I recently received the following comment on the HSA for America blog regarding how the Affordable Care Act (or Obamacare) is really measuring up now that the open enrollment period has begun. I want to thank our reader for taking the time to comment and open up a dialogue regarding the ACA and its effect on the American public.
“Instead of just slamming Obamacare, it would be helpful for you to post examples of premium costs under old and new plans. I am sure the computer glitches will be worked out at some point but until they are, I am not going to waste time trying to apply. However, my initial research indicates that our premium will be significantly lower under a new gold plan compared to what we pay now.”—Sandy Boothe
Are Premiums Under the ACA Really That High?
First and foremost, let me say that part of me really wanted to like the Affordable Care Act. I believe in the idea of everyone in the country having access to affordable health insurance, and the promise was that this would do just that. However, things that sounds fine in theory are often not a good idea in reality. The Affordable Care Act is one of those instances where the end result is so far from the concept that it doesn’t even appear to be the same idea anymore. The mere fact that in most areas of the nation the Affordable Care Act is far from affordable makes it seem laughable, although it truly is not a laughing matter.
Your comment about rates is a legitimate one, Sandy, and I am glad you brought it up. I am equally glad to find that the Health Care Reform Laws may not affect you as much as they do the majority of other Americans. If the process worked as well for everyone, I might be much more supportive of the Health Care Reform laws. However, looking at what little data has been made available, it appears that your situation is far from the norm. As a general rule, people are paying a great deal more for insurance than they were prior to the ACA going into effect.
In a Word…YES!
We did a review just a couple days ago with one of our clients, looking at their current coverage, and what plans would be available to them starting next year. This person has a grandfathered plan, so is allowed to keep his coverage if he wants. Lucky for him.
The rates for the Bronze Level plan for this man and his family were more than double what he is now paying. In fact, his premiums increase by a whopping 114 percent. Not only was the price much higher, but the coverage was not comparable to the coverage he currently had. His deductible was higher, the percentage the insurance company paid was lower and the amount of hospital services covered was less. Yes, he could purchase a higher level of coverage that would be more in keeping with his previous plan, but his premium would increase by even more.
How Pre-ACA Compared to Post-ACA Plans
It would be extremely helpful for everyone if I could simply give you the rate for a plan both before and after the ACA implementation so that you could compare the two. However, too many things go into factoring the premium to be able to tell you exactly what the premium difference would be. For one thing, the plans available post-ACA are not the same as plans that were in force prior to the ACA, therefore there is no way to compare them exactly.
Factors that affect your premium include your age and sex, whether or not you are a smoker, and your zip code. All policies under the Health Care Reform laws are guaranteed issue policies, which means you cannot be denied coverage for a pre-existing health condition.
Here are some specific examples of how new rates compare to existing rates:
• In New Mexico, a 27 year old woman will face a rate increase of 132 percent, with her pre-ACA plan costing $74 and her post-ACA rate costing $172. A 40 year old woman will see the least increase, with her premium raising a mere 86 percent, from $113 to $210. A 64 year old woman in New Mexico has the highest increase at 160 percent, with her pre-ACA rate at $190 and her post-ACA rate at $494.
• In South Dakota, a male aged 27 will see a premium increase of 147%, with the cheapest pre-ACA plan costing $94 and a post-ACA plan costing $232. At age 40, his premium increase is only 90 percent, from $149 to $283. Last, a 64 year old male will have the lowest increase at 74 percent, with his pre-ACA premium at $383 and his post-ACA premium at $665.
• Conversely, Colorado has a premium decrease of between 33 and 36 percent for both women and men in the same age brackets as the above examples of premium increases, due to one low-priced carrier.
There are some states, such as New York, that were highly regulated prior to this law being passed, and that are actually seeing rate decreases. But unless you qualify for subsidies, it looks like most people will be seeing rate increases from 40 to 100 percent. Younger people are usually looking at larger increases than that.
Facts about the ACA
Here are a few things we know right now about the Affordable Care Act.
• Many people, especially those who will not qualify for any subsidies or tax credits, will find it less expensive to pay the penalty for not having health insurance rather than purchase the insurance itself.
• In many, many cases, the subsidies are not enough to offset the cost of the insurance plan.
• In order to compare plans as closely as possible, you need to figure out the rate itself without the subsidy. Some misleading premium amounts are being bandied about and pre-ACA rates are being compared with post-ACA rates, but the data can be easily skewed if the premium subsidies are figured in to the supposedly lower rate.
• The lowest level of coverage–the Bronze level—has shown average rate increases of over 100%.. For Silver and Gold level plans, this increase is going to be much greater.
There are definitely cases where people are seeing premiums go down, but that is the exception. Those who qualify for larger subsidies will also see their premiums drop. For your sake, I am glad that the ACA has improved your insurance situation.
Wiley Long is President of HSA for America, and a passionate advocate for consumer-based solutions that will improve price transparency and lower health insurance and medical costs for people purchasing individual and family health insurance plans.