December 27, 2013

Is the Affordable Care Act Affordable? – Part 2

Mary MahoneyBY Mary Mahoney

J. Robinson Group Blog

Providing comprehensive coverage was an original objective of the Affordable Care Act. The law sought to reduce the more than 60 percent of personal bankruptcies attributed to medical care.

When insurance plans developed for the Affordable Care Act were unveiled, some people (and their political representatives) expressed outrage, saying they were being forced to drop their lower-cost plans. The fact is, many of those lower-cost plans would not cover hospital stays or a major medical crisis and would expose policyholders to considerable out-of-pocket expenses.

Asked about those cases earlier in the year, White House Press Secretary Jay Carney repeated President Obama’s pledge, that the health-care law “would raise the bar on insurance plans.” Some existing plans simply would not meet minimum standards, as defined by a document entitled “10 essential benefits every plan has to provide.”

Then, on the last day of October, President Obama changed his position, announcing that people could retain substandard plans. An estimated 2 million holders of such plans would be affected. The administration made yet another last-minute policy shift in December, deciding that people whose policies had been cancelled could chose not to purchase insurance for 2014.

Gary Cohen, an official with the Center for Consumer Information and Insurance Oversight, said health insurance policies purchased under Obamacare  “will actually cover”” enrollees, unlike the substandard plans. “There have been a lot of products on the market where people thought they had insurance, but then it didn’t cover hospitals, for example.”

Providing comprehensive coverage was an original objective of the Affordable Care Act. The law sought to reduce the more than 60 percent of personal bankruptcies attributed to medical care.

Elizabeth Benjamin, vice president for health initiatives at the Community Service Society of New York, concluded that Obamacare plans provide consumers with “a good deal.” The society, which operates a telephone hot line to help patients troubleshoot medical bills, discovered that 45 percent of callers were uninsured.

Under Obamacare, “there are high co-pays, but there’s also a cap,” Benjamin said. “We now have people come to us owing $50,000 or $150,000. So if the worst-case scenario is you pay $5,500, you won’t go bankrupt over that,” as noted in the New York Times article, “Affordable Care or a Rip-Off?”

Still, there is the question of how to choose the right plan from the federal government’s website, healthcare.gov. A New York Times article entitled, “Navigating a Transformed Insurance Marketplace,” gives advice for “factoring in free services and calculate your risks.” The Affordable Care Act requires most plans to provide free coverage for preventive services like physicals, mammograms and immunizations.“ Those preventive services could save the typical family of four several hundred dollars, said Bonnie Braun, a family economist at the University of Maryland.

Consider your family’s needs when choosing a plan. If your children are accident-prone or get sick often, you will pay more out-of-pocket with a high-deductible plan. The article cited Sarah Schut, who is in her mid-40s, with five children. Her husband is self-employed, and she’s about to leave her job to start a financial planning business. She is leaning toward a silver plan, which covers 70 percent of expenses under the new law’s formula. Ms. Schut said she had no problems with co-pays and deductibles, as long as illnesses or accidents are covered.

Acceptance, understanding and smooth sailing for Obamacare will not happen overnight. Forbe’s article, “4 Ways New Exchanges Will Radically Alter Health Insurance,” sums up an optimistic forecast for health-care reform:

“Expect Jan. 1 to be only the beginning of industrywide transformation. It will take time for every state to work through the operational and technical challenges associated with the exchanges. But once in place, this Expedia-like service will be the preferred route for individuals and small businesses. And we can expect that – similar to travel, retail and finance – once Americans go down this path, they won’t want to go back.”

December 2, 2013

Is the Affordable Care Act Affordable? – Part 1

Mary MahoneyBY Mary Mahoney

J. Robinson Group Blog

Just before the Oct. 1 rollout of the national Health Insurance Marketplace and its website, healthcare.gov, the White House eagerly announced that health-care premiums would be “lower than expected.” However, that news got lost when the website and enrollment process were overwhelmed with technical problems. Because the premise of the Patient Protection and Affordable Care Act is to provide affordable, quality health care for all Americans, it’s important examine what the White House and others are saying is affordable.

According to the report, the average nationwide price of basic health insurance coverage will be $249 a month, excluding tax credits. “For millions of Americans, these new options will finally make health insurance work within their budget,” said Kathleen Sebelius, U.S. Health and Human Services secretary.

Many factors play into how much health insurance will cost, including age, family size, tobacco use, income and geographic location – with significant variation among cities and states. In a Huffington Post article, ”Obamacare Premiums Report Show Low Prices for Uninsured with Wide Variation,” it was reported that the average price of the cheapest plan in Minnesota is $144 while in Wyoming, comparable coverage costs $425 on average, not including subsidies.

Another major factor is the type of coverage you choose. Becoming known as “metal plans,” packaged health insurance comes in gold, silver or bronze levels with a variety of options within each category. In general, lower-end, or bronze plans, will have lower monthly premiums but higher out-of-pocket costs while higher-end, or gold, plans will have higher premiums and less out-of-pocket expense.

According to a New York Times article, “Affordable Care or a Rip-Off?,” the monthly premium for a “low-end silver plan for a 40-year-old runs about $300 in many places, but as high as nearly $700 in parts of New York.” And, monthly premiums are more than $600 for 60-year-olds in some states.

On the other end comes this statistic, “nearly half of single, uninsured Americans between the ages of 18 and 34 can get coverage for $50 or less, often lower than the cost of their cable bill,” according a Whitehouse blog, “Why We Passed the Affordable Care Act in the First Place.”

More choices do not necessarily mean better prices according to the USA Today article, “Sticker Shock Hits Health Exchange Shoppers.” Bronze-level plans are the least expensive, but according to one unemployed health insurance shopper, “the deductibles are simply not affordable.”

Those seeking cheap premiums would really be in for sticker shock if they get sick. Noted in the Bloomberg article, “Obamacare Deductibles 25% Higher Make Cheap Rates a Risk,” “expenses for some policies can reach $6,350 for a single person and $12,700 per family,” the maximum allowed, according to a survey by HealthPocket Inc. “If you have to pay $5,000 up front” when illness hits, “you might as well not have any insurance at all,” says one consumer, shopping for coverage for a family of four.

When Washington’s DC Health Link insurance exchange began posting rates online, insurance carriers refiled lower premium rates, including United Health Care, which dropped almost 15 percent, according to a press release by the District of Columbia’s Department of Insurance, Securities and Banking.   Insurers “don’t have to and, in most cases, they won’t compete until you force them to,” says Mila Kofman, executive director of the exchange.

Bringing transparency to health-care services and costs and encouraging competition was part of the Obama administration’s plan for the Accountable Care Act. If we’ve learned anything to date in respect to the evolution of health-care reform, things can and will change – hopefully all in the name of quality, affordable health care for all Americans.

In my next blog, we’ll look at the plans within the Health Insurance Marketplace and how it’s benefitting Americans.

 

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