Will health insurance cost less under the ACA?

I have read the Wiki article on the ACA several times and I confess that it remains a mystery to me.  By my own rules I should be silent about this law until I understand it, but I will not be silent. 

Certainly more people will be insured under an expanded Medicaid program for the poor and working poor.  That is a good thing but it will be entirely an expense and without balancing revenue other than projected reductions in the growth of Medicare for the bourgeoisie.  Those reductions explain much of the hostility toward the ACA among the Middle Class.

People who make more money than those eligible for Medicaid will be required to buy or continue to buy health insurance.  If they do not they will be subject to fines (taxes in John Roberts opinion).  these fines will grow each year until they are really painful.  Many people so affected  have long held health insurance.  Many of these are now being told by insurance companies that their existing policies do not meet standards set in the ACA and will be cancelled.  At the same time these insurance companies are offering these people policies that meet ACA standards but are much more expensive.

An example.  A man who lives in Rappahannock County runs a landscaping company.  His brother works for him.  He has a wife and two high school age sons.  He is not a wealthy man.  He does work for us at our house in Alexandria.  He told me the other day that his presently held insurance costs him $500/month for family coverage.  His insurance is being cancelled for the reason given above and he is offered an ACA fiendly policy that would cost him $1200/month.  Would he be eligible for a federal subsidy?  I don't know but I doubt it.

Perhaps there are other people who will be offered cheaper health insurance without subsidies.

I don't know.  Inform me.  pl

 

http://en.wikipedia.org/wiki/Patient_Protection_and_Affordable_Care_Act#Public_policy

Comments

[kao_hsien_chih]

I've found the coverage of how the costs of insurance would be affected by ACA to be quite dishonest, misleading, and incomplete on both sides. At least among those whom I know, I've come across both cases: some, like the gentleman you mentioned, are seeing an increase in costs; others are seeing a decrease. While the details remain as unclear and mysterious to me as to anyone else, the basic logic behind the scheme would suggest that those who were previously enjoying relatively inexpensive insurance will see their premiums rise and those who had very expensive insurance (if they were offered any) would see their premiums fall, as the scheme is based on, essentially, those with the lower risk subsidizing those facing higher risk. The increases and decreases must necessarily balance out, as the law has little or no provisions for controlling the costs, either directly (via increase in premiums) or indirectly (via gov't subsidies--and whatever revenues needed to finance these subsidies). Accounting for mandated increases in coverage (and basic financial inefficiencies), it is inevitable that, on average, there will be an appreciable increase in health insurance costs.

[Fred]

This gentleman has a $6,000 a year plan offered by this insurance company, which now conveniently has a $14,000 plan as a replacement - which meets the new Obama standard, unlike the previously adequate one? That sounds very similar to stories in Michigan. One of the firms I deal with in Kentucky dropped its employee medical coverage and is telling their employees to buy their own. The $500 or so annual increase in pay sure wont' make up for the cost. I can't wait to see the class action lawsuits being filed against these insurance companies for fraud - i.e. failing to provide adequate coverage previously. Perhaps a few state attorney generals will get into the act. (Not to include Maryland's AG, who's got deep trouble of his own).

[William R. Cumming]

Probably not but more would have insurance! There was no way to make insurance cheaper and broaden coverages for those 55 million without insurance or pre-existing conditions.

A single payer system would have been a better choice but was lobbyied against by many! IMO over $500M spent on a largel

[eakens]

All you need to know was that the day the law passed, the stocks of the health insurance companies in this country rose handsomely.

The reality is that our government is wildly inefficient. Paying $600M to create a piece of crap website which in Silicon Valley could have probably been done for $10-20M (if that) is an example of this.

Further confusing and burdening the system is 36 state exchanges.

We're screwed.

[Charlie]

A couple of things:

Medicaid expansion will largely be paid for

Yes, if you make more than the subsidy min and buy your own insurance the price is going up

Finally the subsidy is as part of your tax, so the 1200 monthly insurance (but only 50 on subsidy) means you pay 1200 a month cash

[b]

The fact that the ACA was conceived at the Heritage Foundation and promoted by Romney explains all that is wrong with it.

A single payer system or the Swiss or German system would give much better healthcare for all and at less than half of the total costs.

Obama and most Democrats in Congress did not want that.

