Everywhere you turn these days, the Affordable Care Act (ACA) — otherwise known as “Obamacare” — is in the news.
From last month’s government shutdown, to the glitchy launch of healthcare.gov, to the results of last week’s elections, and now to President Obama’s recent apology for millions of policy cancellations despite his earlier statement that we’d all be able to keep our health insurance, the news can be contradictory, confusing, and — yes — politically charged.
Whatever your political leanings though, we can all agree that ACA has triggered a lot of news!
But, what is going on “in the trenches”? What is really happening as people — real people — begin to navigate the new landscape under ACA?
The first thing we can say is ACA is having a tremendous impact for people in the individual market (those who buy their own insurance vs. getting it from their employer)! Our phones have been ringing nonstop and our email boxes are full! A majority of these calls are from clients who have received cancellation notices from their current carriers.
How are people reacting? Let’s delve a little deeper.
Sicker or Older Consumers and Affordable Care
The folks that can’t switch fast enough to a new ACA-compliant health insurance policy for 2014 tend to be those who are sicker and/or older.
These are folks whose health issues mean they are currently paying very high premiums for their coverage. This group is, by and large, pleased with their 2014 ACA premiums. Why? Because the premiums for this demographic will actually go DOWN. (Remember, ACA pricing spreads the cost of medical care across more consumers. Read more.)
But in many cases, their out-of-pocket health care expenses may go up (via higher deductibles and co-payments meant to keep the premiums down) AND, their access to the providers they know and trust will most likely shrink.
In one extreme example of reduced access to providers, we are literally unable to find a 2014 plan whose network includes the only local hospital that offers a potentially life-saving treatment for a client with a serious medical condition.
Younger, Healthier Consumers and Affordable Care
Younger, healthier consumers are also facing rising deductibles and co-pays, as well as shrinking provider networks in new ACA-compliant plans in 2014.
But for this group, the premiums are RISING in 2014. Yes, they will be covered for the ten essential health benefits mandated by the new law, but the bottom line is their new coverage is likely to be (a) more expensive in terms of premiums, and (b) less robust in terms of access to care.
So Who is Signing up for new ACA Plans in 2014?
Our experience here in our office shows that older, sicker people — those who are more expensive to insure — are the first in line for 2014 plans!
We are seeing younger, healthier individuals more likely to elect early renewal of their current plans, essentially delaying their entry into the Affordable Care Act marketplace.
Small Group Health Insurance Market
We are seeing a similar experience in the small group market as well (small businesses with fewer than 5o full time employees that provide employer-sponsored coverage for their workforce).
Let’s take a look at two scenarios.
| Scenario 1:
A small landscaping company with 5 employees.
All employees are young and healthy.
Premiums for 2014 group coverage are going UP by 80%.
Solution: Renew 2013 policy early. Premiums go up by 6%; coverage stays in effect through Dec, 2014.
At that point, likely cancel coverage for employees altogether.
| Scenario 2:
A small business with 10 employees, many of whom have had serious health problems in the past several years, resulting in large claims to the tune of several hundred thousand dollars.
Premiums for 2014 coverage are going DOWN by 43%.
Solution: Drop current plan and purchase new ACA-compliant group coverage, effective January 1.
We will leave it to you, the reader, to draw your own conclusions about the new law’s impact.
In the meantime, we continue to be available to answer your questions and be of assistance as you make your way around the Affordable Care Act.
Thank you for your patience as we manage a high volume of calls and emails.