The health insurance marketplace – particularly for individuals – will look markedly different after Jan. 1, 2014, when key provisions of Obamacare will take effect. With such a complex piece of legislation, there are myriad unknowns, and the government is trying to get the word out before Oct. 1, when consumers can begin shopping for coverage on state- and federally run exchanges. The Obama administration on Monday launched a helpline and revamped its HealthCare.gov site. The NFL and the NBA have reportedly been approached by the administration to help pitch health insurance to the young and uninsured, and advocacy groups are working to educate consumers on their options in 2014.
There’s no way to tell now how well reform will work, but there are some trends – both positive and negative – we’re seeing already and expect to see when the law’s remaining provisions roll out.
1. Young, healthy adults won’t buy coverage
The Obama administration aims to enroll at least 2.7 million young adults – a group that’s historically been uninsured at higher rates than other age groups – through the exchanges for coverage in 2014. But there are indications that 20-somethings won’t be buying in and will instead opt to pay the penalty. (The penalty is $95 per person for 2014 or 1% of yearly income, whichever is higher. In 2016 it increases to 2.5% of income or $695.)
An ADP Research Institute report published this week found that, while health benefits eligibility declined slightly in every age group since 2010, younger workers faced the largest decrease (which may indicate their jobs were less likely to offer benefits). But the report also found that, even when employees under 30 were offered benefits, only half participated in their employer’s health program in 2013, a figure partly explained by the provision that allows those up to age 26 to get coverage through a parent’s plan.
Another potential hurdle: young adults’ increased use of retail health clinics. According to a Rand study that examined more than 1.3 million retail clinic visits, young adults (ages 18-44) accounted for 43% of retail clinic patients, compared to only 23% of patients who visit primary care physicians. Patients are also less likely to have a personal doctor or to pay for care with health insurance, the study found.
2. Uptick in early retirement
With health costs in retirement topping $200,000, according to some estimates, many Americans find they have to keep working just for the employer-sponsored insurance (workers can’t sign up for Medicare until age 65). According to a January report from the Employee Benefits Research Institute, 19% of retirees said they had worked longer than they would’ve liked to in order to continue receiving employer-sponsored insurance.
Currently, if you’re between 55 and 64 and you decide to retire, you have to buy insurance on your own. And right now in 45 states, you could be denied coverage based on your health status, says Jean Abraham, associate professor at the University of Minnesota’s School of Public Health. Under the Affordable Care Act (ACA), consumers can’t be denied coverage if they have a pre-existing condition. They also can’t be charged more: If you’re in a particular age bracket – say, 60 to 64 – your premiums cannot vary by more than a certain amount from those charged to the youngest adults, says Abraham. In other words, high health costs won’t be a factor in keeping older workers tied to their desks when they’d otherwise retire.
3. Some people won’t find their current plans on exchanges
Beginning in 2014 insurance sold to individuals and small businesses on an exchange must be at one of four “actuarial value levels”: 60% (bronze plan), 70% (sliver), 80% (gold) and 90% (platinum). This means, for example, the bronze plan covers 60% of medical expenses. The higher the actuarial value, the lower the out-of-pocket costs and higher premiums paid by the consumer. So platinum plans would have the highest monthly premiums and lowest out-of-pocket costs, but the plan will pay more of the costs if you need a lot of medical care.
Most employer-sponsored plans sit in the 80% range of actuarial value, while in most states you can now find plans with a 50% actuarial value – below Obamacare’s minimum, Abraham says. Those plans won’t be available on the exchanges in 2014, and for some, “there will be higher premiums because they’re getting more coverage... It will force them to modify their choices,” she says.
4. Better hospital food
Banana-nut pancakes and rack of lamb for your hospital stay, courtesy of Obamacare? A Kaiser Health News and USA Today report this week found that hospital administrators are paying more attention to food service in an effort to boost patient satisfaction ratings. Under the ACA, since last year Medicare began paying hospitals based partly on their these ratings, essentially tying patients’ assessments on everything from room tidiness to nurse availability to payments. Medicare has been publishing patient-satisfaction scores on its Hospital Compare website since 2008, but hasn’t used them to adjust payments.
One patient at Rex Hospital in Raleigh, N.C., cited in Kaiser’s report raved, “The food is amazing,” while about 84% of Rex patients surveyed said they’d recommend the hospital, compared to 71% nationally, the Kaiser report said. While Medicare's surveys don’t ask specifically about food, Rex administrators attributed their better-than-average satisfaction rates to improved food.
5. Surprise tax bills
A key ACA provision provides tax credits to low- and middle-income consumers to help them purchase coverage on the exchanges. The subsidies are available to those with incomes of up to four times the federal poverty level – which this year is $45,960 for an individual or $94,200 for a family of four. The lower your income, the bigger the subsidy. A potential snag is that eligibility for a subsidy can change year to year if your income fluctuates.
Consumers must estimate their 2014 income this fall when they sign up for coverage; the exchange will look at your most recently filed tax return (2012 for most people) as one sign of what your earnings may be in 2014, says Karen Pollitz, senior fellow at the Kaiser Family Foundation.
If you or your spouse gets a raise and your family income jumps in 2014, you could end up with a bigger subsidy than you’re entitled to. If that happens, the law says you have to pay back at least part of the money when you file your tax return in the spring of 2015. If your circumstances change midyear – say, you get a new job – you can go back to the exchange and correct your information and adjust your subsidy accordingly. Says Pollitz, “A big part of the trick will be how well people are counseled about all of this, and how well they remember [or are reminded] to come back to the exchange to report midyear changes that affect their subsidy entitlement."