Another US health insurance question
March 15, 2013 7:10 AM   Subscribe

How are things looking over the next few years as far as health insurance costs in the US?

The realistic health insurance rate for a good family plan (self employed, so I get the crappy and expensive individual policy) is more than my mortgage, and not only is coverage expensive and precarious under an individual plan but I'm ALSO factoring in my experience in that the premiums tossed around are teaser rates which nearly double every year.

I don't want to turn this thread into a political debate or one over what's causing the high prices, as that's already been hashed out elsewhere, but what I'd like to know is what's realistically coming over the next few years in terms of health insurance reforms for those who are NOT low-income, high-risk, or enjoying group/employer coverage, and how much of it has been (or could be) rolled back?

Also as far as the red states that are passing all these symbolic bans against Obamacare, does this pose any real threat? I'm guessing the state pools would still have to comply.
posted by crapmatic to Law & Government (7 answers total) 3 users marked this as a favorite
It's really going to vary by state. What state are you in/likely to be in over the next few years?
posted by mskyle at 7:14 AM on March 15, 2013

Response by poster: Oklahoma. Yeah, our legislators just voted overwhelmingly for the symbolic Obamacare ban. I'll leave my personal opinions out of it. Moving is definitely on the table.
posted by crapmatic at 7:26 AM on March 15, 2013

I don't see any way it will get cheaper for the middle class. I'll be happy enough if the annual premium increase falls back to single digits. Longer term, I think the entire system collapses and forces us into something resembling a Canadian / European system.
posted by COD at 8:13 AM on March 15, 2013

There's three different things that will be going on starting in 2014, if you're buying coverage in the nongroup (individual market):

1. New policies sold in the exchange will need to meet new standards in terms of what they cover in order to count as "credible coverage" (that is, will allow people covered to meet the criteria for having health insurance in terms of not facing a tax penalty). Generally states are setting these standards, but in Oklahoma I believe they will be set by the federal government because the state is refusing to run its own health insurance exchange. These minimum benefit standards are generally going to be more expansive that what is currently covered in the nongroup market--it'll include things like maternity coverage, and mental health and substance abuse coverage, all of which historically hasn't been covered in the individual market. This will cause the (full) premiums associated with nongroup plans to rise in virtually all states, and almost definitely in Oklahoma.

2. Lots and lots of new people *should* be entering the individual market, because there are tax penalties for not having coverage and subsidies for people to buy coverage. In theory this should drop premiums, because a lot of the folks currently sitting out are presumed to be younger, healthier folks who are gambling on not needing coverage right now (no current expensive health conditions). However, how many of these people ACTUALLY sign up will probably vary by state and by how aggressive outreach / marketing is. If Oklahoma has a bunch of news stories about "LIVE FREE WITHOUT OBAMACARE" you could see a fairly high proportion of people refuse to sign up; that would mitigate the expected effect of lowering premiums. Hard to say how this factor will play out.

3. No matter what happens with full premiums (which are driven by the cost of the medical claims for the group actually covered), many people will see their own bill go way down, because the federal government will provide subsidies towards the cost of premiums. These subsidies will exist for families up to 400% of the federal poverty line (FPL)--which is something like $90,000 income for a family of four. At the very top end (350-400% FPL), the out-of-pocket costs for premiums will be capped at around 10% of your income. If you fall into the group below 400% FPL, it's likely that the premiums that *you* face will drop, even if the underlying costs are going up. You can check out the useful calculator here to see what these subsidies might look like for you.

So, it's hard to say, but I think #3 is probably going to make the biggest impact on you, although not knowing how much you make and how much you pay now I can't say for sure.
posted by iminurmefi at 9:14 AM on March 15, 2013 [1 favorite]

Oh, and also, regarding this:
I'm ALSO factoring in my experience in that the premiums tossed around are teaser rates which nearly double every year.
These might be teaser rates (I'm not an expert in the Oklahoma market specifically) but more likely, the low rates followed by big hikes is related to churn in the market. When insurance companies set rates for an individual policy, they usually take everybody who applies around the same time for the same policy and create a "block" of business that they underwrite using similar tools to an employer group. However, unlike with an employer group, on a national level you tend to see about half of all the people in each block of business drop out and find a new policy within 18-24 months. The people who do this aggressive price-shopping are overwhelmingly the youngest, healthiest folks who have no problem getting a new plan; the sicker folks who are currently using their insurance tend to hang on longer. What this means is that the block of business becomes very expensive, very quickly, and the more expensive it gets the more likely it is that those who are able drop out to find a new policy. Rinse, repeat.

This churning should calm down a whole lot in the new market, as most people are going to be getting subsidies and so would be facing the same price no matter where they bought their policy. This alone should reduce some of the crazy price swings you're seeing and the need to hop from plan to plan, even if your family doesn't qualify for subsidies.

And on your last question: states can't overturn the ACA (new health care reform law), the Supreme Court has already heard the case and declined to overturn anything except the mandatory expansion of Medicaid, and if states refuse to comply the federal government is simply planning to come in and take over the individual market and operation of the exchanges itself. So long-term, I can't promise that the law won't go away if it proves remarkably unpopular, but I don't think you should really worry about it being rolled back, at least over the timeframe of the next 5 years or so.
posted by iminurmefi at 9:24 AM on March 15, 2013 [2 favorites]

crapmatic: "Oklahoma. Yeah, our legislators just voted overwhelmingly for the symbolic Obamacare ban. I'll leave my personal opinions out of it. Moving is definitely on the table."

Don't order the moving van just yet; HB 1021 has only passed the House, which is where the brunt of the 10th Amendment fanatics are located. The Republicans in the Senate tend to be more moderate. The companion bill in the Senate is SB 203, and it looks like it hasn't even made it to the Senate floor. Today was the third reading deadline, so if SB 203 couldn't make it off the floor of the Senate, there may not be enough votes to get a nullification law out of the legislature.
posted by Dr. Zira at 4:47 PM on March 15, 2013

Response by poster: Not sure if anyone is still reading this thread but.. many thanks! This is great info.
posted by crapmatic at 9:38 PM on March 16, 2013

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