Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
Support MFO
Donate through PayPal
Individual health plans sold on Michigan's Affordable Care Act exchange will jump 16.7% next year
Hi @FundStudent YIKES !!! Hey, how about those "deductible" requirements too, eh? A private plan for an 18 year old, (BCBS Value) has a $6,700 deductible and monthly premium pay of $139, in Michigan.
Well, there's more, like your choice to use an insurer that's raising rates more than average in Calif (13.2% for individuals, 8.0% overall). I suppose that's the point of ACA - giving people the choice to spend more (hopefully to get more).
BTW, my insurer raised rates by 33% give or take (depending on the plan).
Nevertheless, it might still be the least expensive in my market. But its quality of service, its denials that I've had to appeal (and complain to the state regulators when the insurer did not timely respond to appeals) show that sometimes you do get what you pay for (or don't pay for).
Only 16.7% - that's awesome news for me, since my company's premiums are only going up a little over 5% next year. The problem is it jumped up 55% two years ago, and that was after increasing our deductible 2 1/2 times.
Most of my small business clients (I'm a CPA) here in Michigan averaged high 40's to mid-50's percentage increases in their premiums two years ago. The biggest factor was Obamacare creating a single risk pool. I use the auto insurance analogy to explain this - it would be like every person paying the same amount for auto insurance based on their age, not on their driving record; so you would be essentially subsidizing the "bad" drivers.
Those of us who are on Medicare and earning more than the government thinks we should are also getting shafted with much, much higher premiums for Part B and Part D to help prop up this un-affordable disaster. We are paying considerably more, actually a whole lot more for our Medicare insurance than it cost us to be on my small company's plan, which is quite expensive. Talk about throwing money down a money pit!
ObamaCare Enrollees Face A Rude Awakening In Two Weeks
"A 25-year-old living in the state's vast "Inland Empire" who makes $18,000 a year will end up paying an average of $1,080 a year — after subsidies — for a Silver plan that comes with $3,000 in deductibles, according to Covered California. That means they'll have to spend roughly 20% of their income on premiums and medical bills before seeing a dime in benefits"
Here is an "average" of costs for Medicare folks I surveyed, in Michigan: NOTE: The below consists of prescription drug insurance with a large deductible, a supplemental health policy (for the over and above of charges not covered by Medicare) which are type "F" plans and the Medicare Part B required amounts. All folks surveyed had similar costs, with the below being a monthly average. The numbers are for a retired couple.
---RX insurance = $37 ---Supplemental insurance, Plan F type = $329 ---Medicare Part B = $243.60
My wife and I, retired, appear to have ~$4500/yr for Medicare costs (Mass.). Not positive I have captured everything. Her contracted-out plan is zero-premium and includes meds, but of course she co-pays significantly for everything. I have a supplement plus separate pdp.
ObamaCare Enrollees Face A Rude Awakening In Two Weeks
"A 25-year-old living in the state's vast "Inland Empire" who makes $18,000 a year will end up paying an average of $1,080 a year — after subsidies — for a Silver plan that comes with $3,000 in deductibles, according to Covered California. That means they'll have to spend roughly 20% of their income on premiums and medical bills before seeing a dime in benefits"
There's a saying: If it looks too good to be true, it probably is. May I suggest a corollary? If it looks too bad to be true, it probably is.
Without even reading the editorial, what stands out is that while it says that subsidies were included in calculating the premium, it is silent about the CSR (cost sharing subsidies) that reduce deductibles.
Someone earning $18,000 falls between 100% and 200% of the FPL (Federal Poverty Level) if in a one or two person household. CSR caps the allowed maximum out of pocket limit at $2,350. Less than the $3,000 in deductibles stated in the editorial.
That's without even looking at specific plans, so you don't have to be from California to know the figure didn't incorporate CSRs. As to the real plans, I ran a quick insurance search on San Bernadino 92401 (part of "the state's vast 'Inland Empire'").
Yes, the average premium of the CSR 87 silver plans (i.e. plans for people between 150% and 200% of FPL) in this zip code comes out to $1,185.41/year, or $1060.80 if you throw out the one plan that costs 38% more than the second highest plan. But that's an average. Two of the seven plans come in at $735 ($61.30/mo) or less.
Deductibles? All the plans have the same deductible after CSR: $700 ($650 medical, $50 drug). That's a total of $1435 including premiums, or about 8% of income. Or about 60% less than the inflated 20% figure in the editorial.
The editorial goes on to say that this person has to pay all this money before seeing a dime in benefits. That's not how the ACA works. Flu shot? Health screening? Preventive services are provided before paying a dime in deductibles.
This is not nuance. This is not obscure. Aside from the specifics of the San Bernadino plans, this is law, unambiguous, nationwide.
My bad. I didn't check the details of the plans. Aside from preventive care, lots of other services come before paying a deductible. That seems to be pretty common with CSR plans.
Seeing a doctor - just a copay, no deductible. Getting a test (lab test, even MRI) - just copay, no deductible. ER - just a copay, no deductible. Home care - just a copay, no deductible. Rehab - just a copay, no deductible.
You get the idea. Here's the summary of benefits for the $61.30 plan (HealthNet) I was looking at.
Meanwhile, in recent years the cost per capita of Medicare spending has been falling: nytimes.com/2014/09/04/upshot/per-capita-medicare-spending-is-actually-falling.html The truth is we need more government healthcare, not less. Medicare should be extended to everyone. Medicare is so powerful as an entity it can negotiate rates for medical procedures and pharmaceuticals no private insurer can.
I think Paul Krugman would say that these higher premiums are a good thing. They keep insurance companies in the plan, increase GDP, allow the hiring of workers, allow for higher paid workers who then spend money, increase the health of the workers that increase productivity and lower costs to the consumer.
If I get more for the extra money, I'm all for having the option of paying more.
That's why insurers offer some plans off-exchange - these may be higher benefit/higher price plans that don't fit well into the exchange model. For example, United Healthcare offered an individual plan off-exchange that gave access to one of its group plan networks, rather than the significantly reduced networks one found on-exchange.
That plan cost hundreds, if not thousands, of dollars per year more than on-exchange plans, but you got something more for that extra money.
For that matter, people pay up for platinum plans for the same reason. Lots of people are begging for these higher premium plans - at least enough that the insurers are happy to meet that demand.
Here's an interesting article on the premium subsidy dynamic that I am facing this year:
“… the amount of the [self-employed health insurance premium] deduction is based on the amount of the … premium tax credit, and the amount of the credit is based on the amount of the deduction – a circular relationship. Consequently, a taxpayer eligible for both a … deduction for premiums paid for qualified health plans and a … premium tax credit may have difficulty determining the amounts of those items.”
...the problem, mathematically, is that calculation of the correct insurance premium tax credit together with the self-employed health insurance deduction creates a circular reference. As the CREDIT increases, the amount that might be claimed as a DEDUCTION for payment of premiums is reduced, but when the DEDUCTION is diminished, the MAGI is increased, which in turn reduces the amount of available CREDIT.
I can not write about Michigan ... but, I sure can about what I have done with my Medicare Advantage PPO coverage in North Carolina.
I curently have a Medicare Advantage PPO through Blue Cross Blue Shield of NC. During the year BCBS of NC has been investigated by our Commisioner of Insurance and fined for their clain payment and processing practices. I myself have had claim processing and payment issues with BCBS of NC this year where last year things went smoothly. I now pay $71.50 a month for my PPO with the premium to increase to $86.00 a month next year if I stay with Blue Cross. This amounts to about a 20% increase.
By shopping around I have found another insurance provider (Atena) that has been providing about the same coverage through their Medicare Advantage PPO plan in my state for no monthly charge for the past three years plus, and for me, they have better drug benefit coverage over my current plan. While the Atena plan will have a $195.00 drug deductable for me which will apply to some (not all) of the medications I take the Blue Cross plan does not have a deductable but the drug cost would be higher for me under the Blue Cross plan. Plus, I will be getting a dental and vision care allowance with Atena where there is none in the Blue Cross PPO plan.
Overall, I will be saving a good deal of money by switching without reduced coverages. However, I would have changed insurance carriers anyway because of BCBS of NC claim proccessing and payment practices that lead to fines by the State's Commissioner of Insurance office.
And, yes ... I have made the change to Atena for the coming year. I generally have a practice to leave companies that get fined by their regulators. Seems, though, I am stuck with Duke Energy and they just bought Piedmont Natual Gas Co which is another company that I am locked in with for service.
So, it might be prudent to shop around, if possible.
@Old_Skeet - thanks for posting your calculations on making a switch. They illustrate concretely what you concluded - that it often pays to shop around. But also that one really does need to crunch the numbers and consider non-dollar factors as well.
I'm not sure I'd call the premium increase a 20% hike, because you're paying for your MA plan with your Part B premiums also (the government pays the Medicare Advantage companies to offer your insurance). So the way you're computing percentage increase doesn't really represent the increase in the total you're paying.
For example, if last year your MA premium had been $0, and this year it was $1, then the way you're figuring it, the increase would be astronomical - infinite, actually.
Regarding being locked in on energy service - many states allow ESCOs to compete as energy suppliers. Unfortunately, you're not in one of those states. Write your legislators a letter.
Here's an interesting article on the premium subsidy dynamic that I am facing this year: “… the amount of the [self-employed health insurance premium] deduction is based on the amount of the … premium tax credit, and the amount of the credit is based on the amount of the deduction – a circular relationship. Consequently, a taxpayer eligible for both a … deduction for premiums paid for qualified health plans and a … premium tax credit may have difficulty determining the amounts of those items.”
This form of "circularity" shows up in many places. Usually (i.e. in real world situations), the calculation converges to a stable value if you iterate enough times. That's what the first article says as well.
For example, let's assume that you're in the 25% tax bracket, your employer gives you $3K for relocation expenses, and promises to make you whole by covering your taxes on this payment. This is circular because the amount of money the employer gives you depends on the taxes you'll owe, and the taxes you'll owe depend on the amount the employer gives you.
The employer first gives you $3K + 1/4 x $3K (the latter to cover the taxes on the $3K). Then the employer gives you 1/4 x 1/4 x $3K more to cover the taxes on the taxes. Then the employer gives you 1/4 x 1/4 x 1/4 x $3K to cover taxes on taxes on taxes. And so on.
For this particular type of problem, you don't have to keep calculating forever. There's a formula: $3K x (1 + 1/4 + 1/4 x 1/4 + 1/4 x 1/4 x 1/4 + ...) = $3K x 1/(1 - 1/4) = $3K x 4/3 = $4K.
The ACA does have some real problems that need tweaking. IMHO Clinton (Bill) was right about that. It was designed to expand coverage (good), contain insurers' profits (good), help lower income people get coverage (good).
But it wasn't well designed to contain medical costs (as differentiated from insurer costs), and it ran the risk of being a heavy burden on those just a bit above the 400% FPL line, where subsidies cut out.
For lower income people, ACA may be doing better. Especially in Minnesota, with its MinnesotaCare (a Basic Health Plan).
Remember Mona's age 25 $18K worker? MinnesotaCare covers that worker. So for about $37/mo (that's the 2016 rate) and monthly deductibles of $2.95, this person would get doctor visits for $15, outpatient services for $25, etc.
The ACA gave states a lot more flexibility in designing programs like this than I think many people realize. But some adjustments are needed at the national level. @davidrmoran gave some good links that look at possibilities.
>> ACA gave states a lot more flexibility in designing programs like this than I think many people realize.
If they made use of it and did not abandon or fight it tooth and nail. Just google
ACA red states
to see some real horror analyses and projections, past and ongoing and upcoming. Blinkered hatred is all quite dumbfounding. (I am not opposed to informed hatred.)
This form of "circularity" shows up in many places.
I finds this circularity to be true with regard to my aging comprehension. As I get older I find myself knowing more and more about less and less until I know everything about nothing."
We should all have the same level of health care as the members of Congress. That is one of the best plans available and they enjoy the benefits of it paid for with our tax money. If its good enough for them, its good enough for me. These are the same members who will vote against any plan to assist the rest of us. If health savings accounts are the answer, as some members insist, then they should take the leadership and have a high deductible plan with a health savings plan and have some skin in the game. The answer to health care is simple and straightforward, place everyone on the same game plan, Congress and government officials set the example.
We should all have the same level of health care as the members of Congress. That is one of the best plans available and they enjoy the benefits of it paid for with our tax money. If its good enough for them, its good enough for me. These are the same members who will vote against any plan to assist the rest of us. If health savings accounts are the answer, as some members insist, then they should take the leadership and have a high deductible plan with a health savings plan and have some skin in the game. The answer to health care is simple and straightforward, place everyone on the same game plan, Congress and government officials set the example.
The ACA also created pilot programs to test new drug pricing models. It couldn't do that with Part D drugs (we all know why), but Medicare Part B also pays for a number of drugs.
Then there are well intentioned sections of Part D that have unintended side effects. Part D says that there are certain types of drugs where virtually all brands must be offered on the formulary (e.g. HIV drugs). Since the insurers cannot exclude some drugs from their plans, they have less negotiating power for these drugs.
Comments
YIKES !!!
Hey, how about those "deductible" requirements too, eh?
A private plan for an 18 year old, (BCBS Value) has a $6,700 deductible and monthly premium pay of $139, in Michigan.
Well, there's more, like your choice to use an insurer that's raising rates more than average in Calif (13.2% for individuals, 8.0% overall). I suppose that's the point of ACA - giving people the choice to spend more (hopefully to get more).
http://acasignups.net/tags/california
BTW, my insurer raised rates by 33% give or take (depending on the plan).
Nevertheless, it might still be the least expensive in my market. But its quality of service, its denials that I've had to appeal (and complain to the state regulators when the insurer did not timely respond to appeals) show that sometimes you do get what you pay for (or don't pay for).
Most of my small business clients (I'm a CPA) here in Michigan averaged high 40's to mid-50's percentage increases in their premiums two years ago. The biggest factor was Obamacare creating a single risk pool. I use the auto insurance analogy to explain this - it would be like every person paying the same amount for auto insurance based on their age, not on their driving record; so you would be essentially subsidizing the "bad" drivers.
"A 25-year-old living in the state's vast "Inland Empire" who makes $18,000 a year will end up paying an average of $1,080 a year — after subsidies — for a Silver plan that comes with $3,000 in deductibles, according to Covered California. That means they'll have to spend roughly 20% of their income on premiums and medical bills before seeing a dime in benefits"
http://www.investors.com/politics/editorials/obamacare-enrollees-face-a-rude-awakening-in-two-weeks/?yptr=yahoo
Here is an "average" of costs for Medicare folks I surveyed, in Michigan:
NOTE: The below consists of prescription drug insurance with a large deductible, a supplemental health policy (for the over and above of charges not covered by Medicare) which are type "F" plans and the Medicare Part B required amounts. All folks surveyed had similar costs, with the below being a monthly average. The numbers are for a retired couple.
---RX insurance = $37
---Supplemental insurance, Plan F type = $329
---Medicare Part B = $243.60
Monthly (rounded) = $610
Annual = $7,320
Regards,
Catch
http://www.politico.com/magazine/story/2016/10/problems-obamacare-misunderstanding-healthcare-reform-214364
http://www.vox.com/the-big-idea/2016/10/7/13191250/obamacare-exchanges-crisis-arrogant-progressives
http://www.vox.com/the-big-idea/2016/10/7/13192640/obamacare-exchanges-insurance-healthcare-fix
My wife and I, retired, appear to have ~$4500/yr for Medicare costs (Mass.). Not positive I have captured everything. Her contracted-out plan is zero-premium and includes meds, but of course she co-pays significantly for everything. I have a supplement plus separate pdp.
Without even reading the editorial, what stands out is that while it says that subsidies were included in calculating the premium, it is silent about the CSR (cost sharing subsidies) that reduce deductibles.
Someone earning $18,000 falls between 100% and 200% of the FPL (Federal Poverty Level) if in a one or two person household. CSR caps the allowed maximum out of pocket limit at $2,350. Less than the $3,000 in deductibles stated in the editorial.
That's without even looking at specific plans, so you don't have to be from California to know the figure didn't incorporate CSRs. As to the real plans, I ran a quick insurance search on San Bernadino 92401 (part of "the state's vast 'Inland Empire'").
Yes, the average premium of the CSR 87 silver plans (i.e. plans for people between 150% and 200% of FPL) in this zip code comes out to $1,185.41/year, or $1060.80 if you throw out the one plan that costs 38% more than the second highest plan. But that's an average. Two of the seven plans come in at $735 ($61.30/mo) or less.
