Thursday, March 13, 2014

Healthy, relatively wealthy, and hit by ACA rate hikes

Past and forthcoming posts of mine have looked (and will look) at the situations of several people who do not qualify for ACA subsidies but were still satisfied with the coverage they obtained for 2014.  That is because they all either had pre-existing conditions or were in a household where someone else had one -- as do a very large percentage of Americans, particularly those over forty in households larger than one person. As for the young, the overwhelming majority of them are subsidy-eligible.

At the same time, of the 12-18 million people who bought insurance in the individual market in 2013, nearly half were not eligible for subsidies, according to the Urban Institute. Of the substantial percentage of them who were not punished for a pre-existing condition in the pre-ACA market, many will pay more for coverage in 2014 than they did last year (click here for more statistical detail on these fronts).  Some will get better coverage for the extra money, but some won't, and some will get coverage they would not buy if they did not have to.

In recent days I've heard from two of them, neither unsympathetic to the ACA (yes, my readership is skewed that way).  Sam, living in New Hampshire, was hit hard by a premium increase this year.  If the timing of certain life events had been somewhat different, however, he might have benefited directly from the law's enactment. His initial note indicates somewhat unusual circumstances:

My wife's and my Blue Cross policy more than doubled...from $511/m to $1300/m.. However, we had a huge deductible ($11k individual, $22k family) and no maternity coverage. We were able to get a cheaper plan from Blue Cross through the exchange, $1100/m. We are well above the level for subsidies. Am I unhappy to be paying so much more? Yes. Do I still support ACA? Absolutely.
A premium at that level suggests an older couple -- yet maternity coverage seems not to have been entirely irrelevant.  How is that?  Sam explained in followup:
I turn 60 at the end of the month... My wife's in her mid-40s, and we have a three year old.  When we first moved to NH three years ago (from NYC - now that was expensive single payer) Blue Cross turned my wife down because of a prior condition.  What prior condition?  We used IVF to conceive our child.  This, despite the fact that we were buying insurance that did not include a maternity plan.  They accepted her a year later, which was the plan that was cancelled under the new ACA guidelines.

In that gap year, Sam's wife was able to stay covered via COBRA.  Once Blue Cross took her on, Sam writes, "The cost of the coverage would have just about doubled to about where it is now under ACA." His takeaway:
Would I like to have my old coverage back?  Absolutely.  I like saving a $500/m.  But I also understand that the major problem with American healthcare is that it tends to work only for the wealthy and healthy, a bill my wife and I fit fairly well.  Our, and others like us, not paying for maternity care, just makes it that much more expensive for people who do, and that somewhat defeats the purpose of insurance, especially if you think, as my wife and I do, that insurance should be available to all.  As for cutting maternity care off at a certain age bracket, my own take is that this country already does far too much for its older citizens, and not nearly enough for youngest, so I wouldn't approve of another benefit at all, regardless of how much it helps me.

I might also add that one of the children from my first marriage, who was 20 at the time, was also denied coverage at the same time as my wife because of medication she was taking.  This was not a problem, as I was able to buy coverage for her through the college she was attending at the time, but it does mean I am sensitized to some of the benefits of the law, even if they don't particularly impact me directly.
In fact, college plans are generally more expensive than ACA plans for college-aged adults, particularly for the subsidy-eligible. Sam is apparently affluent enough to be more generous-minded than many might feel they can afford to be. But the twists and turns in his coverage history illustrate the tradeoffs in any attempt to spread risk and costs more equitably given the ACA's own pre-existing condition: the uniquely and unsustainably high prices charged by American healthcare providers.

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Paul, 52, and his wife, 42, live in Los Angeles County. Paul wrote:
Our Blue Cross policy, which covers everything my wife and I need, went from $450 to nearly $650 in January. Blue Cross told us the big jump was due to the new ACA provisions in the policy. We (just barely) don't qualify for a subsidy. I was looking forward to this law taking effect, believing costs would be less for everyone, but that simply is not the case, unfortunately. For some they are going up, at least for now... Feeling kind of left out of the party at this point.
I asked Paul for some more detail about his situation and his coverage before and after this year's hike. He responded:
We are both healthy [as might be forecast from his previous low premium] and rarely visit the doctor, just for check-ups. Our plan was the basic Anthem Blue Cross 5k deductible plan, with $35 doctor visit co-pays, $10 drug co-pays, and 25% lab test co-pays, comparable to a Bronze plan on the exchange. A safety net if/when we need more than 5k in care was the main benefit.

We were told in January our plan was going from $450 to $636 a month.The deductible is the same, but It has more features, some of which we can use, some of which we can't, such as maternity care and pediatric dentistry...There were other costs such as for tests and lab work, much of which may be offset in the new ACA approved plans, I'm not sure. We were content with our plan since it covered us in an expensive emergency and fell below the $500 a month we could rationalize spending on healthcare we rarely used.

Not quite qualifying for a subsidy is disappointing; the subsidy doesn't taper off, it just exists at a certain income level, then doesn't at the next. I hope costs will actually come down once all are covered. Unfortunately we are paying more, not less. for now. I'm sure many others are in the same boat.
In fact subsidies do taper gradually for younger buyers; it's older buyers who face a subsidy cliff. That's because their premiums can be up to three times as high as those for younger counterparts, but the subsidy covers the difference so that people at the same income level pay the same premium, regardless of age. The more people in the household with older adults, the steeper the subsidy cliff.  Paul's premium is twice that of a twenty-something, and his wife's is about 32% more.

In fact, too, his renewing Blue Cross plan seems to be somewhere between the Blue Cross bronze and silver plans on offer in the California Exchange for Los Angeles County, which are priced at about $580 for bronze, with $5000 per-person deductibles, and $680 for silver, with $2000 deductibles (there are two of each).  Benefits before the deductible are hard to compare but seem to be far superior in his plan than in the bronze exchange options, which offer limited coverage prior to the deductible being reached (other than the free preventive care services mandated by the ACA).

Finally, if Paul and his wife are really close to the subsidy line, they might follow the advice of a Covered California spox and see an accountant or financial adviser about massaging their taxable income.

Have a tale -- good, bad or ugly -- of navigating the insurance market pre- and post-ACA enactment? Please contact me via the "about me" section on the right margin of this blog.

Insurance-shopping chronicles
COBRA or the ACA? comes through in a complicated situation
Switching from COBRA to the ACA
Buying unsubsidized insurance in the ACA universe

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