Obamacare

[Brat]

About 10 years ago I did an analysis of the health care plans offered through OPM. DH & I were in great health with only one generic prescription. I entered the premiums, copays, and deductibles for each. At the end of the year, with routine preventive care and no serious medical issues, they were a wash. Plans with large deductibles ($10,000+) were not offered.

Consider the fact that most American families don't have savings to cover a large deductible. Because they may see a large deductable plan as less expensive that will be their choice. They will skimp on preventative care and/or will be unable to cover the deductible in a medical emergency - cost shifting to other insured.

There are a lot of ways to save money in health care. For example walkers are a blessing for many but why do they need to be new? When someone doesn't need a walker any more why not make it available to others as no cost? It is a small thing, I know, but small expenses are cumulative. I couldn't give my Mother's walker away.

 

[mpeirce]

While I am certainly in agreement with you, My guess is it was not an oversight. Lower deductible premiums naturally result in higher premiums collected. You force the healthy people to pay for insurance they don't need, so to help pay for those who need to use it.

I don't think it was an oversight either. The people who authored the PPACA were the same folks who were fighting against HDHP/HSA's in the past.

 

[misanman]

The people who authored the PPACA

Hope this isn't too far off topic, but who did author PPACA? Despite the popular nickname, I'm guessing it wasn't the President, but I guess I could be wrong.

Just wondering.

 

[FinanceDude]

ETA: If it wasn't clear, let's keep election rhetoric out of the thread.

Well, your brought it up........ I believe the comments were "bending the cost curve down". Paul Ryan spoke at length and explained at the hearings on health care about how it would not work, according to the CBO. Losts of youtube videos, etc..........

 

[Mulligan]

About 10 years ago I did an analysis of the health care plans offered through OPM. DH & I were in great health with only one generic prescription. I entered the premiums, copays, and deductibles for each. At the end of the year, with routine preventive care and no serious medical issues, they were a wash. Plans with large deductibles ($10,000+) were not offered.

Consider the fact that most American families don't have savings to cover a large deductible. Because they may see a large deductable plan as less expensive that will be their choice. They will skimp on preventative care and/or will be unable to cover the deductible in a medical emergency - cost shifting to other insured.

There are a lot of ways to save money in health care. For example walkers are a blessing for many but why do they need to be new? When someone doesn't need a walker any more why not make it available to others as no cost? It is a small thing, I know, but small expenses are cumulative. I couldn't give my Mother's walker away.

This is what fascinates me about the discussion of health insurance. I am not questioning your math in any way, Brat, but for me my math didn't work that way. It seems like my costs are a far outlier, for which I don't understand as I am not getting any inside favors anywhere. When I retired, (and before Obamacare) I had a chance to stay on my group plan at about $500 a month, $1k deduct, with usual standard co pays. I instead went on an individual $5500 deductible, 0 copay after deductible. The premium started out at $73 over 3 years ago, and now is at $76. With my $3k HSA deduction, my insurance is essential "free". I have saved over $18k my doing this, but have a nice stash reserved now in my HSA. For me, the higher the deductible, the more the savings. I guess it comes down to how much preventive care and meds a person needs, which at this point I am fortunate I need neither.

 

[Texas Proud]

Well, I'm sure some people would think the govt is going too far in mandating seat belts which makes it illegal to manufacture a car w/o seat belts. But there is a clear, demonstrable benefit to a seat belt mandate, and (in theory at least), the public supports this through their elected officials.

I fail to see any clear, demonstrable benefit to declaring high-deductible policies to be 'non-conforming'. I'd be willing to keep $5,000 in escrow if that was required to purchase a $5,000 deductible policy (or some equivalent proof that one could cover the deductible) - I think something like that would be reasonable. I think this is an over-sight and should be corrected, the only other explanation I can think of is worse.

-ERD50

I guess that I missed it.... but is there a mandate that you can not have a $5K deductible


I was told from our insurance agent that the plan we have is compliant and it has a $5K in network deductible and a $15K out of network deductible... X3 for a family....

 

[bUU]

Well, I'm sure some people would think the govt is going too far in mandating seat belts which makes it illegal to manufacture a car w/o seat belts. But there is a clear, demonstrable benefit to a seat belt mandate, and (in theory at least), the public supports this through their elected officials.

So basically you, with regard to ACA, are like those folks who don't see the demonstrable benefits to a seat belt mandate.

I fail to see any clear, demonstrable benefit to declaring high-deductible policies to be 'non-conforming'.

