Wednesday, July 24, 2013

Good news about Obamacare

The latest news about the Affordable Care Act, aka Obamacare, is that it might actually be even more affordable than we thought. To be fair, many of the provisions in Obamacare haven’t kicked in yet and until they do, the impacts of those laws are mainly speculative. However, one key aspect, the Health Insurance Exchanges, are just coming into fruition and the news is very good.

Health Insurance Exchangesor Marketplaces, give individuals and small business owners options for picking from a pool of health insurance plans. In coming years, states must either offer their own Health Insurance Exchange or allow the federal government to offer one in their stead. There were fears that insurance costs would skyrocket once states were forced to offer these plans. Not so much.

It’s hard to compare rates across states, especially since these plans aren't even available in most places yet (and different states have different metrics for explaining costs), but here’s what New York, Colorado and California are expecting to see.

In Colorado, about a dozen insurance companies will offer over 200 different health care plans. As an example, a 27 year old living in Denver would pay between $200-$375 per month for a‘silver level’ plan (about 70% of health costs are covered). A family plan (2 adults and two minor children) would cost between $700-$1360 per month. That doesn't sound that great, does it? However, those are the unsubsidized prices. People who make up to 400% of the federal poverty level will qualify for subsidized coverage. So, if our 27 year old were only making $25,000 per year, he or she could knock $158 off that price. A family of four making $80,000 per year would get a monthly credit of $539 toward their family insurance plan. Suddenly, these plans are looking extremely affordable for most people.

In California, our hypothetical 27 year old will pay about $150/month and our family of four will pay $633/month for health insurance.

Finally, New York just announced that individuals and families could expect to cut their insurance costs in half once their exchanges start operating next year.

To put all this in perspective, in 2010, the average monthly insurance cost for a family was over a $1000

I should also note that these prices are for people who can't get insurance through their jobs or through Medicare or Medicaid. To make insurance affordable to the poorest citizens, Obamacare also provides a provision to expand Medicaid to everyone making up to 133% of the federal poverty line. The Rand Corporation estimates that if all 50 states adopt this change it will save them a cumulative $18 billion per year.

There are hundreds of provisions in Obamacare. Some that have already gone into effect include free cancer and diabetes screenings, blood tests, prenatal care and well-baby visits. Young adults can stay on a parent’s insurance plan until they're 26, even if they're married. An estimated 3 million young people between the ages of 19 and 25 have gained health insurance thanks to Obamacare.

Perhaps most importantly, you can no longer be denied coverage for having a pre-existing condition. Not only does this give people options for getting health insurance for the first time, but it also frees people from being trapped in jobs they may not like. What do I mean by this?

Suppose you work at a company that provides health insurance and you develop a heart problem. Try as it might, your insurance company can’t quite declare your new condition to be ‘pre-existing’ so you get treatment. Now let’s say you’d prefer to leave this company. Perhaps you’re exposed to dangerous or unpleasant work conditions, or you don’t like the pay, or you just want to try something else for a change. Can you leave and get another job? Before Obamacare, the answer was most likely no. You would have been trapped at that company by your need for health insurance. The same is true if it's your spouse or your child who has a pre-existing condition. Thanks to Obamacare, it's much easier for people to contemplate changing jobs if they want to.

Don't get too excited about these changes yet though. The Republican party is doing everything in its power to see that Obamacare is repealed, or at the very least, postponed. House Republicans have voted to repeal Obamacare over three dozen times in the past few years. Since some of the provisions are not set to become law until 2022, it will take a rather extraordinary run of good luck for the entire plan to be implemented, and even then it might not be available in all states. 

As of now, 27 states are refusing to offer the insurance exchanges, all but one of them (Montana) run by a Republican governor. And this is true even though the federal government is offering grants to help states plan and implement the changes. Fourteen states are currently refusing to expand Medicaid and several more might refuse, even though they'll lose over $8 billion in federal funding and leave 3.6 million Americans uninsured by doing so. Guess which party governs those states.

Elections have consequences. This is yet another thing to keep in mind next time you go to the polls.


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