The Obama administration is extending the enrollment deadline for the Affordable Care Act past March 31 and is describing the move as a consumer-friendly change that will allow insurance shoppers who haven’t finished their applications to still qualify for coverage.
Whether or not there’s a last-minute rush of enrollments, now that the new exchanges have drawn some 5 million sign-ups, the biggest test of the reform will be if Obamacare policies actually succeed in providing affordable health insurance to more than 30 million Americans. That test will revolve around one concept: Total cost.
In private policies, which is what the Obamacare exchanges are selling, what you pay depends upon your premium and out-of-pocket costs. The least-expensive policies (premium-wise) will make you pay more bills on your own.
As I discovered in several months' research in pricing policies on the federal HealthCare.gov exchange, there are many details that are not immediately apparent when you scan the offerings.
Having become frustrated in trying to find an affordable policy on my own through the exchange, I consulted with a "navigator," in this case a professional insurance broker who could also sell me non-exchange policies.
While I have a catastrophic policy that covers major medical and hospital expenses for $600 a month ($5,800 yearly premium), it doesn't cover routine office visits, immunizations for my children or office diagnostic tests. As a "grandfathered" policy, it probably will be eliminated eventually and I will likely pay more for insurance.
My wife and I chose to use a navigator because we were befuddled by an array of co-payments, policy options and preferred-provider networks. Even though I've been buying private insurance for more than a decade on my own, the sheer number of policy combinations didn't make it easy without knowing how to evaluate these plans.
After several rounds of surveying policies on HealthCare.gov, our navigator walked us through the policy selection process. Here's what we found:
- The policies on HealthCare.gov and private exchanges are virtually the same. I noticed this when I scanned the offerings on ehealthinsurance.com — the policies sounded like the same products. Our navigator confirmed this by pulling up plans directly from an insurer's website.
- The prices for the private plans are nearly the same as the HealthCare.gov plans. When I checked ehealthinsurance.com, the premiums were slightly higher, even though they were virtually the same plans.
- A handful of insurers dominate both the private and public exchanges in each state. Since there is not much competition among insurers — the biggest insurers grab the largest market share — this does not bode well for competition and lower premiums. For example, in Illinois, where I live, Blue Cross/Blue Shield is the dominant insurer. According to our navigator/broker, they hold 70 percent market share in the Prairie State. If single insurers dominate, which is a problem in every state, particularly the smaller ones, that does not create a competitive marketplace and lower premium prices.
- The devil was in the details on network inclusions. You may pay more for your doctors and hospitals if they are "out of network" in the plan you chose. We drilled down to discover that all of our local hospitals were out of network in the "bronze" plans we were eyeing — meaning we would pay 20 percent more out of pocket for the policy we were considering. That can be a huge difference on large medical bills.
- There's still underwriting for age and smokers. While no insurer can discriminate based on medical history or pre-existing conditions, they can charge you more based on your age. In our case, I would be charged more (for being over 50), while my wife would be charged less.
- The bigger the network, the higher the premium. We also priced "gold" and "platinum" plans (the most expensive on HealthCare.gov). As mentioned above, our "bronze" sample policy didn't include our local hospitals, but they were included in the more-expensive policies. Was this pricing strategy designed to get us to use lower-cost providers or just provide an incentive for us to pay more for a policy upfront through a higher premium?
- If you don't qualify for the federal subsidies based on family size and income, you should shop through a broker for private policies, which offer the same benefits as the ACA plans. Make sure that the insurance professional you select represents several different insurers.
Another Layer of Costs
The analysis we did with our navigator was an eye-opener. Not only did it show us a bevy of hidden costs like out-of-network charges, it confirmed the idea that we were getting a pretty good deal with our existing policy, although it will probably only be a bargain through this year.
What was vexing, though, wasn't the trade-off between paying lower premiums in exchange for less-inclusive networks and higher out of pockets. It was the implicit "nudge" to get us to pay much more upfront — up to $500 a month — for a policy that would include our preferred doctors and hospitals.
Even one of the cheaper bronze policies we sampled from Blue Cross had quite a few obnoxious charges like 20 percent co-insurance for primary/specialist doctors and generic prescriptions. That translates to a penalty for cheaper drugs and doctors.
Of course, much of the pricing, or underwriting, of these policies is based on insurers taking all comers. If their new customers are chronically ill or need expensive surgeries or treatments, insurers need to cover their anticipated expenses or "losses" through higher premiums or pass along those expenses in the form of out-of-pocket costs.
While the ban on excluding coverage for pre-existing conditions is one of the greatest advances in consumer protection in a generation, insurers will still pass along their costs in one form or another. In that regard, the actual cost of these policies could be higher than many consumers expect. With often-expensive private insurance at its core, Obamacare could still unleash a barrage of hidden costs over time.
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