The sticker shock people are experiencing for individual policies is due to guarantee issue. The underwriting has to assume that everyone applying has significant health problems. People who are healthy have to start paying premiums at a level that assumes they have a chronic expensive disease like diabetes.
Insurance companies cannot offer reduced premiums for healthy people, since that would violate the ACA. The only exception are grandfathered policies that were in effect prior to the enactment of Obamacare in 2010.
People who have an actuarial risk of $300/month are not going to pay $900 a month for health insurance. Without a very strong individual mandate, the only people who will sign up are those who perceive that it is a “bargain” – as the pool becomes made up of only really sick people, the premiums (or subsidy) will zoom up. My HIPAA plan in Connecticut was up to about $1,800 a month when I bailed.
“The sticker shock people are experiencing for individual policies is due to guarantee issue. ”
Shouldn’t be sticker shock- it was thorougly debated in 2009 and 2010. The key point was that it makes no sense to buy a policy if you are healthy since you can not be denied once you get a chronic illness… the plan is designed like a fire insurance regulation that requires the insurance company to issue the policy so long as you call the insurance company before you call the fire department to put it out, so why buy it before the fire?
For a diagnosis of a chronic expensive disease, the deliberately uninsured will be eating those expenses for up to a year. Maybe I didn’t make the point clear, as it is 180 degrees opposite of what I was explaining.
Let’s say I chose to not buy insurance and what happened in 2009 happens tomorrow. I spend 4 days in the Hospital and get a $37,000 bill from the hospital. If I apply for coverage, it doesn’t cover me until 2014 (after I pay the first $5-$10k, and it won’t cover anything in 2013.
Let’s take an example closer to your point – let’s say I was diagnosed with kidney failure. I would have to pay my own expenses until Jan 1st, then the deductible and copays. The insurance company would then be on the hook for dialysis and maybe a kidney transplant – however, Social Security already has a mandate to pay for kidney dialysis under Medicare disability – which would be true of most sudden onset costly diagnosis diseases like HIV/AIDS. The deductibles and copays will ultimately force many people of that type of problem ino Medicaid. If your income is low enough to qualify for Medicaid, you’re not qualified to be in the exchange. A question that follows (which may directly affect me) – if your income is low enough to qualify for Medicaid, but you are not eligible because you have assets, can you even buy a guarantee issue plan without the subsidy? (I’m pretty sure the answer is Yes)
I’m no expert on Medicaid but many government programs make a distinction between liquid assets, retirement accounts, and the value of one’s home. Take a close look at the structure they require and compare it to the structure of your assets. You name need to open a retirement account, or invest in a more expensive home than you need.
Your best bet, Art, is to get hired by a startup where all the employees are 20 something – you will get the same group rate they do and they will not realize why their rate went up after you joined. 😉
If the company has 50 or fewer employees, the ACA’s SHOP provisions apply. The pricing uses the same pricing model which is based only on age and zip code. The employer is required to offer you the ability to enroll – they are NOT required to pay for the coverage! – although there is a surcharge if too many of your employees don’t sign up.
What??? Obamcare requires my employer to “give” me health insurance, but I have to pay for the premiums myself? Surprise!
So the only advantage to be in your employer’s SHOP plan (if the employer is not paying) is the small employer plan may have a different risk pool with lower premiums – it is up to each state if they want to merge the individual and small business risk pools. You also will get better tax treatment.
To encourage business to pay for the SHOP premiums, the employer will get a 50% tax credit, but if the business is not making a profit, that has no value.
This bill was 2,000 pages long – we’re up to about page 11.