ACA: Affordable or Not?

What the President could have and perhaps should have said: “you can keep you plan,” if you have employer/government sponsored health insurance (80-83% of the populace) OR if you have an individual policy that will be automatically grandfathered after ACA is implemented in March, 2010 (another 5% of the populace), PROVIDED your individual policy is not subsequently terminated by your insurance company. The remaining 12-15% of the populace will have the opportunity to buy affordable healthcare insurance through government run exchanges. Depending upon income, many of these exchange shoppers will qualify for government subsidies.

The current debate centers on those grandfathered individual plans. What happens if the insurance company cancels one of these grandfathered plans? Well, it has to offer a new plan that meets the ACA criteria (a minimum of 10 new health care benefits) AND the requirements of its respective state. These new plans may have higher rates (1) because they would have higher rates regardless of ACA depending upon circumstances in the respective state, (2) because they are tiered to match policies in the Exchange (which is not an ACA requirement though perhaps a predictable convenience), (3) because they must now meet the new requirements (e.g., maternity care or prescription drug coverage), (4) because medical history can no longer be used to determine rates (people with healthy medical histories will pay more so that others with unhealthy records can pay less). Some in the press have identified state ordered policy terminations with these grandfathered plans. But, at least in California, these terminations targetted non-grandfathered plans that were not compliant with ACA. Regardless, whether the state or the insurance company terminates a plan, the conditions for replacement are essentially the same.

Potential impacts for these new individual plans may include higher premiums and higher deductibles, though out-of-pocket annual expense is limited to $6350.00. Also, some insurance companies may change from PPO (preferred provider organization) to EPO (exclusive provider organization), forcing a potential change in doctors. On the plus side, many with terminated individual plans will find cheaper plans on the exchanges than what is offered by their current insurance company. Also, they may qualify for subsidies. Best guess is that most of these people had individual plans because they were unemployed or because they worked for small businesses that could not afford the premiums. Likely, many of these people will qualify for subsidies. There may also be some very rich people in the individual insurance plan market. Remember the richest 1% (who control 40% of the nation’s wealth) don’t necessarily work for a living. Like the recent Republican candidate for President, their income comes from securities in which case an individual insurance plan with low cost premiums and high deductibles may appear as a bargain for somebody in these circumstances with reasonably good health.

The bottom line is that there are too many variables in the implementation of ACA that must be worked through before any definitive statement on its success or failure can be made. Much of the rumble on cable TV and the distortions emanating from Washington polities are merely self-serving garble. We are at the beginning of a sea-change in America’s health care provisioning system. It’s going to take years to fully stabilize and hone this system, much as it did with Medicare.

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