Obamacare - practical discussion

Thats true that people pay into it but that 3-4% doesn’t cover the cost.

Government general funds still cover 1/2 of Medicare costs.

Well, why don’t parents think they should pay for their kids schooling? And why should a couple with no kids to put through the public school system pay the same property taxes as parents with a kid or five? Not to mention the tax exemptions they allow. The government tax and benefit system isn’t always equitable or fair.

This is getting way off topic. Short answer though, is that is costs MILLIONS to run a school district, even a small one. If you divided up the cost per child, no family would be able to afford to send their kids to school. Since public education from K-12 is compulsory, society as a whole has to foot the bill. Unless we want to change the laws and become like nations where the kids can’t go to school when their parents can’t afford school supplies and fees.

[quote=“jerosen, post:85, topic:31”]
I’m not really sure what you think Obamacare is doing about the costs of the most expensive 5-10% of the population that differs from any other insurance program. Obamacare insurance costs only covers the costs of people in Obamacare and does not carry any extra burden beyond that group.[/quote]
Of course it does, the largest of which is the NII tax of over $100B in “extra burden”. Those with enough total income pay an extra 4% of their investment gains. For those with long term gains, this is a 20% increase in the tax rate (from 20% to ~24%). Next on the list is hiking the Medicare tax rate on higher incomes, so all those wages get taxed as well. There are plenty of other Obamacare taxes:

Medicare has a 5-10% group within it that has extremely high costs. Also Medicares base average costs are well above Obamacare. Average spending per Medicare enrollee was nearly $11,000 as of 2014. Obamacare premiums are around half that much.

Yes, of course some people have high costs. For Medicare, everyone who works pays into the system and they don’t know yet if they’ll need those benefits or not (or even live long enough to claim it!). It’s a classic example of diversifying risk through insurance.

In Obamacare, the people in the individual market bear the costs of these very sick people, but instead of having 2% of very expensive people out of 100% of those age 65 for example, now you have 2% of those people’s costs being spread over the group of 5% of average health people in the individual market, while the other 93% of people skate away scot free from paying for this (income-based taxes aside for now). This is why the premiums are so high compared to what they were before the ACA.

Yes, individual Obamacare premiums are around the same price as the Medicare number you cite, but remember that the average person under Obamacare is only 35-40 years old while the average Medicare person is practically dead ;). You should expect a factor of several higher cost for the Medicare group based solely on their age. For example, the oldest ACA people in their early 60s would have gotten premium rates about 6x higher than the young adults in their 20s if it weren’t for the law restricting premium pricing.

Government covers the bulk of Medicare. For 80% of Obamacare enrollees government cover the bulk of the cost too.

Taxpayers cover the costs, one way or the other. The government doesn’t magically pay for anything, it just bills other taxpayers. This is why costs should matter, and the ACA hasn’t done much for affordabilty since it was designed to increase the fraction of insured people to score political points and not particularly to reduce medical costs.

Seems that the real complaint is that ~20% of the highest income Obamacare enrollees have to pay for their insurance themselves.

They are not complaining about paying their own insurance. They’re complaining about paying 3x the fair rate, ie for themselves and two other people in poor health as well. If the ACA covered the whole market and not just the small individual market, those extra two unhealthy people’s cost would be spread over 20 people instead of 1 (i.e. 5% individual market size vs 100%) and then the costs would be much more reasonable.

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Here’s a good discussion of non-ACA short term plans and alternatives.

https://www.bogleheads.org/forum/viewtopic.php?f=2&t=232507

The main benefits are being 1/3 the typical cost of an unsubsidized ACA plan, and giving a good network of doctors. The downsides are preexisting exclusions or other health-related disqualifications (i.e. They don’t have to take you), possible limitations on certain medical issues like maternity or mental health and drug coverage, and of course a possible tax penalty (YMMV getting out of this). BruDude, an insurance broker who used to be on FWF and was quite helpful, had some good comments half way down:

Petersen and National General have short-term plans with national PPO networks that can be extended for up to 12 months. You have to buy a 3-month policy and then it can be renewed up to 3 times. If you are diagnosed with a pre-ex condition during one of those periods, it will be covered in the following period. They do not cover pre-ex from before the policy was purchased though, don’t cover maternity/mental health/preventative care, and they aren’t compliant for tax purposes.

If the lowest priced bronze plan on HC.gov is more than 8.16% of your household income, you would be exempt from the penalty since it would be considered unaffordable.

I would stay away from any ministry sharing plans and US Health Group.

The Petersen and National General policies allow for guaranteed renewal and pre-ex conditions developed in a prior coverage period are covered, but pre-ex conditions from before the first policy were bought are not covered. Ex: Buy policy that starts January 1, have heart attack January 30, renew policy on April 1, heart attack/complications still covered. Pivot/Companion Life also has one of these type of policies available. Options vary depending on what state you’re in.

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Pivot / Companion Life short term policy resources. No network issues - see whoever you want.

Summary brochure:

States covered now and anticipated:
Now: AL, AZ, AK, DC, FL, GA, IL, IN, IA, KY, MI, MS, NE, OH, OK, PA, TN, TX, VA, WV, WI.


