Tuesday, October 1, 2013

The Finer Details of Obamacare (Part 2)

Perhaps the most significant boon of the Affordable Care Act is for young males, age 18-34. There are so many advantages to signing up that it beggars the imagination to conceive why one wouldn't. See also:


So what makes Obamacare so advantageous to this demographic? First, an analysis of the individual market today shows that young men with income above tax credit eligibility (400% of FPL) comprise a small fraction of enrollees: 7 percent of the 10.8  million total individual market enrollees, or about 750,000 in 2011.  Overall, nearly 60 percent of young men ages 18-34 currently enrolled in the individual market may be eligible for tax credits or Medicaid if their state implements the Affordable Care Act’s Medicaid eligibility expansion.

Second, preliminary information suggests that premiums will be affordable for this group, even without eligibility for a premium tax credit. In Los Angeles for example, for a 25 year old individual the lowest cost silver plan is $174 per month, and the lowest cost bronze plan is $147 per month. Premiums in Portland are very similar—$174 per month for the lowest cost silver plan for a 25 year old individual and $133 per month for the lowest cost bronze plan. In Albuquerque, a 25 year old could pay as little as $143 for a silver plan.

Individuals under the age of 30 will also be eligible for catastrophic coverage, and those under the age of 26 may be eligible for coverage on parent’s policy. In Los Angeles, California, the lowest cost catastrophic plan is $117 per month for a 25-year-old individual. In Albuquerque, New Mexico, the lowest cost catastrophic plan is $109 per month for a 25-year-old individual. In Portland, Oregon, a 25­year-old individual could pay as little as $89 for a catastrophic plan.

Third, tax credits will help many young men in this market. To illustrate the impact, a 25 year old in California with income of $17,235 (150% of poverty) could pay as little as $34 per month for a silver plan in North Los Angeles, and could purchase a bronze plan for as little as $7 a month.

So why wouldn't a young guy take advantage? Well, because he may have an invincibility complex. And that works or seems to, until one is in an auto accident, or is accidentally  (or intentionally) shot  or perhaps even gets some contagious disease (say dengue fever) because of exotic travel (Peace Corps?) Or, he may simply get an H3N2  flu he can't shake and which requires ER attention.

The problem, as always, is that once one is severely physically compromised after the fact, it's too late. You then reap the whirlwind, and if say seriously injured with a spine injury in a car accident you will now be looking at $280,000 in medical bills- perhaps along with college loans to pay off.

Young males need to bear that in mind when they consider taking the penalty as opposed to signing up for health insurance.

Btw, you can compare prices and packages at:


Cautions: What Health Exchanges Might Not Tell You:

1) Signing up on Day One could be a bitch.

Today is ribbon cutting day on the ACA but beware. The exchanges in 36 states have been scrambling to get ready but a majority may not be. Anticipated snafus can range from jammed phone lines and websites to technological glitches and security failures.

Quoted in the Wall Street Journal Sunday section of the Denver Post, Bryce Williams (managing director of exchange solutions for Towers Watson) says:

"Unless you are desperate for health insurance, our advice is to wait until November or December. It's kind of like not buying the first model of a car when it comes out - wait until the kinks get worked out."

See also: http://www.miamiherald.com/2013/10/01/3662645/health-insurance-marketplace-plagued.html

2) Know Thy Exchanges.

The new ACA exchanges, also known as health insurance marketplaces, are run either by states or the federal government and cater to individuals.  Private exchanges, operated by benefits firms like Towers Watson and Aon Hewitt, exist meanwhile to serve employee groups.

Too many people think of the exchanges as like a shopping mall, but in reality they are basically websites where people can log on to compare insurance prices, packages. Think of it more like the health insurance version of Orbitz or Priceline.com.

3) Don't ask staff for advice - if you call up - they can't give it

Certain companies have delegated money to hire "navigators"  for the new health care exchanges.  The problem is that current regulations prohibit these navigators from recommending or choosing plans on a consumer's behalf.  The navigators are only allowed to "facilitate enrollment", i.e. such as helping people to set up an online account.

4) Don't Violate the Honor Code to Try To Get a Cheaper Plan

A key and welcome component of the ACA is the ability of low income people to receive subsidies on health insurance through the exchanges.  All those with incomes up to 400% of the poverty level are eligible.  The problem is that the verification processes will likely be delayed until 2015 - leaving exchanges to trust customers on the "honor system" until then. But legal experts warn of stiff penalties if violators are found out, ranging from jail time to large fines.

5)  Sharing the Cost Burden.

Those who get insurance through their employers will not be eligible for subsidies. But they will still be expected to help subsidize insurance for those not employed, for example.  A lesser known ACA provision requires employers to pay fees that go toward the cost of covering Americans who were previously uninsured- often those who have chronic health conditions and expensive to insure. Until the fees are phased out, employers will pass them on to workers.

6) You Might Not Be Able to Keep Your Doctor

When first promoting the ACA, Obama said those buying insurance through the exchanges could keep their own doctor.  The truth is that many plans strictly limit the network of doctors they pay for. People can look for a plan that covers their doctor, but it might not be feasible in some market places. An analysis of plans in 13 states disclosed half had limited networks.

7) Competition to Get Lower Prices is a Work In Progress

Gov't officials have said the exchanges will keep insurance prices down by making companies compete with each other. But that's a work in progress. So far large insurance companies like Cigna and United Health group have abstained from many states' exchanges this year.

WHO Will Pay?

Interestingly, despite the government partial shutdown starting today, Obamacare (the ACA) is fully funded. So ironically also, the one law the Reepos wanted to defund carries on despite their seeking the shutdown solution. But it elicits the question of who pays? There are several components:

-Higher Medicare taxes on top incomes - brings in $210.2 billion

- Insurance company sales fees - brings in $60 to $100 billion

- Tax on Cadillac health insurance policies (for the 1 percenters) brings in $32 billion

- Tax on Medical devices - brings in $20 billion

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