The government isn't declaring high-deductible policies to be 'non-conforming'. They're declaring only excessively high-deductible policies to be 'non-conforming'. If there wasn't an upper limit, insurers would essentially bypass the ACA's mandate provision entirely by setting a $1M deductible per individual. It would be like the seat belt law exempting vehicles that cost less than $1M.

I'd be willing to keep $5,000 in escrow if that was required to purchase a $5,000 deductible policy (or some equivalent proof that one could cover the deductible)

I could endorse that as a friendly amendment to the ACA, but politically I think it is a non-starter because from the one side it makes ACA more acceptable, which they have a vested interest in obstructing, and from the other side it makes ACA more elitist, which they have a vested interest in opposing.

Are you really complaining about the difference between a $4,375 and $5,000 deductible?

 

[pb4uski]

Well, I'm sure some people would think the govt is going too far in mandating seat belts which makes it illegal to manufacture a car w/o seat belts. But there is a clear, demonstrable benefit to a seat belt mandate, and (in theory at least), the public supports this through their elected officials.

I fail to see any clear, demonstrable benefit to declaring high-deductible policies to be 'non-conforming'. I'd be willing to keep $5,000 in escrow if that was required to purchase a $5,000 deductible policy (or some equivalent proof that one could cover the deductible) - I think something like that would be reasonable. I think this is an over-sight and should be corrected, the only other explanation I can think of is worse.

-ERD50

I think it is a popular misconception that high deductible health insurance plans that are HSA compatible will go away under ObamaCare. Insurers in my state plan to offer HSA compatible plans and have proposed premiums for such plans that are ~20% more than what I pay now but ~15% less than my COBRA HDHI rates. Also see this recent Forbes article.

 

[bUU]

Hope this isn't too far off topic, but who did author PPACA? Despite the popular nickname, I'm guessing it wasn't the President, but I guess I could be wrong. Just wondering.

ACA is ostensibly a copy of Romneycare, implemented in Massachusetts in 2006. Of course, Mitt Romney didn't write the legislation, but rather only signed it. Like any legislation, it's generally useless to try to ascribe authorship: It's government by committee.

I guess that I missed it.... but is there a mandate that you can not have a $5K deductible

What I've overheard my spouse talking about is that the cap on the deductible is actually related to a cap on annual out-of-pocket potential. I think it's $6,750 or something like that. So the deductible would be set based on a formula working down from there, factoring in the impact of the co-payments. Regardless, the way I read ERD's message is that s/he would consider $5K "high".

 

[rbmrtn]

It seems like my costs are a far outlier, for which I don't understand as I am not getting any inside favors anywhere.

I've never been able to figure how you got a deal like that. I'm sure I would want to keep that as well. On the other side... I don't know anyone over 50 that has been able to even purchase an individual plan. I have no pre existings, don't take any meds and was rejected.

I don't know if it was a factor on HDHPs but it is because the average joe doesn't have the means to cover a deductible that high. We have threads here all the time about how little people have in savings... for some covering the deductible would lead to bankruptcy. Myself, I would prefer a HDHP and pay for what little I use myself and not deal with the insurance unless something catastrophic happened.

 

[Mulligan]

I've never been able to figure how you got a deal like that. I'm sure I would want to keep that as well. On the other side... I don't know anyone over 50 that has been able to even purchase an individual plan. I have no pre existings, don't take any meds and was rejected.

I don't know if it was a factor on HDHPs but it is because the average joe doesn't have the means to cover a deductible that high. We have threads here all the time about how little people have in savings... for some covering the deductible would lead to bankruptcy. Myself, I would prefer a HDHP and pay for what little I use myself and not deal with the insurance unless something catastrophic happened.

Wow, that is incredible. Did they give you a reason for rejection? That would infuriate me if I were you. I had 3 retiree friends over 50 joined my plan when they retired and had no problems being accepted, all at the rate quoted online. I have certainly received an education on this forum concerning the other side of the coin, so to speak. My experience has only been cheap insurance, and minimal health costs. I went and did my annual bloodwork physical three years late last week. Might as well waited another year as it was the same as then, and could have saved me a $100 waiting another year. I really only went because I don't want my doctor to drop me, as I here some do that now if you do not go, regularly.

 

[ERD50]

So basically you, with regard to ACA, are like those folks who don't see the demonstrable benefits to a seat belt mandate.

No, I'm only addressing this specific issue (as I understand it) of high-deductible policies being non-conforming.

The government isn't declaring high-deductible policies to be 'non-conforming'. They're declaring only excessively high-deductible policies to be 'non-conforming'. ....
Are you really complaining about the difference between a $4,375 and $5,000 deductible?