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Petersen short term medical resources. 3mo plans, just a fixed deductible and then 100% coverage up to $1M max, national PPO network.

https://www.piu.org/health-insurance/short-term-major-medical

brochure:

Coverage currently only available in AZ, CA, CT, GA, IL, LA, MN, OK, TX, VA

Limitations include only paying U&C for out of network care, and non-covered expenses are not covered at negotiated rates. Rates 1.25x higher if you want your moderately risky sports to be covered, like skiing, rollerblading, etc. the very risky stuff they just don’t cover.

You can get up to 11 months of rolling coverage (see their “retro date”), in that new illnesses that show up in the first 3mo are covered for almost a year before you need to renew with them as “preexisting”.

they also offer a separate plan for seniors approaching Medicare age, but you have to be 60 for that.

Agile / National General short term policy resources. Aetna PPO network. Offers some more expensive, lower max coverage policies as guaranteed issue, rather than medically underwritten (i.e. $100k max instead of $1M max for the former vs the latter).

https://www.agilehealthinsurance.com/term-health-insurance/national-general

Sample brochure (may be state specific, had to put in a state to get info)

More medical exclusions than I’d seen in the fine print for the others, including not covering things like hospice, joint replacements, kidney disease, organ transplants, sales tax, etc… (as well as the typical exclusions for mental health, fertility issues, routine pregnancy, hearing/vision aids, drug abuse, etc).

Agile also offers several other plans not through National General. Not sure, these may not have the rolling renewal feature so that you can keep a year’s worth of coverage for conditions that arise only since the start of your coverage with them.

Everest:


Everest Prime:

LifeShield:

standard life:

GoldenRule / UnitedHealth:

OK thats a general tax that everyone/ anyone with high income is paying not specific to people buying Obamacare.

I’ve really no idea what you’re talking about here.

The most expensive costs for the individual market are spread across the individual market. This is fundamentally how any insurance works. Are you just upset that sick people are allowed to have insurance now?

The problem for the overall healthcare insurance system here is that the individual market is very small compared to the whole market, only 7% of people give or take. 3/4 is employer group plans, including government employees, and the rest is Medicare and Medicaid. The problem is very sick people are dropping out of the 3/4 sector of the pool, i.e. working people with coverage, and into the 7% individual pool. So essentially the individual pool is being asked to subsidize the health costs of a 10x larger group, and consequently the premiums skyrocket, the non-sick individuals leave somehow or refuse to buy, and the government has to extort the healthier members of the individual pool via punitive penalties or bail out those who remain in the individual pool (or let them suffer with unaffordable insurance / medical costs, I supposed).

In short, the Obamacare plan of guaranteed issuance applied only to the individual market, is destroying the individual market. If they want that to work, they should have pooled the costs over the whole population instead of trying to support these sick people using just a small corner of the overall pool. If there are 2 sick people out of say 80 (ignoring Medicare / Medicaid at about 20), the cost sharing works if each person pays ~1/40 (=2/80) of those excess costs a lot better than if they pay ~1/4 (=2/7) of those costs.

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Do you have any data or anything to support the idea that sick people are dropping out of employer provided coverage into the exchange in any significant numbers? Or is this pure conjecture on your part?
I’m sure that happens in some cases but I can also see people with high medical costs clinging to their jobs and employer sponsored health insurance.

Exchange plans are still a lot cheaper than employer provided insurance.

Average cost in the exchange is $4382

Average cost for a single person in group employer provided insurance is $6690

This might not have a direct bearing on what the insured individual has to pay.

Out of curiosity, I recently plugged some info into the exchange to see what it would cost us for family coverage per month, if we didn’t have insurance through my husband’s employer. It gave me a figure of over $1100 per month, which seems to be in the ballpark of what people claim they have to pay without subsidies. My husband will pay $152 every 2 weeks for our family coverage in 2018, which is a slight increase over this year’s costs.

yeah.

Employer plans are usually heavily subsidized. Most people don’t see or realize the real costs since the employer pays much of it and the % of subsidy varies widely based on the employer.

xerty’s is arguing that Obamacare plans are more expensive and have unnatural inflated costs. Yet the actual costs of employer provided plans are a lot higher.

Of course bearing the full cost of an Obamacare plan is likely more expensive out of pocket than an employer plan where the employer pays for 75% of it.

Yes. I haven’t had to shop for insurance for many years. I paid for my own health insurance when working minimum wage/barely-above minimum wage jobs, but it seemed more affordable then.

