Remember all of the promises you were told when politicians were attempting to pass the Affordable Care Act?  Can you recall all of the great benefits we'd see with the passage of the landmark piece of legislation?  I certainly remember many of the lofty goals and utopian outcomes our leaders told us would come to pass if we simply trusted government to take the reins of one our biggest national industries.

While we must allow the law to really make its impact felt before we can make a final judgment on the merits of its ability to improve healthcare quality and increase accessibility, we can weigh in on the major area that all of us feel monthly, which is our health insurance premiums. 

As we've noted several times in the last month, Open Enrollment begins this weekend and we'll be able to get our first view of the pricing of 2015 health insurance plans.  Fortunately, I've been able to get an advanced look at what we'll call "solid estimates" and the results are frankly.....exactly the same as before or worse!  In the past years before Obamacare we would typically expect annual rate increases of 6% to 10% each year.  Sometimes those rates would only climb 4%, and bad years would see 12% hikes.  We've all been told that the Affordable Care Act would "bend the cost curve" and make healthcare more affordable since services would be spread across a larger pool of insured people as the losses providers felt from serving the uninsured went away.  Unfortunately, we're too early to see any real impact or we were simply lied to.

2015 Affordable Care Act Pricing Analysis

Let's jump into a quick example and I'll remind you of last year's analysis where we did a post in October of 2013 - Obamacare Impact, Pricing Analysis.  In this blog post we reviewed the impact on Dan and Dawn, 30 and 31 year old clients.  In last year's analysis we noted that their plan was being terminated and they were going to purchase the closest similar plan called the Blue Cross Blue Shield Silver PPO 004.  This plan ended up costing our clients $575.54 a month.

As we check back in on Dan and Dawn, I did one thing that actually UNDERSTATES the impact of the new plan year, I didn't age them so Dan and Dawn have somehow tapped into the fountain of youth.  Why did I keep them at 30 and 31 instead of aging them?  I want to make sure that we look at the pricing impact in 2013, 2014 and 2015 on insurance purchasers of the same age.  Remember, we were told that our healthcare would improve and our premiums would go down, so we want to test this promise to verify if it was true.... or something else.

The take away here is that Dan and Dawn will suffer another round of budget destroying premium increases in 2015.  The increase for this young couple is a staggering 13.5%!  It appears the cost curve has been bent, just in the wrong direction!  Just for good measure, let me remind you of the original premiums in the table below.

Clearly, the impact on Dan and Dawn is simply dreadful.  In the span of just 15 months, their health insurance premiums will increase 94%!  Advocates of the Affordable Care act will suggest that subsidies are available for anyone that makes less than 400% of the Federal Poverty Level (FPL).  I would argue that the premiums are still greater, it is just the tax payer that is paying a portion of the bill!  As I've argued over and over, the Affordable Care Act simply has made policies more expensive, thus the US taxpayer is paying much more than it should.  Wouldn't it have been better just to provide the old policies to everyone?  Now, the subsidies effectively only buy half as much as it would have just 15 months ago!  Only big government can craft a solution that makes regular citizens pay more, have higher out of pocket costs for deductibles and co-insurance, and make the government's dollars go half as far!

Mixed Bag

Believe it or not, the 13.5% rate increase is not the worst premium increase I found.  Several of the lowest cost plans with Blue Cross (the PPO 005 and PPO 006) will be raised 20%.  Other plans in the Blue Cross portfolio will run 10% higher in the next year.  The striking thing is that HMO products (these are the ones that the government subsidizes heavily via your tax dollar) only increased 2% to 3%.  Once again we are seeing regular middle class citizens get the very worst outcome.  Their premiums increased significantly (few people would ever choose the HMO if they had a choice) and the government will proudly tell them that healthcare premiums for the plans they oversee only went up a little!

Not everyone has endured the shock of this premium debacle.  Many Blue Cross Blue Shield policy owners are losing their coverage if they purchased a policy after October 23, 2010.  These Blue Cross policy holders will unfortunately become aware of the awful impact the ACA will have on their wallet.

Cigna

Let's not just focus on one carrier.  Cigna like all the other insurance companies also plans to raise premiums in 2015.  Our analysis suggests that their plans will see about a 15% increase for each plan offering.  Price changes aren't the only major event happening at this firm.  As we discussed in 5 Obamacare Surprises Coming in 2015 we highlighted that Cigna will also drop MD Anderson, a major cancer hospital in the Houston area, from their plan. 

Humana

Humana offered a few plans in Texas in 2015 and was very competitive in certain regions throughout the state.  In the Austin and San Antonio areas Humana priced products very aggressively and often was the best value.  In the Houston region, Humana plans were not priced as competitively, but that may change in 2015 as Humana raised rates about 3% for their Silver and Bronze PPO plans and 8.5% for their Gold PPO plan.  Any increase in my book is bad, but clearly Humana's approach is less bad than Blue Cross or Cigna.

In summary, the Affordable Care Act continues to provide nasty surprises and continues to fall short of our expectations (or promises).  While many will be eligible for subsidies to help pay for premiums, the US taxpayer's portion is being used to fund overpriced insurance purchases.  A 13.5% increase for Dan and Dawn is simply inexcusable and unaffordable! 

Great Guidance, Pricing Analysis, and World Class Service

You must examine your plan options each year.  It is not in your best interest to continue using the same plan UNLESS you have examined other plans or carriers and their pricing.  The analysis of the universe of your options will help you save money and ensure you have an appropriate plan for the way you use insurance.  Let Texas Health Design serve you in the process.  Please click CONTACT US or get a QUOTE NOW to get started.  We are just a call away.  Call 713-422-2935 if you prefer to speak to our expert staff.

We're just 4 days away from the beginning of Open Enrollment, contact us today and we'll put you on our list to send offical quotes when they are available during the week of November 15th!

Jason Bohmann

Texas Health Design

713-422-2935 (office)