What is 'excessively high'? Where does the $4,375 number come from? I don't know, and don't know where to go to find out - heck, many of these provisions seem to be still TDB by HSS. I was going off general comments I've heard that these high-deductible polices are considered 'non-conforming', so please enlighten me if this is not the case. It's hard to follow when some people insist on making distinctions between 'not allowed' and 'illegal'.

-ERD50

 

[travelover]

Wow, that is incredible. Did they give you a reason for rejection? That would infuriate me if I were you. I had 3 retiree friends over 50 joined my plan when they retired and had no problems being accepted, all at the rate quoted online. ......

Puzzling. Does this plan have a low maximum payout? Gotta be something.

 

[MichaelB]

HSA and other high deductible policies are included in the PPACA. This has been confirmed here and elsewhere.

Has Mulligan's health care policy been cancelled? All I recall was a concern on his part that it might not be renewed. How that led to a discussion on the reasons for the cancellation is a mystery.

 

[ERD50]

... If there wasn't an upper limit, insurers would essentially bypass the ACA's mandate provision entirely by setting a $1M deductible per individual. It would be like the seat belt law exempting vehicles that cost less than $1M.

I don't this 'logic' holds.

Let's take car ins for example. The ins company plans to make the same overall profit whether I have a $250 deductible or a $5,000 deductible. They take in less with the HD, but they pay out less on average, and have lower admin costs with fewer small claims. If one can afford it, HD makes sense.

So setting $1M deductible for HC (for people who can really pay the $1M out-of-pocket) wouldn't 'hurt' the sysem - it would be less in but less out also.

We can use that 'grocery store insurance' analogy - imagine $0 deductible 'grocery store insurance'. You go to the store, and don't learn the costs until you get your EOB a month later. But your insurance 'pays for it', so you take what you want. But then the ins co will need to charge accordingly on average, plus admin costs. Low deductibles do nothing but raise costs (again, assuming you can handle the deductible).

-ERD50

 

[meierlde]

Actually the lower limits are a movement to what is the desired goal, a single payer health care system where all health care is covered. As noted this helps the majority of folks who would be close to BK with a high deductable plan. (But then a question to ask is what level of deductable do they carry on auto and home policies.) The plan is designed to benefit the greatest number, so some will naturally loose. All be it the plan does not cover the objections cited in seeking sickness which points out a lot of screening is really useless and likley harmful, just like they finally determined with PSA tests, the cure is worse than the possible disease. The book points out that full body cat scans often find things not normal, but then they have to investigate, even if the thing is giving no trouble, in terms of the precautionary principal run amok.

 

[mpeirce]

I've never been able to figure how you got a deal like that. I'm sure I would want to keep that as well. On the other side... I don't know anyone over 50 that has been able to even purchase an individual plan. I have no pre existings, don't take any meds and was rejected.

Maybe it's your state or you circle of friends, but when I FIREd a couple of years ago, me (49 at the time) and my wife (58 at the time) had no problem getting (what we considered) a reasonable priced policy in Ohio. Yes, it was a HDHP/HSA plan, but that's what we had before I retired from the mothership and it worked well for us.

 

[MichaelB]

Puzzling. Does this plan have a low maximum payout? Gotta be something.

There is no doubt the coverage is limited in some way.

 

[Mulligan]

Puzzling. Does this plan have a low maximum payout? Gotta be something.

No, these were all standard individual plans at the time. $5500 deductible, zero co-pay, with $7 million dollar limit on policy.

 

[bUU]

What is 'excessively high'?

Like I said, there needs to be a line drawn, otherwise people will simply bypass ACA by having $1M deductibles.

Where does the $4,375 number come from?

From the samples provided in a lot of the literature. Like I said, it's the result of a computation which is actually based on the annual out-of-pocket maximum, which is around $6,750 for an individual IIRC.

I don't know, and don't know where to go to find out - heck, many of these provisions seem to be still TDB by HSS.

What is TDB is the educational materials. (I have some personal, second-hand knowledge about that, including how cost-cutting has contributed to delays and other compromises with regard to the quality of helping the public understand the new provisions.) The actual provisions of the law are not changing.

I was going off general comments I've heard that these high-deductible polices are considered 'non-conforming', so please enlighten me if this is not the case.

A HDHP with a $10k deductible for an individual is indeed non-conforming. But there will be options with deductibles in the $4k-$5k range.

If there wasn't an upper limit, insurers would essentially bypass the ACA's mandate provision entirely by setting a $1M deductible per individual. It would be like the seat belt law exempting vehicles that cost less than $1M.

I don't this 'logic' holds.

