Coming in January to ObamaCare: Rate shock, part two

A shrewd analysis by Pro Publica’s Charles Ornstein, who also wrote the feature last week about the Obama-loving couple in San Francisco who are now paying more across the board for their new insurance. His point is simple: The “rate shock” that people are experiencing right now is almost entirely a reaction to the new premiums on the exchanges, but premiums are only one component of what insurance costs. Deductibles and co-pays, the other components, are being overlooked right now by some consumers — as are provider networks, of course, as I’ve noted several times. Consumers who aren’t paying attention to those things are in for a rude awakening in January, when their coverage finally takes effect and they visit the doctor for the first time. What happens to support for O-Care when some people find out that their out-of-pocket costs are higher too — and, unlike their premiums, that cost won’t be subsidized under their new, allegedly more “comprehensive” plan?

Consider a family of four making $59,000 a year. They will have to pay $400 a month toward their insurance premium, after receiving a subsidy, said industry consultant Robert Laszewski.

“But then, they will get a plan with a $2,000 deductible and hefty co-pays,” he wrote in an email. “The Democrats that say everything is going to be OK really need to go on one of the open exchanges and take a hard look at what consumers will see.”…

“The website difficulties have meant that in much of the country people have yet to really see what the cost-sharing will look like in these plans, and they may be surprised for find out that the deductibles and co-pays in bronze and silver plans are higher than what one would find in typical employer-provided health benefits,” Larry Levitt, senior vice president of the Kaiser Family Foundation, said in an email.

“I think it remains to be seen whether people see these plans as offering them good protection against catastrophic health expenses — which they do — or are disappointed that they won’t generally provide much coverage for occasional visits to the doctor or prescriptions,” Levitt added.

Subsidies are available to defray out-of-pocket costs but the income threshold to qualify is lower than for subsidies aimed at premiums — below $60,000 for a family of four for the former versus $94,000 for the latter. Anyone whose income falls in between — i.e. a nice chunk of the middle class — is on the hook for deductibles and co-pays with no help for Uncle Sam. And those who do qualify may not find the money there when they need it because of the sequester. Looming question on January 1: What good is having “comprehensive” benefits if you need to pay much more than you used to in order to use them?

The “good” news, such as it is, is that the backbone of the ObamaCare scheme is “young healthies” who won’t be visiting the doctor much in the first place. Bill Clinton, in fact, mentioned his conversation with one of them in the clip that’s making the rounds online today. The healthy youngster he spoke with has low out-of-pocket costs under his new plan but much higher premiums than he used to; it’s basically the opposite of catastrophic coverage, which is what people in that demographic usually seek out to keep costs low. But it stands to reason that O-Care would nudge someone like him into a plan that’s ass-backwards: Insurers need guaranteed revenue from healthies to offset their costs from covering the sick so naturally they insist on higher premiums, even if in some cases they kinda sorta make up for it with lower out-of-pocket. Emphasis on “in some cases.” The San Francisco couple that Ornstein wrote about last week led a healthy lifestyle and ended up paying more in premiums and out-of-pocket after they were booted from their old plan. Matthew Fleischer, another “young healthy” whose LA Times op-ed a few weeks ago got a lot of attention, is also seeing both his premiums and his out-of-pocket costs increase. One of the virtues of O-Care in theory was that it would leave people less afraid to visit the doctor when they’re sick for fear of the expense. If higher premiums don’t mean lower deductibles, what happens to that theory?

Here’s Democrat Kurt Schrader feeling grossly misled by Obama about all this or something. You’ll be pleased to know that Fred Upton’s “Keep Your Plan Act” gained its first Democratic co-sponsor this morning.

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