Hold on to your checkbooks folks!
As Americans look across the health care landscape to find coverage under the Patient Protection and Affordable Care Act, they may encounter insurance rates three times higher than expected in the coming months. That’s according to analysis done by Wall Street Journal reporter Louise Radnofsky. She reports that while those individuals suffering from the most fatal illnesses will benefit from lower premiums, it doesn’t seem probable that these exchanges will offer any of the “cut-rate policies” that healthy Americans currently purchase.
Many Americans, in other words, should brace themselves during the most crucial stage of the law’s implementation–-the start of open enrollment for the new health care exchanges in October.
Carriers in eight different states recently revealed rates for various plans on the exchanges, and the early signals do not look good. These exchanges will affect the estimated 20% of Americans who aren’t covered by an employer, Medicare, or Medicaid.
In the case of a 40 year-old nonsmoker, for example, a “bronze” plan (keeping in mind “silver” and “gold” plans would cost even more) would cover 60% of medical costs for $200 a month, according to proposals.
Radnofsky describes the crucial difficulties the law will create:
The challenge is that healthy 40-year-olds can typically get coverage for less today, especially if they are willing to accept fewer benefits or take on more costs themselves. Supporters of the law say tighter regulation on insurance practices gives consumers more protection and is worth the extra cost, but they have to persuade people who don't have an immediate need for health care of that. If only sick people buy into the new insurance pools, prices could shoot up.
With these new exchanges launching, plans will be available to all Americans regardless of their health condition. And, according to Radofsky, the most detailed plans will cover 80% of an individual’s medical expenses – in addition to giving access to a range of doctors – all for approximately $400 each month.
Says Radofsky, “that is a lot of money for the lower-to-middle-income Americans who are expected to be the main customers on exchanges. Those without coverage also face out-of-pocket medical bills in the tens of thousands of dollars if they get sick.”
In May, California released health insurance premium rates for plans in the exchanges. According to Covered California, the organization tasked with implementing the exchange, rates would be between 2% and 29% below the 2013 average premium for small employer plans. However, Avik Roy, a senior fellow at the Manhattan Institute, argued that Covered California wasn’t telling the whole story, and that insurance premiums in the individual market would rise by 64%-146%.
The Affordable Care Act doesn’t seem like it is on track to help make health care “affordable” for many Americans. Time will tell, but, if we go along at this rate, it will be scary to see how high insurance rates could go.