NEW YORK (MainStreet)—Nongroup health insurance, which is typically more expensive and often provides fewer benefits than group coverage, is generally going to have an even higher price tag under Obamacare.
In an online perspective piece, the nonprofit Kaiser Family Foundation (KFF) stated the organization expects "that average, unsubsidized premiums for nongroup coverage will be somewhat higher under reform than they are today (as does the Congressional Budget Office)" and that "patient cost sharing will still be quite high."
"Someone who is young with a bare-bones plan could easily see rates double as the plans are brought into compliance," says Brad Leddon, vice president of the employee benefits division at Coffey & Company, an insurance agency.
But the news is not completely grim. In the piece, KFF stated that "many people will be getting better insurance."
Beginning 2014, the Affordable Care Act will require all nongroup health insurance to include certain benefits, such as preventive services, maternity and mental health. There also will be a cap on out-of-pocket costs. And insurers will be required to cover people with pre-existing conditions at the same cost as healthy individuals. So, people who have health problems may see their premiums reduced from current costs, according to KFF.
Women and older people may also see a savings as premium differences for gender are eliminated and variation in premiums due to age are held to a maximum of three to one.
"The richer the plan currently is and the older the insured, the less of a [rate] increase," Leddon says.
Other "unhealthy" practices will also fall by the wayside. Joel Winston, a former New Jersey deputy attorney general and founder of AnnualMedicalReport.com, points out that currently in most states, insurers can charge more or spend less by increasing premium rates or denying coverage for treating conditions, sell policies with lifetime caps on medical conditions, and use software to identify policyholders who have been recently diagnosed with expensive health conditions and search their medical files for legal grounds to revoke their policies. Not so under Obamacare.
For those people who are young and healthy and think it may be cheaper to pay the penalty and get insured only when sick, the strategy may fail, because the government will have special enrollment periods when plans can be purchased in order to deter such practices and include more healthy individuals into the health insurance pool. While younger people will be eligible for subsidies, the young and healthy are expected to bear more of the burden.
S.Z. Berg is the author of College on the Cheap.
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- Kaiser Family Foundation
- Congressional Budget Office