Sicker Shock

Sicker Shock

Sat, 10/15/2016 - 22:22

Consumers are in for a shock.  Another round of premium increases come November 1st.  This is driven by insurers leaving the exchanges and those that are remaining are raising their prices by large percentages.

Sicker Shock

Obamacare sicker shock

The insurance companies made a bet on the Marketplaces.  Some made a profit and others ran losses.  That was to be expected.

♦ It was well understood that the Marketplaces would be the go to place for people who had been without insurance for years due to costs and harsh exclusions imposed by insurance companies prior to the Affordable Care Act (ACA).

These people were expected to need more health care and cost more to insure.  Many insurers didn’t factor this in well.

In the past insurers could pretty much pick and choose the healthy people to insure but now they had to accept everyone regardless of health condition.  The result, sicker shock for many insurance companies and a lot of crying.

♦ The ACA put in place a plan to redistribute cash from profitable insurers to loss-making ones to help in case the industry underpriced insurance.  If everyone suffered a loss than the taxpayer would have helped make up for it.

This was not a new idea.  A similar ‘risk’ situation operates quite successfully as part of Medicare.

But congressional Republicans gutted this provision in 2015.   And the sicker shock got bigger.

♦ Obamacare is working for the people who are lower income and can receive a credit.

If you received a premium tax credit, what some people also call a subsidy, you are protected against a large premium increase.  As the premium goes up so does the credit.

If you are not eligible for a premium tax credit than you will be in for a surprise.

• There are a lot people whose income falls below 100% Federal Poverty Level (FPL) and whose state didn’t expanded Medicaid coverage.  These people won't qualify for either income-based Medicaid or a premium credit on a Marketplace health insurance plan.

 Most are left out in the dark.

• If your income is between 100% and 400% of FPL in all states you qualify for a premium tax credits that can lower your monthly premium for a Marketplace health insurance plan.

The poorer people get a higher percentage than the richer people.

• There is a lot of talk about the family that made too much but they don’t consider themselves as having made too much.

People with an income more than 400% of FPL do not receive a premium tax credit.

They are really at the mercy of the open market.

♦ For 2016, a family of four earning more than $97,000 per year is over the 400% level.

Many would argue that the scale is tipped against these people and $97,000 is just too low to be considered well-off.

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