Last time we discussed some additional taxes you may or may not be paying as a result of PPACA. This post addresses the considerable benefits of PPACA to you a health care consumer. Next time we'll discuss the effects of PPACA on your practice.
Free Preventive Care
I say “free”, but it really isn't, since the insurance company is paying for it and you'll likely be paying higher premiums for it. But, that said, you are now allowed three visits to your primary physician per year and certain screening examinations such as mammograms, colonoscopies, pap smears and even an ultrasound to rule out AAA (only for older male smokers) without having to pay a co-pay or co-insurance.
Free Contraceptive Coverage
Insurers now can't charge you a co-pay or co-insurance for birth control pills or an IUD. Good luck getting them to pay for your condoms.
Stay on Parents' Insurance Until Age 26
It is a little surprising to me just how popular this provision is. I moved out of the house at 18 and aside for a month or two in the summers during college, never looked back. I paid for my own health insurance and didn't think it was that big of a deal, just part of being an adult. There are apparently plenty of people out there who disagree with me though, so now you can stay on your parent's plan until you turn 26. I don't know why 26 and not 36 or 46, but that's the way it is. It doesn't matter if the kids are students, working, married, single, or smoking pot, as long as they don't have coverage through their employer. Lots of people have 2 or 3 kids by 26, but the kids can't get onto the grandparent's plan.
No Lifetime or Annual Limits
This is a provision I'm happy to see in the new law. If nothing else, insurance needs to cover catastrophes. Now your insurer can't put a maximum lifetime limit on your coverage. The “no annual limit” rule begins in 2014.
Pre-existing Condition Rule Changes
Another justifiably popular provision of the law prevents insurers from denying you coverage due to pre-existing conditions. While this is obviously going to raise premiums for healthy people, I'm okay with that if it avoids the situation my wife and I once got into where we had to pay much higher premiums because she had a single episode of cystitis. This doesn't phase in fully until 2014, but until then you can buy insurance through a more expensive “Pre-existing Condition Insurance Plan.” My aunt who was recently diagnosed with pancreatic cancer, only to learn that her employer-provided health insurance had an annual limit of something like $2000, was able to get insurance through a PCIP after her diagnosis.
PPACA requires insurers to use an adjusted community rating to determine premiums. The insurer can charge more depending on your age, gender, and tobacco use, but that's it. All 50 year old male non-smokers in your community have to be charged the same premium.
Essential Health Benefits
PPACA requires insurers to pay for anything deemed an “essential health benefit.” What are essential health benefits? Here's a list ( breast implants and abortions aren't on it.)
- Ambulatory patient services
- Emergency services
- Hospitalization
- Maternity and newborn care
- Mental health and substance abuse disorder services, including behavioral health treatment
- Prescription drugs
- Rehabilitative and habilitative services and devices
- Laboratory services
- Preventive and wellness services and chronic disease management
- Pediatric services, including oral and vision care
Annual Cost Sharing Limits
A health insurance plan must have an annual out of pocket cost of no more than $5950 (individual) or $11,900 (family.) No super high deductible plans allowed.
Choose Any Doc From Your Plan
There is a provision that allows you to see any doc in the plan, rather than having one assigned to you. You can also see an OB/GYN without a referral.
Insurance Company Rebates
If an insurance company doesn't spend 80-85% of premiums collected on actual health care, it must refund the difference. This puts a limit on insurance company overhead as well as profits.
Standardized Coverage
Beginning in 2014, there will be much more standardization of health plans. While all plans must cover the essential health benefits, they can offer different “actuarial levels.” The least expensive plans, with the highest co-pays and co-insurance, will be the bronze level, in which the insurance company will pay 60% of all the health care costs incurred by a typical population on the plan. Silver level will pay 70%, gold will pay 80%, and platinum will pay 90%. If you're healthy, you want a bronze plan. If you're not, you want a platinum plan.
Out of Network Emergency Care
If you go to an ED that is out of network, you no longer need pre-approval nor can the insurance company charge a higher co-pay or co-insurance.
Health Insurance Exchanges
States will be required to set up health insurance exchanges where individuals and small businesses can easily compare and purchase plans. My state has had one for years. It's not that helpful. It's just a website. But if you're not very good with a search engine I suppose it's nice.
