The Truth About Your Health Care Premiums in 2014

We've had a lot of news hit the tape in the last week and I wanted to provide some clarity in what is quickly becoming a confusing mess of spin and half-truths. I'll start by saying that I'm clearly biased, but my sincere hope is that we get the truth rather than some version of what I want or what I think. As you know, I feel strongly that the PPA (Patient Protection Act) will increase medial costs and absolutely insurance costs for most of us, but let's not rely on my experience and opinion, let's look at three stories that were posted this week and attempt to discern what is correct.

The Good News - Premiums Lower In California?!?

The group called Covered California who is responsible for implementing the rollout of the California Health Exchange (California's version of Obamacare) announced this week that the exchange policies would be more affordable than we've heard. In fact, here's what they had to say about the news.

"The big news today," Peter Lee, executive director at Covered California, told reporters Thursday morning, "is that because of the Affordable Care Act, we've hit a home run for consumers."

At this point, rates are still tentative, pending review by state regulators. Final contracts are slated for approval in June.

The new information is for individual consumers only. Covered California will announce options and rates for small businesses in June."

We'll get more into the details in a moment, but at first read, this looks like great news with Covered California saying that premiums could be about 10% lower than expected.

The Not-So-Good News - RI Rate Increase

In this article unfortunately we find out that Rhode Island insurance purchasers are looking at double digit price increases on their policies. Blue Cross of Rhode Island looks to increase group premiums by 15% and individual policies by 18%! Other providers also are hiking rates in the state. Remember, evil insurance companies no longer can make obscene profits without limit as they must use at least 80% of every dollar they take in the door in the form of premiums for health care costs. How is it that we are seeing pretty dramatic increases in costs in Rhode Island and "savings" in Rhode Island? Something just isn't making sense. Let's dig a bit deeper.

Home Run Or Triple Play - Rate Shock And Spin

The Forbes article by Avik Roy highlights all things wrong with the healthcare debate. Mr. Roy details that California health insurance rates for individuals and families, contrary to what Peter Lee says, are going to skyrocket in 2014. How is this possible? If you've been reading our blog posts over the last two years, you are well aware that there is no way that individuals and families will see reductions in policy costs if they are current policy holders of individual policy holders. In fact, we've been saying that individual and family policy cost will gradually trend (or not so gradually) toward the price of small employer pricing for health policies. Unfortunately, this is exactly what we are seeing for buyers of individual policies in California.

In the examples provided by Mr. Roy, we see that a 25 year old male will see price increases of more than 100%. A 40 year old male could also see increases of 50% or more. Why the staggering price hike and how do we balance these facts with what Mr. Lee stated?

In the post we did in November titled, "4 REASONS YOU'LL PAY 50% MORE NEXT YEAR" we highlighted that because the PPA makes carriers price plans without regard for gender, health status, and to some extent age, younger and healthier payers will pay much more. All of those ideas are still valid, we are just now seeing the predictions being validated.

So, how did Mr. Lee come to his conclusion that prices would be lower? Well, I can only say that Mr. Lee was comparing the cost of a policy on the exchange to that of a group plan provided by an employer in the state. As a result of this comparison, his group can share their story about why the things that they are doing are helping, but clearly there is a large segment of the population that will actually face a much different reality.

Other Beneficiaries?

Alright, as usual I want to frame this debate as evenly as possible. There will be people who will benefit from the exchange and I'll simply name a few right here. If you are sick and have a pre-existing condition, that would cause you to receive a rate up or a denial, you will probably be a winner with Obamacare. First, in 2014 you'll be able to receive coverage where as in 2013, you might have been denied coverage. Secondly, if you have a pre-existing condition, you cannot have it excluded anymore and your rate cannot be increased to compensate for that condition. On the merits of those items, the PPA is going to benefit someone.

If you are not making much income, you'll probably also benefit as you'll have the ability to have someone else pay for some or all of your premium (say thank you to other taxpayers).

If you have a mental health issue, carriers will now need to provide coverage for those conditions. This is especially big for insurers like Blue Cross Blue Shield of Texas that EXCLUDED those benefits from their contracts.

If you are going to have a baby (need maternity coverage) then you'll also see some enhancements in coverage here in Texas as insurers will need to cover those costs in the future.

Drawbacks

While the Biz Journal article above discusses the "savings" of the California exchanges it also eludes to some of the drawbacks of the exchanges. I'll do an article next week highlighting some of the bad things that will come, other than the increase in prices.

From my perspective, I think Mr. Lee's statements are pretty close to an attempt to sell how great things are at the cost of being straight forward and honest. I guess transparency and honesty don't matter much when you are trying to promote your product (health exchanges). I would have been happier for Mr. Lee to describe explicitly that he was comparing the rates to employees in firms and then clearly highlight that individual policies would increase significantly. It's too bad he didn't speak plainly.

What Can You Do Now?

If you are currently unhappy with your health coverage or haven't had the chance to examine prices of available plans, let me know. You actually could benefit by locking in coverage this year before December 31st of 2013 because you'll be able to buy a "grandfathered" plan that won't be subject to the price increases you face until you renew later in 2014. On the other hand, if you wait until the open enrollment period in October (for a 2014 effective date) or wait until your renewal period in early 2014, you will pay higher prices for the new plan. Why not look at a new plan now, lock in the lower prices, and then examine your options when new plans become available in 2014. If we can save you money and still provide you great health options, it is probably worth it!

Please contact us today at [email protected] or simply call us at 713-422-2935. If you just want to look at prices, please visit our Get A Quote page. We never want you to buy a policy without discussing it first. Once you get a quote, please call us and we'll ensure that you know what you are buying! We often help our clients save money and obtain better insurance for their needs, don't neglect to get an experts help! The price is the same even if you don't use an agent or broker, you might as well get great service!

Jason W Bohmann
Texas Health Design
www.texashealthdesign.com
713-422-2935