Lack aid? Many counties have only pricey plans
Jayne O'Donnell and Paul Overberg, USA TODAY
8:45 a.m. EST December 26, 2013
More than half of the counties in 34 states using the federal health
insurance exchange lack even a bronze plan that's affordable — by the
government's own definition — for 40-year-old couples who make just a little too
much for financial assistance, a USA TODAY analysis shows.
Many of these counties are in rural, less populous areas that already had
limited choice and pricey plans, but many others are heavily populated, such as
Bergen County, N.J., and Philadelphia and Milwaukee counties.
More than a third don't offer an affordable plan in the four tiers of
coverage known as bronze, silver, gold or platinum for people buying individual
plans who are 50 or older and ineligible for subsidies.
Those making more than 400% of the federal poverty limit — $47,780 for an
individual or $61,496 for a couple — are ineligible for subsidies to buy
insurance.
The USA TODAY analysis looked at whether premiums for the least expensive
plan in any of the metal levels was more than 8% of household income. That's
similar to the affordability test used by the federal government to determine
whether premiums are so expensive consumers aren't required to buy plans under
the Affordable Care Act.
The number of people who earn close to the subsidy cutoff and are priced out
of affordable coverage may be a small slice of the estimated 4.4 million people
buying their own insurance and ineligible for subsidies. But the analysis
clearly shows how the sticker shock hitting many in the middle class, including
the self-employed and early retirees, isn't just a perception problem. The lack
of counties with affordable plans means many middle-class people will either opt
out of insurance or pay too much to buy it.
The prices of exchange plans have shocked many shoppers, especially those who
had plans canceled because they did not meet the ACA coverage requirements. But
experts are not surprised.
"The ACA was not designed to reduce costs or, the law's name notwithstanding,
to make health insurance coverage affordable for the vast majority of
Americans," says health care consultant Kip Piper, a former government and
insurance industry official. "The law uses taxpayer dollars to lower costs for
the low-income uninsured but it also increases costs overall and shifts costs
within the marketplace."
Along with underscoring how high rates are in many places, the analysis could
portend more problems for the health law's troubled rollout. The Congressional
Budget Office projected 7 million people would sign up for the law by the end of
2014 and enrollment is already falling several million short of that goal.
Insurers need a lot of relatively healthy people to sign up for insurance to
make up for the higher cost of insuring the less healthy. Highly subsidized
lower-income consumers who haven't had insurance before often weren't getting
regular doctors' visits. If many of those making about $50,000 for an individual
or about $62,000 in household income for a couple opt out of the new health care
system, it will deprive it of some of the counterbalancing effect needed.
Still, about 95% of consumers live in states where the average premiums are
below earlier estimates, says Department of Health and Human Services
spokeswoman Joanne Peters.
"The new Marketplace is night and day from what consumers faced in the
individual market before the health care law, where they could see unlimited
out-of-pocket expenses for plans with limited benefits and high deductibles, if
they can even get coverage without being denied for a pre-existing condition,"
says Peters.
Many ACA-compliant plans will cover prescription drugs, routine care for
chronic conditions and primary care visits even before deductibles are met,
Peters notes.
But those aren't the plans that are affordable to many middle-class
individuals buying insurance. In many cases, catastrophic plans — which USA
TODAY excluded from its analysis — may be all that's left for consumers on the
exchanges. These high-deductible plans are generally only available for
consumers under 30, who are least likely to need to use them, but they can also
be purchased by people who don't have other affordable options available in
their area. These plans generally require consumers to pay all of their medical
costs up to a certain amount — often $6,000 or more — although preventive
benefits such as physicals have to be covered under the new law.
President Obama said last week that people whose plans were canceled and
think the options on the exchanges are too expensive aren't required to buy
insurance or can buy a catastrophic plan through what's known as a "hardship
exemption." But most people actually do want insurance, says financial counselor
and author Karen McCall.
"Every one of those people, if they have any consciousness and aren't totally
self-medicating, would prefer to have insurance," says McCall, author of the
book Financial Recovery. "You could go a year and not get any benefit of
health insurance, but there is a deep emotional need to know that we have proper
insurance."
State and federal exchange officials approve the rates health insurers can
offer, and plans are then subsidized to levels that make them affordable for
those below 400% of the poverty level. Karen Pollitz, a senior fellow at the
Kaiser Family Foundation, acknowledges that catastrophic and even bronze plans
would be very difficult for many 40 or 50-something consumers to afford with
their $5,000-$6,000 annual deductibles.
"Most people don't have that kind of money in the bank, and I think it's
going to create problems for people," Pollitz says.
Although premiums are unaffordable in many places now, protections in the law
will prevent the massive jumps in premiums that characterized the individual
insurance market before the ACA, she says.
Individual policies before had only the "optics of affordability and no
dependability," Pollitz says. "What good is protection if it doesn't work when
you need it?"