[steve g]

IMO this could possibly be the beginning of
means testing to all government health programs
to a greater degree than is applied now. The
example cited could be a case in point. I had
to cancel insurance for me, but not my wife,
because we could not afford 650 a month with a
5000 deductible. Depending on age and deductible
500 a month for 4 is relativing inexpensive. Could
we also move to a sliding scale for general health
practices as a factor. A former co-worker had a
history of heart problems. He had quadruple by-
pass at 39. He did not change his life style.
Overweight, smoking, poor eating habits and lack of
exercise he has had 2 subsequent stent surgeries and
is now 63. His insurance has not really gone up the
way a car insurance policy might have if he had
multiple DWI, speeding and other moving violations.
The healthy have subsidized him. The VA means tests
all veterans for Non Service Connected (NSC) treatments.
When I signed the papers in 67 lifetime FREE benefits
was in the contract. This was modified under Reagan.
Everyone has to fill out a form yearly or they charge you
depending on procedures. I dont have a problem with
this. Why not across the board instead of one size
fits all?

[different clue]

And those costs are targetted to guaranteeing and increasing the profit made by private insurance
companies who are the designated recipients of all those premium streams under the Forced Mandate.

[different clue]

There are two blogs which have spent the last few years examining and criticising the ACA in great detail. They are The Confluence by Riverdaughter and Naked Capitalism
by Yves Smith and several co-posters.

[Jose]

Centralized planning rarely works in a country as large and diverse as the United States. A single player system would never work, because Dems and Reps enjoy the many special favors they can do in exchange for political donations. RomneyCare works on Mass only because the people support it, this is what is going to cause ObamaCare to fail.

Correct me if I am wrong, but subsidies are only provided if you make less than $22.000 per year. Making more than that amount, requires that you subsidize those making less by paying more and getting less benefits higher deductibles, more personal liablity, etc.).

BTW, I saw the web broadcast of the Virginia governors race and if McAuliffe wins change your state name to South Maryland.

[Don Bacon]

Nobody knows anything abut ACA cost except that there are no ACA cost controls on a medical system which is already characterized by exhorbitent costs, at least double any other world system.

The ACA perpetrators contend that costs will become lower because in a free market system when more buyers demand the same products the price will go down. Oooops.

[Jose]

Forgot to add this useful calculator since ObmaCare does not work:

http://kff.org/interactive/subsidy-calculator/

[VietnamVet]

Colonel,

We are talking about taxes, user fees, or insurance. Up until the Reagan Revolution, business was taxed and prodded to pay a portion of health insurance as an offshoot of wage control during WWII. Now that the Elite have seized control of government, worker income is decreasing and benefits are being cut. Apple and GE do not pay any corporate income taxes.

This places the bloated US health industry in a difficult position. Its patients cannot afford it. DC in its wisdom decided to force American citizens to pay for insurance they cannot afford. The only alternative to health care for the few who can pay cash for it is to cut hospital costs and tax the wealthy and corporations to maintain the US public health.

This requires Medicare for all.

[ISL]

I had an insurance broker create a health care plan for my company that outmatches the one I had before and well exceeds ACA. Previously, I had an employer offered plan where it was cheaper for me to pay the doctor in cash than pay the deductible - which made me question the point of paying for a good insurance - e.g., deductible and co-pay would be around $350 on a MRI, but if I paid in cash right away the doctor would accept $300 rather than argue for 6 months with the insurance company for $2000 to cover the costs of him employee who's job it was to argue with the insurance company. As I understand it, ACA has just made things immeasurably more complex, which is not going to lower overall costs.

In any case, when we have talked about ACA, and it is his business, he has told me that he has no idea how it will actually work as underlying it is hundreds of pages of special interest influenced language, with the devil in the details. Co-insurance is one of the new buga-boos. Co-insurance seems one of the new "offers" that will cause the newly insured to be unable to use their insurance as the co-insurance fees will be too high. I expect ay such horror stories to arise - whether they get coverage obviously depends on the political winds.

[SAC Brat]

I can attest that Yves Smith's site has tried to provide as much details as possible. It is tough to parse the facts from all the pro and con nonsense from other sources. No one outside the blogs wants to talk about the roots of the ACA, and I find it strange that it appears forbidden for the mainstream media to compare/contrast it with Romneycare.

Having traveled outside the US and having had to pay cash to cover a relative's medical treatment in the US, I'm appalled at how inefficient the US medical system is and how the market is manipulated.

Cure cancer? Where's the profit in that?

[SAC Brat]

"A single payer system or the Swiss or German system would give much better healthcare for all and at less than half of the total costs."

Maybe it isn't about healthcare in the US, but revenue. It looks like we've strayed from capitalism and moved to kleptocracy.

[no one]

I work (as a consultant these days) in the healthcare insurance industry in actuarial support and have been in the actuarial data for many years. I am currently building the data infrastructure for reporting on the individual market segment (those the company currently has and those it is expecting to gain under Obamacare)for one of the big three companies in the US.

The bottom line is nobody knows how the ACA will impact the insurance companies' bottom line and that uncertainty is an issue of concern for the exec's/shareholders. There are theories - some positive and some negative - but nobody knows and the databases/reporting we are engineering are designed to track, trend and provide analysis so the company can get a handle on it all ASAP once the claims start coming in.

Will the ACA lower costs? That is a question that depends on perspective. Lower costs of what? for whom? Maybe it is a meaningless question because it is so nebulous.

Really, costs, in the objective sense, can go up. Healthcare services cost what they cost. The ACA isn't causing hospitals, physicians or providers of DME and pharma's to charge less, right? So if more people are insured then there is more money being paid out to providers. The $s have to come from somewhere. They're not going to print new $s just to pay the providers are they (ok, maybe they will - that has a cost too)?

Will more people be insured? We simply don't know, but microeconomic theory can help us make a prediction.

Those currently excluded from insurance due to pre-existing conditions will seek to purchase insurance *if they are currently paying out of pocket for services at a cost > the cost of a premium*. I don't think this is very many people. Typically very sick people can't work and b/c they can't work they are on Medicaid or Medicare. So negligible net population gain, but they would be a health care cost increaser to the extent that they get into risk pools.

Those who are young and healthy, but don't have insurance for whatever reason. These people won't purchase insurance until the cost of the tax penalty + the cost of existing with some level of risk (considered to be perceived as minimal in among this group) exceeds the cost of a premium. They lose any way you cut it. The cost savings predictions depend on a significant influx of this member profile - people that pay in yet don't utilize. I don't know why they would sign up at this point. If they can't afford it, they can't afford it.

Healthcare insurance costs a lot because medical services cost a lot. This is what people need to understand. The myth of the greedy insurance company causing insurance to cost what it does is just that.

I worked for a NFP BCBS franchise for several years. Their commercial premiums were higher than those of the publically traded FP company I am currently contracted with (yes, these are figures I need to, and do, see). The BCBS company was running at MLRs of +/- 92% AND YET THEIR PREMIUMS WERE HIGHER. The $s were going to providers.

Non-ACA compliant policy cancellations are happening (or are on deck to do so). I don't know about a re-offering for a compliant policy at a higher cost. That might be just more of the cherry picking for scariness that has characterized this debate since inception on ALL sides. Then again, in some instances I'm pretty sure it is the case b/c the ACA demands a much richer benefit level than the more catastrophic based coverage that many of this market segment currently has.

My soap box moment....When we purchase car insurance we expect to be covered in the event of a catastrophic event, only. The insurance doesn't pay for maintenance. It doesn't pay if the alternator goes bad. The insurance won't pay for the fancy new rims we might want. We understand that maintenance is an out of pocket cost associated with owning a car. IMO, HCI should be viewed the same way. If it was, we could all afford it. Any given year it is 2.5% to 3.5% of an insured (non-Medicare) population that incurs cost in excess of the premium they pay. Get it? 97% of insured would be better off paying out of pocket, saving a little each year and having very affordable coverage for catastrophic events, say in excess of $20k. I am talking, here, about something like an HRA + a catastrophic rider being optimal for all.

Anyone promising anything else is manipulating the masses (more smoke and mirrors within circus). The ACA is a joke and it will fail miserably.

[Mark Logan]

The big picture is our current system is a gawd-awful mess, and the AHCA is but an attempt of break "enertia". Tom Coburn is right, it is not going to work. As is, the mandates are not strong enough. It is simply the best that could be done in the existing political climate. We might trash it, we might fix it, it's up to us.

Your friends situation is impossible to dissect without more information. Every states program is different, and his families medical situation is unknown. He might have had one of those rip-off policies which give the illusion of coverage. Had one of those at my company when we started out, and the result was an employee whose child's Leukemia ultimately resulted in his having to quit working so they could qualify for Medicaid when our policy "tapped out". That's how bad it is. Your friend might have not fully explored his options, the web-site is a mess.

Still have 6 months to go. The one small area this bill tried to address is ending the practice of privatizing the profits and socializing the losses. They raised the deductibles on the "Cadillac Plans" so people would "shop" more. This angered unions. Too bad. That is about the only thing in it which attempts to address our exorbitant costs directly, and that is a huge factor in this "mess". The insurance companies can hopefully concentrate more on administrative efficiency instead of proving PT Barnum's Observation.

And that's about it, I'm afraid. To me this is essentially an unsolvable problem for a government we would have as limited as ours, and so the best we can hope for is that it has "enlarged" the problem, in the Eisenhower sense.

[Will Reks]

Medicare is a single-payer system. It has its flaws but it's vastly more efficient than the private market and even less so when compared to the VA. There's far more evidence that the private market has been a disaster in this country.