[quote=“jerosen, post:101, topic:31”]
Do you have any data or anything to support the idea that sick people are dropping out of employer provided coverage into the exchange in any significant numbers? Or is this pure conjecture on your part?[/quote]
I remember hearing how terrible it was before Obamacare and how you’d lose your job and your work insurance as soon as you got sick for more than a few days, and then you were at the mercy of expensive COBRA and preexisting exclusions, neither of which you could afford. Here’s Elizabeth Warren telling in 2005 us how big a problem this was before Obamacare:

http://www.washingtonpost.com/wp-dyn/articles/A9447-2005Feb8.html (2005)

each year, 2 million Americans – those who file and their dependents – face the double disaster of illness and bankruptcy.
The link between jobs and health insurance is strained beyond the breaking point. A harsh fact of life in America is that illness leads to job loss, and that can mean a double kick when people lose their insurance. Promising them high-priced coverage through COBRA is meaningless if they can’t afford to pay. Comprehensive health insurance is the only real solution, not just for the poor but for middle-class Americans as well.

People who lose their health insurance through their jobs had a hard time affording coverage or even getting coverage. Thats a pretty broad truth. They’re saying 3/4 of people couldn’t afford paying their own coverage or healthcare bills. Thats most people. Most people aren’t “the most expensive 5-10%”… they’re most people.

This doesn’t mean all the most sick and most expensive are dumped in the Obamacare exchange at the cost of others.

Do you have any actual data showing that the actual costs in exchange groups are higher on average versus employer sponsored groups?

The fact that premiums are significantly lower than employer group plans seems to imply that the costs are lower. I mean there could be demographic differences that explain that but I can’t think of any. I’d expect the exchanges to have more older people on average.

But you’re stating that theres extra “most expensive 5-10%” people in the Obamacare exchanges. Overly burdening the exchanges. so why are average premiums so much lower than employer plans ?

Don’t seriously ill adults end up losing their jobs and have no choice but to go into the individual market? Unless they happen to be a dependent on someone else’s policy?

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While the average single ACA premium is lower than the employer group one, $400 vs $500/mo for single roughly, there are a number of contrary factors that suggest the cost of healthcare for ACA individuals are higher:

  1. The insurance companies have been losing money hand over fist in the ACA markets (even with some transitionary taxpayer subsidies), so the premiums we see even with the big hikes year after year are not yet reflective of the full cost of the average person’s healthcare.

  2. Deductibles for employer group plans are about $1k, while ACA averages more like $4k. Thus the value of an ACA plan with the same premium is worse since if you incur say $2k in costs per year, that already gives back basically the whole premium difference, and higher costs are worse. OOP max numbers are also better for group plans, with about half below $3k (vs the $4k average for ACA). Alternatively, think of an employer group plan with a $1k deductible as comparable to a (expensive!) Platinum plan which runs almost $600/mo on the exchange, while the average ACA is a mediocre Silver plan.

  3. Most (and in some areas now all) ACA plans are HMOs, while the typical group plan is a PPO (>50% PPO or similar, with only 15% HMOs). PPOs provide much greater flexibility as well as out of network coverage that is completely lacking for ACA plans.

  4. Network quality is much better for group plans than ACA ones. For example, narrow networks are defined by having less than some fraction of hospitals or doctors within a given distance of you available to you under your plan. For group plans, around 10% were narrow, while for ACA plans it was 70%+ with over half of those being “ultra narrow”.

In short, when you figure in the costs of the higher deductibles, the worse benefits, the worse networks, and the insurance company short term losses, all of which are subsidizing the ACA premiums to keep them artificially low, it’s a surprise the Obamacare plans are as cheap as they are. In my market, every single insurance company has decided that they can’t offer a profitable PPO for any amount of money and I’ve heard examples where those that remain elsewhere run 2-3x the cost of the typical ACA plan. These might be more directly comparable to an employer group plan, which would suggest the adverse selection was indeed significant.

Various sources below:






https://www.agilehealthinsurance.com/health-insurance-learning-center/problem-with-narrow-networks

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I’m not sure how much money insurers are losing in the exchange plans. Got any actual specific financial data on that?
I know theres lots of whining by insurers while they raise rates, but thats not real financial data. They undoubtedly lost money in the markets they pulled out of but I doubt they’re continuing to lose money they’ve stayed in for 4+ years.
As of Q2 2017 the claims were only ~77% of premiums :

If they can’t make money with 22% overhead then thats the insurers problem IMHO.

Kaiser has always said they make a profit and they’re one of the largest.

Yes average deductibles in the exchanges are a lot higher. That does make a difference. I think this would explain the difference in cost mostly. If you’re in the exchange you can get a low deductible plan for $500-600 which is about what employer plans cost.

Yes the distribution of HMO vs PPO matters too.

  1.  This makes a difference too.   How much difference it makes is not known.    While 70% of plans may be narrow that doesn't mean that 70% of people are in narrow plans.    How many people are in narrow plans?
    

You make some good points. I think it all adds up to explain why Exchange plans are so much cheaper on average than employer provided plans. But your argument was that exchanges are burdened with excessive high costs. You haven’t proven that at all. Appears they’re closer to equivalent to employer provided plan costs.

And just a data point, in my market a 40 year old male would pay $582/mo for a $1000 deductible PPO gold plan which is ~40% more than the cheapest gold EPO. The low deductible PPO that my employer offers is $686.

ACA plans skew older and that makes the rates higher.
ACA plans are often smaller group population and that can make costs higher versus a very large group plans.