also choose between having society cover 20 somethings versus 50 somethings, if we have to choose covering the 20 somethings may be the wiser choice over the long-term.