When President Obama pitched the idea of healthcare reform back in 2009, his greatest selling point was that it would make health insurance more affordable – in fact, he went so far as to actually name the act “Affordable Care Act.” Now, four years after his pitch, and a little more than three years after the Affordable Care Act was signed into law, it’s beginning to appear as if health insurance will be anything but affordable come 2014. Before our very eyes, premiums are showing signs of increasing dramatically – in fact, let’s take California’s early start, for example:
Named “Covered California,” the California Obamacare Exchange released rates that insurance companies bid to sell the required insurance on the Obamacare Exchange. While California Bureaucrats are trying to sugarcoat the rate increases by stating, “The rates submitted to Covered California for the 2014 individual market ranged from 2% above to 29% below the 2013 average premium small employer plans in California’s most populous regions” (Get it? They’re comparing individual premiums with SMALL EMPLOYER PLANS.), when you sift through all the desperate attempts to hide the facts, you will see what they’re actually saying. And what they’re actually saying isn’t so easy to hear.
It took Manhattan Institute’s and Forbes contributor, Avik Roy, to uncover the real story. Here’s what he had to say: “For the typical 25-year-old male, non-smoking Californian, Obamacare will drive premiums up by between 100 and 123 percent. For a 40-year-old male non-smoker, Obamacare will increase individual market premiums by an average of 116 percent. For both 25-40-year-olds, Californians under Obamacare will see their insurance premiums double.” According to another Forbes contributor, Peter Ferrara, that is just a conservative understatement of his results.
And California won’t be the only one suffering. A recent report by the Society of Actuaries showed that individual healthcare rates are expected to go up an average of $1200 a year. The rates are estimated to rise in all but five states. In Ohio and Wisconsin, the rates are expected to jump a whopping 80% (at the very least)! What’s worse is, the young and the healthy will be the ones to see the biggest jump in their premiums. But this is fair – right? – because they will be offered a far richer set of benefits. And this shouldn’t come as a shock – right? – because this is what people were told to expect. Right?
According to Ezra Klein of the Washington Post, this was all a part of the debate that took place back in 2009 – that higher rates for the young and healthy are perfectly justifiable because now, we’re protecting the sick. If you’re as baffled as we are by his claim that this was all a part of the debate for Obamacare four years ago, just wait: Klein went on to say that the CBO (Congressional Budget Office), said, “Well, the average premiums are going to go up a bunch.” And, in response to this, Klein claims to have said, “[Well], average premiums are going to go up, but that’s because people are going to have to start buying better healthcare…because now they can afford it.” Klein finished by saying that “Far higher rates for younger, healthier individuals were to be expected…We talked about it.” Hmm, maybe Klein and his colleagues talked about it amongst themselves, but the President and his administration – the group of people who should have talked about it, WITH THE PUBLIC – sure didn’t talk about it. In fact, Obama and his administration led everyone to believe that with this new “Affordable” Care Act, insurance premiums would drop.
A glimpse into the past…
Back in 2009, when Obama was touting the benefits of the Affordable Care Act, he made statements such as “If you already have health insurance, the only thing that will change for you under this plan is the amount of money you will spend on premiums. That will be less,” and “we end up saving $2 trillion…a lot of those savings can go back into the pockets of American consumers in the form of lower premiums. That’s what we are driving for.” From the year 2008 and onward, Obama has been promising Americans not higher premiums, but better coverage, but lower premiums, period.
Many of you might be thinking, “Well, that was before the law was drafted – he couldn’t have known better.” So, for arguments sake, let’s flash-forward, to November of 2009, when the law had been drafted. The White House blog post that month stated that the Affordable Care Act “would save individuals anywhere from $500 to $3000 a year, and families even more. [And those savings would] come in addition to the more generous benefits consumers would receive by purchasing insurance through the newly created exchange [—as well as] in addition to increased protections [for individuals with preexisting conditions].” Nowhere in there did Obama or his administration state that premiums would go up – and again, this was after the law had been drafted.
When somewhere in the CBO’s report, it did happen to mention a rise in premiums (“Where the CBO does see premiums rising, it’s not because Americans are paying more for the same coverage – it’s that they’re making a choice to purchase better plans that weren’t previously available to them…”), Klein responded with, “Average premiums are expected to rise 10-12 percent,” and then went on to explain that this is because people will be receiving 30 percent better coverage than they’re receiving now. “It’s a steal,” he went so far to say.
But, as California’s 100 percent hikes indicate – and as the inevitable premium hikes in 2014 prove – it is becoming increasingly clear that Obama’s “Affordable Care Act” is far from what it’s name suggests, and that, unfortunately, we were duped. So, now what do we do?
Health Savings Accounts: An Affordable Alternative?
During the (numerous) debates over Obamacare, many experts feared that its enactment would destroy the Health Savings Accounts – taxed-advantage savings accounts used for medical expenses – but surprisingly, just the opposite is true. Because HSA’s combine tax-advantaged savings accounts with low cost healthcare insurance policies – because policyholders are able to utilize money in the savings account to cover a substantial portion of their day-to-day expenses (doctor visits, prescriptions, etc.) – because their insurance policy kicks in once their deductible is reached – and most importantly, because money not spent in a calendar year is still available the next year and only grows over time, HSA’s will be the most affordable option in the “Affordable” Care Act.
The benefits of an HSA don’t stop there – there are long-term benefits as well. While HSA deposits reduce your taxable income for the year they are deposited—they also grow tax-free. Unlike 401(k)’s and IRAs, HSAs are not taxed, even in retirement, as long as they are used to pay for qualified medical expenses. And, best of all, after age 65, if you have saved more than you need for retirement medical expenses, money from your HSAs can be taxed at the retirement tax rate for any purpose, without penalty. Not only are HSA’s a great option for your current healthcare predicaments, but they address your retirement concerns as well.
However, at HSA for America, we understand that finding the right coverage for you and your family is easier said than done, which is why I’ve made it my mission to remove the complexity of the entire healthcare machine so that you don’t have to worry about it. Without any additional cost to you, we will find and produce all of the resources necessary for you to get the best coverage, save money on your medical expenses, find those tax breaks that come with HSA’s and in general, help you make the smartest healthcare decisions for you and your family.
If you are worried what 2014 will bring for you and your family, and if you just want to find the best coverage at the best rate possible, contact us at 866-749-2039 or visit us online. We’re HSA for America, and we’re on your side.
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.