What logic are you referring to? The analogy? Well if we cannot agree about something that is so close an analog (something you buy which is limited based on an outrageously high dollar amount) then I don't know if there is really any way to constructively discuss the matter.

So setting $1M deductible for HC (for people who can really pay the $1M out-of-pocket) wouldn't 'hurt' the sysem

You mean it wouldn't hurt the insurance company. It does hurt the system.

 

[Mulligan]

Maybe it's your state or you circle of friends, but when I FIREd a couple of years ago, me (49 at the time) and my wife (58 at the time) had no problem getting (what we considered) a reasonable priced policy in Ohio. Yes, it was a HDHP/HSA plan, but that's what we had before I retired from the mothership and it worked well for us.

MPeirce, if you still have this policy, you could possibly be in the cross hairs of a big premium increase. The only people who I have ever read on this forum besides me have come from Ohio who have reasonable rates. And all of the potential "rate shock" stories cite Ohio individual participants facing upwards of 80% increase for certain people. I have not heard anything about my home state of Mo yet, but I assume to be in a position that would mirror that possibility. Whether it comes to fruition, I certainly don't know, but it concerns me. I have learned a lot about the individual insurance market and it's good and bad. Currently a very odd system, when you get into it. There are probably way more participants using it on this forum, than the country as a whole.

 

[mpeirce]

MPeirce, if you still have this policy, you could possibly be in the cross hairs of a big premium increase.

We still have it. We're practicing watchful waiting to see what happens going forward.

The one change they made late last year that caught our attention was that we can no longer pay a year of premiums at once. Kind of annoying. We figure it's because they intend to make big changes to the policy mid-year - it's one of those policies that is now out of favor since it has a large deductible. But that's pure speculation on our part.

 

[Texas Proud]

From the samples provided in a lot of the literature. Like I said, it's the result of a computation which is actually based on the annual out-of-pocket maximum, which is around $6,750 for an individual IIRC.

Then I guess that what the insurance company told us was wrong... I just looked and my policy has a max out of pocket of $7,500 per individual and $15K per family.

Also, the copays do not apply toward the deductible or max out of pocket... so, if you have to keep going back to the doc for whatever reason, that does not count.... IOW, you keep paying the $50 copay (or $75 to a specialist).... that can add up when you have to do 3 or 4 trips to get everything done...


Time will tell on what will happen... I can always pay a few hundred dollars more per month to get the $5K deductible with 100% insured after that.... but I thought it was a waste of money.... so far I have been proven correct....

 

[marko]

Overall, with only seven (7) months left before implementation and (I think) only 5 months before starting a rollout, it sure sounds like there's not a lot of firm information floating around.

This is a remarkably knowledgeable forum. If the folks here are confused........

I'm getting myself a helmet and a seat belt for December!...could be quite a ride!

 

[Mulligan]

Then I guess that what the insurance company told us was wrong... I just looked and my policy has a max out of pocket of $7,500 per individual and $15K per family.

Also, the copays do not apply toward the deductible or max out of pocket... so, if you have to keep going back to the doc for whatever reason, that does not count.... IOW, you keep paying the $50 copay (or $75 to a specialist).... that can add up when you have to do 3 or 4 trips to get everything done...

Time will tell on what will happen... I can always pay a few hundred dollars more per month to get the $5K deductible with 100% insured after that.... but I thought it was a waste of money.... so far I have been proven correct....

I believe bUU to be in the ball park. One thing that disappointed me is I believe they have not allowed your HSA contributions to count toward meeting that coverage amount which would have been a huge plus for some policies to reach accepted coverage. Someone please correct me about this if I am wrong, but Texas if you are on an individual plan now, it is too late to jump ship to the $5k deductible. Yes, you could do it for the rest of the year, but then you would definitely be in the exchange next year. You have to have been signed up for a plan back in 2010, to have any chance of maintaining grandfathered status.
Take some solace in knowing Texas is an second lower tier of states expecting possible significant rate increase... I found mine today, and I am in with the group expected to get hit the hardest.

We compared the average premiums in states that already have ObamaCare-like provisions in their laws and found that consumers in New Jersey, New York and Vermont already pay well over twice what citizens in many other states pay. Consumers in Maine and Massachusetts aren't far behind. Those states will likely see a small increase.

By contrast, Arizona, Arkansas, Georgia, Idaho, Iowa, Kentucky, Missouri, Ohio, Oklahoma, Tennessee, Utah, Wyoming and Virginia will likely see the largest increases—somewhere between 65% and 100%. Another 18 states, including Texas and Michigan, could see their rates rise between 35% and 65%.

http://online.wsj.com/article/SB10001424127887323936804578227890968100984.html