December 27, 2013
Is the Affordable Care Act Affordable? – Part 2
BY Mary Mahoney
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.”
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.”