Deductibles? All the plans have the same deductible after CSR: $700 ($650 medical, $50 drug). That's a total of $1435 including premiums, or about 8% of income. Or about 60% less than the inflated 20% figure in the editorial.
The editorial goes on to say that this person has to pay all this money before seeing a dime in benefits. That's not how the ACA works. Flu shot? Health screening? Preventive services are provided before paying a dime in deductibles.
This is not nuance. This is not obscure. Aside from the specifics of the San Bernadino plans, this is law, unambiguous, nationwide.
Seeing a doctor - just a copay, no deductible.
Getting a test (lab test, even MRI) - just copay, no deductible.
ER - just a copay, no deductible.
Home care - just a copay, no deductible.
Rehab - just a copay, no deductible.
You get the idea. Here's the summary of benefits for the $61.30 plan (HealthNet) I was looking at.
nytimes.com/2014/09/04/upshot/per-capita-medicare-spending-is-actually-falling.html
The truth is we need more government healthcare, not less. Medicare should be extended to everyone. Medicare is so powerful as an entity it can negotiate rates for medical procedures and pharmaceuticals no private insurer can.
You noted: "and lower costs to the consumer."
Do you mean the health care consumer?
You should be begging to pay MORE for your health insurance, not thinking about paying less.
That's why insurers offer some plans off-exchange - these may be higher benefit/higher price plans that don't fit well into the exchange model. For example, United Healthcare offered an individual plan off-exchange that gave access to one of its group plan networks, rather than the significantly reduced networks one found on-exchange.
That plan cost hundreds, if not thousands, of dollars per year more than on-exchange plans, but you got something more for that extra money.
For that matter, people pay up for platinum plans for the same reason. Lots of people are begging for these higher premium plans - at least enough that the insurers are happy to meet that demand.
+1. HC service is one area for actual human interaction.
“… the amount of the [self-employed health insurance premium] deduction is based on the amount of the … premium tax credit, and the amount of the credit is based on the amount of the deduction – a circular relationship. Consequently, a taxpayer eligible for both a … deduction for premiums paid for qualified health plans and a … premium tax credit may have difficulty determining the amounts of those items.”
my-premium-subsidy-is-dependent-on-my-agi-but-im-self-employed-so-my-agi-is-dependent-on-my-premium-help/
And, for the mathematically inclined:
...the problem, mathematically, is that calculation of the correct insurance premium tax credit together with the self-employed health insurance deduction creates a circular reference. As the CREDIT increases, the amount that might be claimed as a DEDUCTION for payment of premiums is reduced, but when the DEDUCTION is diminished, the MAGI is increased, which in turn reduces the amount of available CREDIT.
self-employed-health-insurance-deduction-alternative-calculation/#more-240
Down to 4 insurers; rate hikes all at least 50%
https://www.healthinsurance.org/minnesota-state-health-insurance-exchange/
I curently have a Medicare Advantage PPO through Blue Cross Blue Shield of NC. During the year BCBS of NC has been investigated by our Commisioner of Insurance and fined for their clain payment and processing practices. I myself have had claim processing and payment issues with BCBS of NC this year where last year things went smoothly. I now pay $71.50 a month for my PPO with the premium to increase to $86.00 a month next year if I stay with Blue Cross. This amounts to about a 20% increase.
By shopping around I have found another insurance provider (Atena) that has been providing about the same coverage through their Medicare Advantage PPO plan in my state for no monthly charge for the past three years plus, and for me, they have better drug benefit coverage over my current plan. While the Atena plan will have a $195.00 drug deductable for me which will apply to some (not all) of the medications I take the Blue Cross plan does not have a deductable but the drug cost would be higher for me under the Blue Cross plan. Plus, I will be getting a dental and vision care allowance with Atena where there is none in the Blue Cross PPO plan.
Overall, I will be saving a good deal of money by switching without reduced coverages. However, I would have changed insurance carriers anyway because of BCBS of NC claim proccessing and payment practices that lead to fines by the State's Commissioner of Insurance office.
And, yes ... I have made the change to Atena for the coming year. I generally have a practice to leave companies that get fined by their regulators. Seems, though, I am stuck with Duke Energy and they just bought Piedmont Natual Gas Co which is another company that I am locked in with for service.
