Monday, July 15, 2013

Portland Area Bronze Medical Care Plan Premiums for Lower Income Users to Spike Under Obamacare

With the publication of healthcare monthly premium costs in the Portland area, it's clear that healthcare costs will be spiking for the lower income person/family who is the natural candidate for the lower level, "bronze" healthcare plans.

The young lose on all the plans compared to current rates for the same plan, but middle-aged and older people able to afford the "gold" plan may see a slight reduction in monthly fees.

Under Kaiser Permanente's proposed Portland area Obamacare bronze plan, 21 year olds are slated to pay $72** more a month; 40 years olds $42 more per month, and 60 years olds $68 more every month for the same or similar coverage as they can get through Kaiser right now.

Comparing Kaiser Permanente's current rates for 21, 40, and 60 year old males* and the approved rates once Obamacare kicks in, those with bronze level coverage (which pays "an estimated 60% of medical costs") will see a significant cost increase. A 21 year old single male will pay a whopping 85% more (from $85/mo to $157/mo) for the same coverage in 2014 that he would get if he signed up August 1, 2013. A 40 year old's premiums will go up 26% (from $159/mo to $201/mo). A 60 year olds' payments will increase 19% (from $359/mo to $427/mo).

In contrast 40 and 60 year olds with gold plan coverage (which pays "an estimated 80% of medical costs") will see an 8% and 13% decline respectively (from $329/mo to $302/mo for 40 year olds and $741/mo to $641/mo for 60 year olds). However, 21 year olds will still see a sharp increase of 35% even in the gold plan (from $175/mo to $236/mo).

This begs the question of whether health insurers are spiking the rates at the low end because they realize that government subsidies will pay costs for many newly insured. Thus, there is no need to have competitive rates in the bronze area since government funds roll in no matter what. There has been no data presented on why current bronze rate payers will suddenly cost 85% (or 26% or 19%) more whereas silver and gold plan users will not.

Maybe health insurers foresee that the 11 million newly insured (subsidized by the government) will still not be able to pay the 40% of costs the insured is to pay under the bronze plan (or 30% of costs if most buy the silver plan). So, emergency room care previously given to the 11 million will likely continue (as it has in Massachusetts). And the 40% of medical expenses not covered, as well as co-pay and prescription expenses will not be paid either. Certainly the health insurers will not legally (or ethically) be able to deny service to people whose premiums have been paid but are unable to pay the 40% still owing not to mention co-pays and prescription fees.

What better way to recoup those funds than to increase charges to the class of people tax subsidies will pay for? At least the subsidized premiums of those users will roll in. But in the end the losses may be so big (imagine not receiving 40%+ of every dollar billed) that all premium payers will see a hefty rise in healthcare fees to cover those bad debts.
*Actual rates vary as Kaiser currently has two gold plans, three silver plans, and two bronze plans. The highest current plan rate was used as the basis for comparison so that differences in the two rates are skewed in favor of the Obamacare rate.

**All Obamacare rate figures are for non-tobacco users. For tobacco users add $125/mo more for 21 year olds, $160/mo for 40 year olds, and $341/mo for 60 year olds.


MAX Redline said...

Wow! Excellent followup, TD!

One minor addition: in terms of the 40% still owing, etc., there are two ways that works out. The HMO will work with the subscriber to establish a monthly payment plan (Kaiser does it themselves; Legacy uses a third-party company called "Account Control Consultant Ent. Inc" or,, as they call it, "ACCENT").

It's worth noting that Kaiser sucks at billing and accounting, so even if on a payment plan, a subscriber is likely to receive a demand note threatening to turn the account over to a collection agency - because Kaiser imposed additional charges and did not include them in the established payment plan).

Failure to establish a payment plan, in any case, will result in collection agency hassles demanding payment in full, with all of the attendant legal wrangling that may go on for months, if not longer.

The result will be the best of all possible worlds: the indigent/underemployed victim will receive boatloads of stress and emotional distress, along with destruction of his/her credit rating - and premiums for the rest of us will, as Obama promised would occur with energy costs "necessarily skyrocket".

T. D. said...

Thanks for the inside view of how collection will work. As you state, the stress of collection agencies will do nothing to help stop the development of serious medical conditions (which the supporters of Obamacare tout as a major plus).

This will drown those who are on the way from poverty to middle class status by adding significant monthly debt and even more debt should they decide to use their healthcare plan.

Anonymous said...

It's too complex and very wide for me. I'll look forward to your subsequent post and try to get the cling of it.

Check this out too: