Affordable Care Act for dummies version (Page 4)

I'm trying to understand how a plan could go up 65% in order to meet the minimum requirements of the ACA Bronze plan.  (as stated in the LA times article)  The Bronze level plans are not great insurance and only cover 70% as it is.  So, that means that this individual had a plan that covered only 60% (if you do the math) of what a Bronze level plan covers?  I guess that's possible, but then, were these kinds of plans really advantageous to our country as a whole?  i.e. if you had a plan that covered only 60% of what a Bronze plan covers, and you got seriously ill, was it pretty likely that you would go into bankruptcy?  In fact 70% of personal bankruptcies in the US were due to medical reasons- most of which were people who had medical insurance.

and, when a person can't pay for their medical bills- guess who pays.  We all do.  (the benefit of this aspect will take a couple years to shake out and potentially reduce overall premiums)

What it seems to me, is that we're comparing apples to oranges.  We're comparing a person with a lousy health insurance plan, now with a much fuller coverage plan.  Interesting, that people making up to $96K/yr (for a family of 4) qualify for some level of subsidy.  

I think that the full story on this won't be written for a few years.  right now, there's too much mis-information for me to figure out what the pro's and con's really are.  for instance, how many productive members of society will be alive in 2016 that otherwise wouldn't have been because they have insurance rather than not.  the Harvard study claimed 46K people needlessly die per year due to lack of medical coverage.  I dunno'.  Isn't there some value to those people?

In the ACA's defense there are are several cherry picked comparisons of plans hitting the headlines.  I saw one the other day bolstering a 500% increase but when you read the details the person had a $90 a month catastrophic plan for their family.  Yes that plan was going away and the cheapest one available was almost $500 so their coverage did go up 500%, but I'd say that's more of an example of lack of choice than it is that everyone's coverage is going up 500% like the article was trying to portray.

To answer your question about a plan going up 65% to meet the requirements is all about risk pools.  For example if you ran an insurance company and only offered insurance to 25 year old healthy single guys the amount of money you'd pay out would be very low.  So, you could charge very low premiums and still make money.
If you had a pool that only covered 25 year old healthy married women, your costs would go up slightly due to maternity costs, so your premiums would have to be higher.
Another example would be if you only covered 50 year old's who had pre-existing conditions.  The payouts would likely be astronomically high with only that pool.

So, over the years insurance companies (right or wrong) came up with an acceptable balance in their risk pools to keep their payouts to a certain level to try and keep premiums down.  With the ACA, all of their historical risk pools get thrown out the window and they are mandated by law to cover everyone no matter what their ailment.  As we've discussed before, the theory is that if enough young healthy people sign up for coverage then their payouts which are low will offset the other payouts that will increase.  There's really no way to tell how this will work out today and the insurance companies are just using models to predict what they think their payouts are going to be in order to set their new premiums.  With their premiums mostly being higher, it tells us that they are anticipating their payouts to be higher than they are today in spite of the new young and healthy people.

If, and this is an if, the young and healthy do not sign up for health insurance at the numbers predicted, then it will offset these models and the rates could go up even higher.  However, if the young/healthy sign up in greater numbers than anticipated then the rates should go down.

Just saw this:

http://www.weeklystandard.com/blogs/house-take-keep-your-health-plan-act_765517.html

On the surface, I'm all for it because that's exactly what I want to do and I'd guess a large percentage of the 1.5M people to date who have had their current plans canceled.

However, if this passes then the exchange plans will surely implode because the whole idea was to get everyone onto the higher coverage plans to pay into that pool.  If only the sick go on the exchange plans and everyone else stays on the cheaper plans then carnage will likely ensue. 

I'm SO happy, this is such a reasonable and accurate response. So, if the plan works as they want it to, do you agree that healthcare costs COULD go down with the ACA?

Likewise, if people don't sign up, it could end up costing the country and the people a ton of money.

Remember, the ACA is only for healthcare insurance costs and not for costs of healthcare.  

In the context of the cost of insurance, yes you are correct.  Insurance premiums could go down if they get enough healthy people signed up and on the contrary if they don't get enough signed up it could get really expensive.

However, my premise is that historically people having insurance with low copays and HMO type plans resulted in an unnatural demand for healthcare which is what caused health care costs to be so high.  These high costs are what led to high insurance which resulted in so many people being uninsured.  So, the symptom is that millions of people don't have insurance, but that wasn't the problem.  The problem was the cost of healthcare, due to crazy demand brought on by insurance plans hiding the high costs to the consumers.