Virginia did just fine with the two Democrats that preceded McDonnell in the Governor's office. I think they'll survive McAuliffe too.

[Walrus]

I pay 1.5% of taxable income as a Medicare levy that gives me access to free "bare bones" medical and hospital care. Australia and the rest of the developed world has had such universal systems for decades.

My dear, departed Annie succumbed recently to colon cancer after three years of the best medical care and treatment available on this planet (and I did check, money was not a consideration) that was provided under this system by a simply wonderful team of surgeons and oncologists. The total out of pocket costs were zero, unless you add in hospital car park fees.

The cruelty of subjecting the sick and dying, and their families, to any form of financial stress or "managed care" is one of the least attractive features of America, ACA or not.

I had hoped that the ACA debate would have focused on costs rather than prices, but this was not to be. You need to go back to square one and start again.

[Will Reks]

Health insurance premiums are the costs in question. Healthcare costs in general terms are a long-run problem and the recent data shows that there has been a significant slowdown in the rate of growth. Under Obamacare health plans must meet certain standards and so companies are not allowed to offer the low premium plans paired with high deductibles that many people had been buying. This means some will pay more for generally better coverage.

There is no doubt that the middle class and wealthy will bear most of the burden to allow the working poor to afford health insurance. However, I think the guarantee of health insurance will allow more people to take risks and start their own businesses as well as lower the costs of insuring workers for many small businesses.

Time will tell if the reforms in Obamacare will bend the cost curve for healthcare in the US permanently. I favored Obamacare over the status quo because the other side had no alternative but I do dislike the crony capitalism involved in padding the profits of PHARMA and the health insurance conglomerates.

[turcopolier]

Will Reks

Yes, Virginia will survive McCauliffe. pl

[turcopolier]

Will Reks

What about those who cannot qualify for a federal subsidy but cannot afford the higher cost? Is that just a necessary cost of social justice? pl

[no one]

"As is, the mandates are not strong enough"

So you advocate for total socialism? Govt control of private industry?

You don't know what you're talking about. I don't mean that in a name calling kind of way. More as an obvious, yet common, deficit.

As I said, even with not for profits operating at +/- 92% MLR (92% of premium $s coming in going back out to providers) premiums are too high for the typical family to purchase out of pocket. These NFPs are charging as much or more than the for profits.

8% administrative cost is pretty damn good and I challenge you to demonstrate that the govt could do it for less. You do realize that the govt has a lot of Medicare and Medicaid administrated through private companies b/c these do it for less.

The cost of insurance is not due to administrative inefficiencies on the part of the insurance companies as you (and fellow socialists) want it to be. It is due to the cost of healthcare, as charged by providers, combined with the mix of services that are covered.

The socialists don't want to acknowledge this fact. They love them some big govt and hate capitalism. Some how the providers escape recognition as capitalists in this little morality play. Fascinating mind set.

BTW, I would be for a national single payer system *if benefits were set in an actuarially meaningful and limited fashion* (you'd have to pay out of pocket/personal health savings account for much of what you think you're entitled to).

The ACA is Obama, as social revolutionary, promising handouts to the masses.

"and the AHCA is but an attempt of break "enertia"."

Did you approve of the govt "shutdown"? Wasn't that also an attempt to break inertia? Goose meet gander.

[Grimgrin]

"Really, costs, in the objective sense, can go up. Healthcare services cost what they cost. "

Heathcare services cost what the health-care provider determines they should cost, factoring in the discounts they expect to have to negotiate with the insurance companies; the yearly write off cost for bankrupt and uninsured patients for which there is no hope of recovery; the cost of billing and the expected reimbursement rate; and, apparently, a number of coin flips and dice rolls.

Since the pricing is rarely disclosed to the patient before the procedures and in any event most patients do not have the option of comparison shopping (my chest hurts and my arm is numb, let's get some quotes for emergency cardiac care), market forces act on these prices weakly if at all.

This leads to the situation recently disclosed where prices vary wildly both when compared to other providers within the US:

http://www.bloomberg.com/news/2013-05-08/hospital-charges-vary-across-u-s-for-same-procedures.html

http://opinionator.blogs.nytimes.com/2013/07/31/a-new-health-care-approach-dont-hide-the-price/

And without:

http://www.nytimes.com/2013/06/02/health/colonoscopies-explain-why-us-leads-the-world-in-health-expenditures.html?_r=0

There was a long article in Time magazine about this that's now behind the pay-wall.

AFAIK, the ACA is attempting to make market forces apply to health-care via price transparency and the insurance exchanges. That's the cost containment side of it.