So, it might be prudent to shop around, if possible.
Skeet
I'm not sure I'd call the premium increase a 20% hike, because you're paying for your MA plan with your Part B premiums also (the government pays the Medicare Advantage companies to offer your insurance). So the way you're computing percentage increase doesn't really represent the increase in the total you're paying.
For example, if last year your MA premium had been $0, and this year it was $1, then the way you're figuring it, the increase would be astronomical - infinite, actually.
Regarding being locked in on energy service - many states allow ESCOs to compete as energy suppliers. Unfortunately, you're not in one of those states. Write your legislators a letter.
Here's a map of where competition is allowed:
http://competitiveenergy.org/consumer-tools/state-by-state-links/
A simpler example of this type of problem is the "gross up".
http://www.investopedia.com/terms/g/gross-up.asp
For example, let's assume that you're in the 25% tax bracket, your employer gives you $3K for relocation expenses, and promises to make you whole by covering your taxes on this payment. This is circular because the amount of money the employer gives you depends on the taxes you'll owe, and the taxes you'll owe depend on the amount the employer gives you.
The employer first gives you $3K + 1/4 x $3K (the latter to cover the taxes on the $3K).
Then the employer gives you 1/4 x 1/4 x $3K more to cover the taxes on the taxes.
Then the employer gives you 1/4 x 1/4 x 1/4 x $3K to cover taxes on taxes on taxes.
And so on.
For this particular type of problem, you don't have to keep calculating forever. There's a formula:
$3K x (1 + 1/4 + 1/4 x 1/4 + 1/4 x 1/4 x 1/4 + ...) =
$3K x 1/(1 - 1/4) = $3K x 4/3 = $4K.
http://acasignups.net/16/10/01/update-minnesota-approved-avg-2017-rate-hikes-566and-one-other-twist
The ACA does have some real problems that need tweaking. IMHO Clinton (Bill) was right about that. It was designed to expand coverage (good), contain insurers' profits (good), help lower income people get coverage (good).
But it wasn't well designed to contain medical costs (as differentiated from insurer costs), and it ran the risk of being a heavy burden on those just a bit above the 400% FPL line, where subsidies cut out.
For lower income people, ACA may be doing better. Especially in Minnesota, with its MinnesotaCare (a Basic Health Plan).
Remember Mona's age 25 $18K worker? MinnesotaCare covers that worker. So for about $37/mo (that's the 2016 rate) and monthly deductibles of $2.95, this person would get doctor visits for $15, outpatient services for $25, etc.
The ACA gave states a lot more flexibility in designing programs like this than I think many people realize. But some adjustments are needed at the national level. @davidrmoran gave some good links that look at possibilities.
If they made use of it and did not abandon or fight it tooth and nail. Just google
ACA red states
to see some real horror analyses and projections, past and ongoing and upcoming. Blinkered hatred is all quite dumbfounding. (I am not opposed to informed hatred.)
Thanks for your comments.
https://www.opm.gov/healthcare-insurance/changes-in-health-coverage/eligibility-enrollment/#url=Members-of-CongressStaff
https://www.cms.gov/Medicare/Medicare-Advantage/Plan-Payment/medicallossratio.html
So if your premiums are going up, blame pharma, not the messenger (your insurance provider).
Or perhaps you might want to blame the ACA after all, since that's the law that's gradually closing the donut hole. Since it's providing better coverage, it's increasing the insurers' costs.
The ACA also created pilot programs to test new drug pricing models. It couldn't do that with Part D drugs (we all know why), but Medicare Part B also pays for a number of drugs.
Then there are well intentioned sections of Part D that have unintended side effects. Part D says that there are certain types of drugs where virtually all brands must be offered on the formulary (e.g. HIV drugs). Since the insurers cannot exclude some drugs from their plans, they have less negotiating power for these drugs.
An excellent article (and the source of my last two paragraphs) on Part D history, law, practical concerns, just updated last week is here:
HealthAffairs.org, The Politics of Medicare and Drug-Price Negotiation
http://healthaffairs.org/blog/2016/09/19/the-politics-of-medicare-and-drug-price-negotiation/