So, IMHO the government decided to address the symptom and ignore the problem.  So, assuming all goes well with the ACA and they get all of the people signed up they wanted, I contend that the demand will shoot through the roof for healthcare services so the costs of healthcare (not insurance) will skyrocket in the coming years.  These costs will be paid by the insurance and they will in turn have to raise all of their rates and we'll be 5 or 10 years down the road with the exact same problem of millions of people without insurance and out of control healthcare costs.  

I may sit back and nit pick little things here and there about the ACA working or not working, and various effects it has on the economy but ultimately I'm opposed to it because I see it as pouring gas on the real problem vs. addressing the cause. 

Wouldn't the higher deductibles that people have been groaning about help to reduce the demand for unnecessary healthcare? Also, no deductibles on check-ups and preventative care should reduce the number of higher cost procedures. Seeing your doctor and getting something taken care of before it is a huge problem, is generally much less expensive.

I agree that higher deductible health plans are a good thing and in my opinion that is the solution to the "problem".  However, when you create a high deductible plan, but then give essentially free routine care visits is it really a high deductible plan?  Granted, I'm a 40 year old dude with 3 healthy kids, but 99% of my healthcare costs are routine Dr. visits.  My current high deductible HSA plan requires me to pay 100% (~$200) out of pocket to go see the doctor until my deductible is met, so I never go unless I really need to go.  This is the whole supply/demand thing at work.  When I feel sick enough to spend $200 I'll go, if I don't I won't.

However, if I get on a similar high deductible ACA plan my routine visits will be essentially free, so now I have no incentive not to go.  My demand as a family of 5 just went to infinite because the cost dropped to zero.  Sure, I have a high deductible for major care items, but I will rarely if ever need those. (knock on wood)

I've heard the argument about preventative care reducing higher cost procedures down the road.  I am sure there's some validity to that argument, but I honestly have no way of quantifying it. 

When I took economics in college we had a whole chapter dedicated to the coming healthcare problem in America.  I wish I knew what text book we used because it was prophetic.  It was purely looking at how insurance impacts the supply/demand curve and that healthcare insurance in it's current form would be unsustainable in the US.
The solution is high deductible health plans paid for by individuals and not companies (think car insurance), but they have to be high deductible health plans, not the hybrid plans that give all kinds of free stuff.  The other issue is that if you only give high deductible health plans without the free stuff, young healthy people won't want them so then you have other issues that we discussed above.

Liustenign to CBS news this morning and they were reporting over 2,000,000 people has so far recieved letters saying that their coverage was not adequate and that they would need to spendm ore money for another porgram.  The report said that the folks running the ACA confirmed that letters were being sent out but would not say how many had been sent or how many more were going out. 

I guess so much for "if you're happy with your current policy you can keep it".  LOL

Not everything is quite as simple as you think it may appear on the surface.

http://news.yahoo.com/why-individuals-losing-health-plans-under-obamacare-074800336.html

Oh c'mon.....it IS that simple.  He said on numerous occasions that if you were happy with your plan you could keep it.  That's not true. Either those people who are affected can keep their plans or they can't......which is it?  Seems pretrty simple to me.  Nothing in your link disputes that.

It's a good thing all these lines get drawn in the sand.....they'd be alot harder to move otherwise.

I'm not so sure I agree with that article.They make the statement about people keeping their existing coverage: "in most cases, it's true. For a few million Americans, though, it won't be."

However, this NBC article mentions that up to 80% of people will be forced to change:  http://investigations.nbcnews.com/_news/2013/10/28/21213547-obama-admin-knew-millions-could-not-keep-their-health-insurance?lite

I can't find the link now, but I read another article last night that talked about a provision in the ACA that mandated any insurance company that has a plan on the exchange has to meet the ACA requirements on all of their plans.  So, if my insurance company wants to provide a plan on the exchange then they have to cancel all of their previous plans and replace them with compliant plans.  I could be wrong, but I can't imagine there would be very many pre-ACA plans that would be compliant with it.

I don't really agree with the premise about grandfathering plans either because my current plan I purchase for my company is the same plan we've had for 4 years.  No deductible or coverage changes at all, but it is being canceled on Dec 31 due to ACA.  I just had a meeting with my CFO trying to figure out what options are out there for us.  We just received a preliminary quote from United Health that the "equivalent replacement plan" is going to be around a 50% increase in premium.  Supposedly they aren't going to have our group rates finalized until Nov 15 for some reason.  uggh

So, for me personally, my plan is gone, I have to get a new one, I have no clue what's out there or what it's going to cost.  I'm only being told it's going to cost a lot more.  So much fun...

