The most significant piece of the bill (ObamaCare) goes in to affect January 1st 2014. At that time, ALL Americans are required to purchase health insurance or pay a penalty and/or fine. Insurers are no longer permitted to underwrite or decline any person for any pre-existing conditions, or even charge them higher rates. Additionally, insurers will be mandated to offer and sell plans that meet specific benefit thresholds.
All these and many other benefits in the ACA sound attractive. However, we feel the ACA did NOT address the key request and requirements many Americans wanted; to bring down the COST of insurance and lower the premium. The mandated benefits, keeping young adults on their parents plans to age 26, preventative care covered 100% without a co-pay and other mandated benefits are all cost “DRIVERS”.
In California, the cost of health insurance for companies from 2002-2012 rose 170% compared to the overall inflation of 31.5% according to the California Healthcare Foundation.
Will the ACA Drive Premiums Higher or Lower?
That is the big questions. The thought that early diagnosis with preventative care coverage would lead to early treatment and lower cost of care. It is too early to determine if this is true. However, the costs to implement the benefits are here now and thus this is a cost (premium) driver.
With all Americans participating in the health insurance market, the thought was that the larger pool of participants would spread out the risk, and with a larger pool of premiums the risk would be lowered. However, with obesity, smoking, diabetes and other lifestyle diseases embedded in our culture, the objective of adding the “purchasers” to the pool could be counter-productive.
Many individuals have purchased plans with deductibles greater than $2000 and were catastrophic in design. These plans must be taken off the market as of January 2014. Those Californians’ that are “kicked off their plans” and forced in to the exchange to purchase a plan with compliant benefits are expected to see their premium rise up to 30%.
In 2015, the California Exchanges and all nationwide exchanges must be self-supportive. What this means is that, at present, there is not funding in place to subsidize the exchanges. Premiums must support the plan.
When they Congressional Budget Office “scored” the ACA it was deficit neutral at a cost of 800 billion dollars. Recent studies have indicated that this estimate was significantly flawed and recent numbers are reflecting a true cost of over 2 TRILLION dollars, and that is even without the ACA being fully implemented.
The risk is that the claims of previously un-insured consumers with pre-existing conditions entering the market with high risk and the newly insured looking to use the plan they are forced to purchase has been under-estimated, and the high claim rates will force premiums to skyrocket in 2015. This could be catastrophic to the future viability of Covered California and the nationwide exchanges.
In summary, with significant cost drivers and few mechanisms in place to control cost, fewer doctors accepting the Medical reimbursement rates in the Exchanges and skyrocketing premiums, we feel the Healthcare Exchanges are at significant risk for implosion.
Over the next few years, the reality of the ACA will write its own history and the direction of our country toward our health care delivery remains in question. The only thing we do know is to expect many changes as the law evolves.
We support a base Medicare plan for the country which would cover hospital and doctor benefits. Like the senior Medicare market people can purchase supplemental plans to pick up what original Medicare A&B do not and purchase a Medicare Part D (Rx) plan. Today I can insure an age 65 or older person on Part F, which picks up all the parts of A&B that are not covered for $150 per month. The cost to insure a young person would be minimal.