Government Subsidies
The federal government will subsidize your health care if you make less than 400% of the federal poverty level. That means a family of four currently gets a decreasing subsidy up until an income level of $88,200. How much is the subsidy? Well, a family of four making $29,000 would fork out less than $50 a month for health insurance and a family making $88,199 would have a maximum payment of about $700 a month. This is unlikely to affect residents or employed docs, who generally have their health insurance as part of their work benefits. Medical students with a working spouse, however, may easily qualify for a substantial subsidy.
Expansion of Medicaid
The federal government is mandating that states expand their Medicaid coverage to cover everyone up to 133% of the federal poverty line. Many states now just cover pregnant women and children at low income levels. That level is currently $14,404 for individuals and $29,327 for a family of four. Barring a working spouse, that should cover any medical students whose parents don't have a plan, or who are already 26.
Next time we'll talk about how PPACA is going to affect your practice (and thus your salary.)
Nice job with a controversial topic. Most other docs i know are against Obama care. My gut tells me that ill make less with the changes down the road but that i also have no idea if its best for our country or not. In regards to the topics mentioned in your article:
1. Ill be interested to see if preventive care implemented like this really saves lives or saves money. Its one of those things that sounds good in theory but doesnt always work out and when something is shown not to be as helpful as previous thought (an example that im not completely versed in but remember somewhat is that mamograms were shown to be needed less often) that politics becomes more important than science.
2. Ive never understood why its cheaper to put kids on parents insurance then just have their own unless they have some condition. It should be a fairly healthy group of people all things considered.
3. Besides implants/abortions are there any actual holes in what consitutes essential health benefits?
4. Ill be interested to see what qualifies for “actual health care costs” from the insurance perspective. Seems like a lot of wiggle room in those words.
5. The out of network ER thing seems like it will be an incentive to take sniffles to the ER in a different area.
6. I doubt the exchange will help people evaluate. I imagine there will be this compare button which then lists a whole bunch of stuff that doesnt matter to the patient or is the exact same so that the consumer really doesnt know what they are doing.
7. Ill be interested to see how expanding medicaid works when so few docs take it.
Romney 2012. That’s all I have to say.
i like that kind of humor but i guess ill wait for part 3 before we discuss what will really affect us or what is just conjecture and is the status quo maintainable or even desireable. If i were guessing, from a personal financial standpoint, the republicans would help me more as well as most docs but its completely a guess.
I appreciate you taking the time to lay out the specifics of the law. It surprises me how uneducated both the public and many medical providers are on the specifics. I have found it difficult to have conversations about the law with others based solely on their level of knowledge of the specifics of the law. There are a large chuck of people that like or dislike the law based purely on politics. I read a poll a few months back that showed less than 50% agreed with “Obamacare” however the same poll then broke down the law into individual elements and almost all of the elements had approval ratings over 70%. Wish I could find that poll now though….
Overall I like the spirit of the law. Its a start but not the plan I would have preferred. Some points I would make:
1. COVERED PREVENTIVE CARE – Good for me (family doc). Good for Americans, most definitely. Good financially….probably not. Good preventive care can reduce immediate costs by catching things early and keeping people healthier but they likely will live longer as well which shifts those costs down the road not only in health care but social security as well. (An interesting related principle is social security cost projections. Most projections are based on increasing life expectancy but many health experts think life expectancy will level off someone in another decade due to increasing obesity and diabetes rates).
2. LIMITS: The elimination of pre-existing conditions and payment limits are the largest benefit. Previously there were far to many Americans who were un-insurable and/or unaffordably insurable due to insurance practices. Sadly most health insurance companies are not there when you need them most as their duty is not to their “patients/customers” but to their stock holders. Many companies often had limits set not much higher than the annual fees (making them more of a health savings company than insurance company). These insurers would drop coverage or greatly increase payments for even minor things. (Oh and really, your rates went up due to cystitis? Wow)
3. INSURANCE REBATES/PAYMENTS – Placing payout minimums will likely make the most impact, but it is also probably the least legal aspect of the law. Interesting how some law makers feel that private insurances can provide better coverage when paying out only 80 cents on the dollar then Medicare does paying out 96.5 cents on the dollar.
4. COLLEGE KIDS – The law was needed in the past because it was very difficult for kids to get coverage if they had any significant medical history and their coverage often dropped if they took a semester off, however the limits on pre-existing conditions basically fixed this and in my opinion this is a nicely worded but completely non-relevant clause.
5. MEDICAID – More medicaid is great in principle for American’s health, but …. If it doesn’t pay at least medicare prices most aren’t going to take it. I see this as an epic fail.
6. STANDARDIZED COVERAGE – What we have seen in the past is that medical coverage has not responded at to traditional market principles. Costs have gone up exponentially and coverage is so diverse and confusing to most Americans that insurance companies haven’t had to worry about pricing to a market. With a majority of preventive care coverage and routine coverage becoming standardized it will be very easy for consumers to compare plans forcing insurance companies to engage in actually competitive pricing which should benefit consumers greatly.
7. ER (FOR REX) – People don’t base which ER they go to on the merits of the insurance plan. However, this was a needed addition. In the past many companies did not pay if “pre-approval” wasn’t met. No one plans emergencies. I have a friend who developed appendicitis quite rapidly while on vacation in another state. His insurance company (which is one of the larger ones) refused payment based on not get pre-approval for his emergent appendectomy (he went from ER to OR in less than an hour). So a fully insured person is stuck with a 15K bill because he happened to be visiting relatives in another state.
Let’s keep the politicking and campaigning out of the comments. I’d like this to be a little different than the comments section of every other website out there.
Obama Rock! No no Romney Rocks! Romney hates dogs! Obama’s a Muslim! etc.
If I have to I’ll start editing/deleting those types of comments.
Rex- I don’t know of any significant holes in the essential benefits list, but as you’d imagine, it’s an evolving concept and a vague one at that.
I don’t see why the out of network ER thing would encourage sniffles. You still have to pay your co-pay to go. That’s what keeps the sniffles out.
I discuss the concerns about the expansion of Medicaid in part III.
It is the topics you discussed here that I like about the law and I am in support of most of them (although it probably could have been better in some areas). They do greatly improve access to care for many people. In my opinion, it is hard to argue than any of these are bad for americans. However, I am curious to see what you write in part III because all of my major concerns with the law I think will fall in this section.
B
I dont doubt that there are issues for people with serious conditions who get railroaded bc of paperwork or rules. They should just come up with a no BS clause. What i am saying is that we all know most people dont currently take medicaid. We are planning on greatly expanding medicaid and people who previously didnt have access to any care will likely have unlimited access with small copays. This new expansion is likely to be more able to afford the copay since if they were more poor they already would be on medicaid. Where are these people going to go? I of course dont know but i wont be surprised if they go to the ER with the least wait in an adjacent town.
I see you thought process now Rex. Hadn’t occurred to me in that way.
I agree with your analysis with one small quibble. To my understanding, I would add to the last section (Medicaid expansion) that there’s a lot more uncertainty here. When the law was upheld in the Supreme Court, they also found it was outside the power of the legislature to compel states to increase their Medicaid enrollment and they could withold funding from the states who chose not to increase it.
WCI, I’m surprised that you are so apathetic to the health care exchange. I don’t know what utah’s website looks like, but the Mass Connector is pretty slick. Insurance plans are divided into bronze, silver, and gold, and then subdivided into low, med, and high based on cost and coverage. In clear table format it displays copays, deductibles, and premiums for inpt and outpt care. Can someone use the Internet to collate all the info on their own? Of course, but there’s a reason why people go to Expedia and Travelocity are popular. Aggregating data not only makes it more convenient, but also puts small local plans on the same footing as the big boys which of course helps competition. The greatest utility will be if/when they put specific services up for comparison, such as cost of ct and mri’s. Studies have shown there can be a 5 fold variability in cost for Amir with no discernible difference in quality. Exchanges can provide the transparency customers need to make informed choices.
expedia and travelocity work well bc a standard hotel room at the hilton or a flight from chicago to DC are extremely similar experiences. Thus if you boil it down to 1 or 2 cost factors then its easy to compare. Sure that 5 bucks less might not get u a bag of peanuts or 1 inch less leg room but you can manage. Problem is health care isnt so easy. Even when they get to the point where they put additional data like CT scans etc, its going to be hard for the non medical folks to compare. Lets just say i have HTN and DM. Well i might look to see which plan offers the cheapest price for these medications i take for those conditions. Problem is that i dont realize that my diabetes is going to put me on dialysis and thus the plan i chose bc it seemed to have the best price/services but in the end doesnt work out that way. If you know what you are going to need then its easier to compare or if you are very knowledgeable about all the potential outcomes then you can make better decisions. If you have less medical knowledge then it does become like travelocity where you pick the cheapest flight and just deal with the minor differences. Some day it may get to the point where all the data you want is up there but it wont be soon.
If you are going to assume that medical customers cannot be informed customers, you might as well throw free market ideals out the window because supply and demand economy depends on the idea of the rational consumer. Cost is a major data point for consumers when they evaluate whether a service is required or not. Too many pts are completely insulated from the costs of their and their md’s decisions which drives up waste. And you definitely can’t use an example where the patient can’t predict the future as a reason why patients cannot be informed consumers. When you diagnose a patient with diabetes, you have no idea if they will be on dialysis in 10 years or running marathons. You can still make an informed decision without knowing what fate has for you 10 years down the road.
On second read through, fate is not the rig word. That implies that the patient has no control over their health which, while that is sometimes true, is not the case in DM or HTN
Sean-
I’m sure a useful health care exchange could make a difference. Utah’s, one of the earliest, is disappointing to say the least.
Not sure about all that.
Take permanent insurance as an example.
Tons of sites out there with great info yet people still buy it on the free market and almost none of them understand it.
I don’t have to know exactly who will develop what. Just understanding the possibilities puts me at an advantage in picking my insurance.
WCI, since the exchanges are state run, I’m sure we’ll see a huge variety in quality and usefulness. After all, a data aggregation site is only as good as the data it aggregates. Rex, I’m sure there are lots of examples where people make bad choices on complex products because of poor understanding. My point is that free market principles still apply to complex products. If you assume that patients can’t be informed consumers, you might as well have the govt make the ‘right’ choices for them.
Considering 25% of Americans don’t graduate high school and many who do skim by, I’d say yes a large percentage won’t be informed consumers. They will make a choice but it wont be really informed. Maybe a new breed of insurance agents will make it easier but they would need a fiduciary standard.
Rex, you may be right about that. Just offering exchanges doesn’t automatically make someone informed, but for people who want to be informed, it will be invaluable.
When this article was written, I was insuring my family for $450 monthly, with really good insurance, low deductibles, and access to any doctor and hospital we chose. Fast forward to 2019, and the cost to insure my family is $24,000 to $48,000 annually, and even the most expensive plan (almost ten times as expensive as the pre-ACA insurance premium) has higher deductibles and will not let me choose the doctors and hospitals I would choose on my own. We chose the $24,000 plan and see the doctors we want to see and pay out of pocket, because it is cheaper than what we would have to pay if they run it through our insurance.
THAT is the Health Care Consumer Perspective. If you would have told me this extreme situation was going to happen seven or eight years ago, I would not have believed it, although I think everybody knew insurance premiums were going to go up for the healthy.
You should probably shop around a bit as $24-48K is certainly WELL on the high side these days. For example, my family of 6 is about $1400 a month pre-tax with dental.
But I agree with your basic premise that PPACA did nothing to reduce costs.
It is not on the high side at all, or the low side, if you are buying as an individual. That is the range of premium cost, from cheapest to most expensive.
I am a family of six, too. Is your insurance group insurance? I ask because group insurance is cheaper. I am self employed with no employees and thus cannot obtain group insurance. As far as “shopping around,” the ACA destroyed the marketplace for individual policies. Two years ago, all of the insurers had left my geographic area but one (some “choice”). This year things have improved a little bit, as there are three companies offering health insurance plans in my geographic area (priced from $24,000 to $48,000).
You are in Utah. I am in Georgia. I am still fortunate to be in the 58% of enrollees who have 3 or more choices in 2019 (only 23% of counties nationwide have 3 or more choices in 2019). If you look at the map, most of the counties in Georgia are less fortunate and have only one insurer from which to choose.
https://www.kff.org/health-reform/issue-brief/insurer-participation-on-aca-marketplaces-2014-2019/
My point is that there is not a lot of “shopping around” to be done, and hiring an employee would cost me more than the insurance and would not add value to my business right now, so group insurance is not really an option.
Sorry for griping, but it is a thorn in my side. The ACA made something that was an afterthought into the most expensive thing in my household budget.
Oops, used my real first name! LOL!
No, I’m buying it as an individual, at least for 2019. Yes, you are older than I am, but $48K? That’s got to be 3X what I’m paying.
You have met with a health insurance broker, right? You’re not just looking at the exchange?
Yes, sir, I have. I guess here is what you do not understand (and nobody I have met yet seems to get this): Because of the ACA, the plans offered by health insurance companies to individuals (not group) are the exact same plans offered on the exchange. I thought I would find something different when I met with a broker two years ago. I was pretty shocked to discover the exact same plans costing down to the penny the exact same premium. The insurance companies have no incentives to offer anything else. The regulations require the same thing from them whether the insurance is offered through the exchange or not. If it were otherwise, then they could just keep selling me, outside the exchange, the cheaper insurance I used to purchase in 2012. They can’t sell that policy anymore to an individual, and they can’t consider my health. All they can consider is whether I smoke and my age. That’s it.
I am an exercise fanatic with overall cholesterol of 101 (not a typo) and 7% body fat. They must charge me the exact same premium that they charge a diabetic with 40% body fat, even if he is infected with HIV and currently has cancer (hyperbole, of course, but still true).
The market for self employed individuals with no employees is drastically different from group insurance and from the individual health insurance market seven years ago. The reason we don’t hear much about it is that most persons in this category qualify for premium tax credit subsidy. The last time I checked the average premium actually paid is only $250 or so. What do they care of the actual cost of the policy is $2000 to $4000 monthly? The government picks up the rest. For that, though, your income must be below 400% of the poverty level for a family of your size (based on tax size, not actual family size, in other words, a divorced parent who rotates the tax credit with his ex every year has a different 400% poverty level family size every year, but still insures that child). At that 400% point, there is a cliff (the Obamacare “cliff”). Literally, one dollar more in earnings can cost you tens of thousands come April 15 of the next year. I am not aware of any other situation in which making more money can cost you money, especially not so drastically. Usually making one dollar more only increases the tax paid on that dollar.
Nobody seems to get the situation in which self employed individuals find themselves. Very few persons are in the individual market with high incomes (and no premium tax credit subsidy), because most persons with incomes like that are either in work (group) plans or two income couples where at least one of them is in a group plan. I am not a doctor (lawyer here, but I love reading your blog anyway), but I bet you probably have some doctor readers who are self employed with no employees that are in the same boat. It might be a good idea for an article for you to meet with a broker and check out the individual market, check out the exchange as well, and see what you find. Literally nobody is talking about this or writing about this, probably because writers and news media are simply unaware of it. They take the data provided by the government, based on averages having nothing to do with my situation, and just write with the information provided.
I can hardly blame them. All of my friends and family (all on group plans) have a hard time believing it when I discuss this issue with them, too.
I have tried to discuss it on a few financial forums (like Mr. Money Mustache), and it just gets buried under partisan political comments about how much better things are now and how I should be thankful the law changed.
Yes, there is a cliff there. Bummer there is nothing else available in your state. Not the case in UT.
Most self-employed folks can at least pay their health insurance premiums with pre-tax dollars.
Also, you may want to do some geographic arbitrage. This is no different than living in California and having a high cost of housing and a high income tax. Apparently living in Georgia comes with a ridiculously high health insurance cost.
Yes, pretax it is, which at least gives me the tax deduction, LOL! but that was true when my premiums were $450 a month, too . . . thanks for listening to me vent.
I am also 52, which may account for some of the insurance premium price difference, since you are younger than I am.
52 years old is a premium multiple of 1.95 over a 21 year old.
Talk about timing! I just received my notice from the insurance company about the projected increase in monthly premium.
Current = $1895.30 (cheapest plan offered, $13,500 deductible), $22,743.60 annually
Projected increase to: $2199.68 (deductible increased to $13,700), $26,396.16
This is an annual increase of more than 16%, which I suppose I should be thankful for as that percentage is lower than previous years.
I guess it is time to comparison shop for 2020.