I'm watching all these developments with a wary eye.  ACA doesn't effect me at all, so I don't have a dog in the fight.  But......I DO think it's important to distinguish between what the ACA mandates vs. what the private insurers are doing to their existing customers simply to take $$$ advantage of the upcoming changes.  It's been discussed all along, that the real competition may be during the next open enrollment period.  If your current provider isn't being competitive, then find another provider.  If they want your business back-they'll have to adjust to the market forces.  Sounds good in therory, I know! 

I'm kind of with you and up until a few months ago didn't think I had a dog in the fight either.  My opinion changed a lot when I was notified that my insurance was being canceled.  grrr
As for insurance companies taking advantage of this, they covered this in the ACA by requiring health insurers in the individual and small group market to spend 80 percent of their premiums (after subtracting taxes and regulatory fees) on medical costs. The corresponding figure for large groups is 85 percent.

So, basically the insurance companies are required by law to only make so much in profit.  If they jack the premiums up, you can rest assured it's because their payouts are going up.  If it happens, I'm sure the "greedy insurance companies" will still get blamed, but oh well. 

that's a point that has been a little lost.  to some extent, the insurance companies don't really have any idea who is going to show up and buy the plans, and who will take the penalty instead.  In the past they made a living by trying to only keep healthy people on their plans and denying coverage to those who required a lot of care.  Now they can't do that.  So, it's possible that the insurance premiums are a little jacked up right not to cover contingencies.  If they make too much money- they will just need to pay it back.  

Also, as the penalties grow in future years, more 'healthy' individuals will choose to opt in, expanding the field and possibly lowering prices.  I really don't think we're going to know the true effect of the ACA for another few years.  and if the GOP wanted to actually do some good for the country, they'd work to improve the law rather than just kill it with nothing to replace it with.

I agree with your first paragraph, They're basically guessing at this point.  Don't forget that does go both ways though, they could be guessing way low.

I also agree that we won't know the true effects for a few years, but if the Republicans fundamentally believe that the system will not work and the administration unwilling to make any changes other than throw more money at it, I'm not sure what they can do to make it better.

I do agree that the Republicans need to come up with a viable alternative though.  You can only go so far with "it sucks" "it sucks", "see we told you Obama lied about keeping your plan"...  At some point they have to come up with an alternative plan.  If they win everything back and come in and repeal the whole thing, we're just go back to a broken system and nothing's better.

lol

Just out of curiosity, I did a quick google search for "the republican healthcare plan" to see if there was even anything out there.
I ran across this from last month, so apparently they're at least trying.  I haven't gone through it yet, so I can't really comment on it.

http://www.bloomberg.com/news/2013-09-23/a-serious-republican-health-care-plan.html

 **edit**

now obviously when the first line of the proposal is "repeal Obamacare" that makes it a somewhat tough sell to the Senate and White House. 

That's pretty much the boat we're in, other than I don't have a firm price on my new plan options. 

There are some new tax credits for companies under 20 employees that I'm trying to explore, but it's really hard to find people who understand the law.  Our local University is having a seminar later this week that my CFO and I plan to attend.  Hopefully we can get some answers.

+1

I'm also all for decoupling healthcare from my business and just giving a credit, but it would be a net effect of giving my employees far less $ towards healthcare and it would also make my company far less competitive with hiring new prospective employees.

I pay 100% of my employees healthcare as well with an HSA (pre-tax) and then I contribute $250/mo. per employee into their HSA account (pre-tax) to cover their deductible of $3000 on the HSA.

I forget the exact rate, but lets just say it's $300/mo. for the healthcare and then throw in the $250 to make it $550/mo. per employee is my current cost and I get to deduct that full amount.  Pretty much all of my employees are healthy so the net at the end of the year is they have free healthcare and an HSA retirement account with $3000 in it.

If I were to just give them an additional $550/mo. in compensation for them to use towards the exchange we will both have to pay Federal and state taxes on that so their actual take home would likely be closer to $350, and their income goes up another $6600/yr. which could impact their tax situation.  Then with the $350 they could likely get a bronze plan that gives them coverage, but they would still have a high deductible that they'd have to meet.  So, they'd end up with a potential higher tax burden and more out of pocket on their healthcare.