Sun 13 Oct 2013 @ 05:34 PM

←Home Experience: Update 2

Note: This is really less of a comment on my direct experience with and more commentary on the insurance options available.

After entering all the numbers from the available health insurance exchange plans into a spreadsheet, it's still somewhat hard to compare them. In addition to premium amount, there is also the total deductible, the out of pocket maximum, and co-payment and / or co-insurance amounts that don't just vary between plans, but between the pre-deductible and post-deductible levels for a single plan.

All the plans I'll be talking about here are for a family of three: Two 40-something parents and a mid-teen dependent in the state of Utah. None of us are tobacco users. Preexisting conditions don't matter under the ACA, so they're pretty much limited to determining premium rates based on geographic location, age, and tobacco usage.

What's more, people with income up to 400% of the federal poverty level will be eligible for subsidies. In theory, those subsidy amounts should pay for bronze complete coverage for an individual at the poverty line.

The cheapest plan for my family (based on the cheapest premium) is a bronze plan that would cost us about $5,100 a year. This plan is a few percent cheaper than what we are currently paying for our insurance. Unfortunately for us, this plan does not pay a single penny (other than the "essential health services" mandated by ACA) until we've spent an additional $12,600 on what would otherwise be eligible health care costs. Anything that the insurance would not pay for under any circumstance doesn't count toward your out of pocket maximum. With this plan you are on the hook for the first $17,700 of your covered health care expenses (including premium and deductible) before insurance pays anything. The good news is at that point it covers 100% of eligible expenses. Since you generally aren't eligible for a catastrophic plan after age 30, this is the closest we could come to a catastrophic plan. Of course, even a catastrophic plan under ACA must still include the essential health services, so it's not really a catastrophic plan. By way of contrast, the most expensive plan is a gold plan with annual premiums of about $9,400. It's maximum out of pocket amount is $12,000, but it provides co-pays of $25/$75/$10 for primary care/specialist care/generic prescriptions both before and after the deductible is met, and the deductible is only $500. The worst case scenario for this plan is almost $4,000 higher than the cheapest, which is really close to the difference in premium. If you are pretty sure that you won't spend much on health care, the lower premium makes the most sense (or opting out and paying the penalty). If you are sure you'll be paying a moderate amount on health expenses you might want to take advantage of the gold plan to take advantage of relatively cheap co-pay amounts. If you think you'll have huge medical expenses, it might make the most sense to go with the cheapest plan, since it would save you several thousand dollars a year. All these considerations make it hard to compare insurance, though probably no more difficult than it without ACA.

Here is the most surprising thing to me. The "best value" insurance based on combined premium and maximum out of pocket expense is the only platinum plan. The premium is about midway between the bronze and gold plans mentioned above, but it has a cap of $3,000 instead of $12,000+.

If our combined income was lower, we'd be entitled to a tax credit subsidy to pay for the insurance, which would bring those numbers down quite a bit. Even so, the subsidy doesn't cover any actually health care costs, only the insurance premiums. You'll still potentially have to pay thousands out of your own pocket before seeing any benefit from having insurance. This is ultimately the real flaw with the "Affordable Care Act". It does very little to make care more affordable. Just insurance. If it works the way they say and everyone has insurance coverage so they can afford to see a doctor when they need to, it might help reduce costs due to fewer people resorting to use of emergency rooms for primary care they are unable to pay for.

There is an alternative scenario. Namely that lots of people with newly acquired health insurance start going to the doctor for conditions that ordinarily would be taken care of at home. If the demand on finite health care resources greatly exceeds the supply, the health care costs are going to go up. If health care costs go up, insurance costs are going to go up by a corresponding amount. The more we burden people with insurance premiums, the more likely they will be to feel "compelled" to take advantage of their insurance. It could be a death spiral to our health care system. If that happens, the next "obvious" step by government will be to declare private health care a 'failure' and force a single payer system on everyone, dictating what they'll pay for any health care item.

Maybe I'm just being doom and gloom for no reason. I hope I'm wrong about a worst case scenario. Yet as I've said repeatedly, past demonstrations of government budget estimation & fiscal responsibility do not give me hope.

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