No Bull, No Fluff, No Smudges
Your news source for
Flagler, Florida and Beyond

Popular and Consumer-Driven Provisions Fuel Sticker Shock of Obamacare Premiums

| November 7, 2013

They can no longer turn you away, but it'll cost you. (NWLens)

They can no longer turn you away, but it’ll cost you. (NWLens)

When setting premiums for next year, insurers baked in bigger-than-usual adjustments, driven in large part by a game-changing rule: They can no longer reject people with medical problems.

Click On:

Popular in consumer polls, the provision in the health law transforms the market for the estimated 14 million Americans who buy their own policies because they don’t get coverage through their jobs. Barred from denying coverage, insurers also can’t demand higher rates from unhealthy people and those deemed high risks because of conditions including obesity, high blood pressure or a previous cancer diagnosis.

But the provision also adds costs. To a larger degree than other requirements of the law, it is fueling the “sticker shock” now being voiced by some consumers about premiums for new policies, say industry experts.

In setting next year’s rates, insurers must factor in “assumptions about who will sign up, high users or healthy people,” said David Axene, a fellow of the Society of Actuaries. “You can imagine who most of the health plans thought would be predominantly signing up.”

Regulatory filings and comments from insurers show they expect that accepting the sick as well as the healthy could raise their claims costs 5 percent to 50 percent or more next year.  That “would be the largest single factor” at Blue Shield of California, accounting for about a 20 percent increase in expected claims costs, said Mike Beuoy, director, actuarial services. 

The focus on premiums has heightened in recent days, amid news reports about large numbers of individual policyholders nationwide who are learning that their current plans are being discontinued and they must choose a new policy.

To be sure, there are other factors affecting premium cost changes. For one, the law requires insurers include 10 benefits deemed essential by the law, including hospitalization, drugs, maternity care and mental health services, benefits not all plans sold to individuals currently include. Indeed, this is one of the major reasons insurers cite for discontinuing policies. Another provision caps consumers’ annual out-of-pocket costs to no more than $6,350 for individuals or $12,700 for families, which could add to premiums as well.

Insurers must also charge men and women equally – and are limited to charging older Americans no more than three times what younger policyholders are charged, considerably less than they could before in many states.

Altogether, those changes for some consumers may mean a sharp increase in premiums between their soon-to-be discontinued policies and new ones being offered them by insurers, even for similar plans.

“I’m kind of shocked,” said Leo Lenaghan, who lives in the Chicago suburbs. The $336-a-month BlueCross Blue Shield policy for his wife and daughter, which had a $2,250 per person annual deductible, is being discontinued and the plan his insurer says is most similar to it in benefits will cost an additional $205 a month. It has a $3,000 per person deductible. “I guess we’re just going to have to suck it up.”

Still, despite the factors that can drive up premiums – including medical inflation – not all consumers will see higher prices.  Health law rules mean people who are older and sicker may see a drop from what they’re paying now. And about half of consumers who currently buy their own policies will be eligible for a subsidy to help offset the premium cost, according to a study released in August.

BlueCross BlueShield of Illinois would not comment specifically on Lenaghan’s situation, but spokeswoman Lauren Perlstein said that the health law will “expand access to health care coverage for millions and may offer additional benefits for many [and] … the impact on premiums may vary widely.”

The changes make the so-called  individual market more comparable with the way insurers price and offer coverage to employers, where rules have long been in place barring them from rejecting employees with health conditions.  Employer coverage also generally covered more benefits with lower deductibles and fewer restrictions than policies purchased by individuals, who sometimes did not realize the limits of their coverage.

“We as consumers may not know just how lacking our current policies are because it seemed like a good value and we didn’t use it much,” said Michael Lujan, a health benefits consultant and former director of sales and marketing for Covered California, the state’s new online marketplace.

The less their policies covered previously, the more consumers’ premiums are likely to rise, experts say. While adding some benefits only costs “pennies on the dollar,” said Georgetown University research professor Sabrina Corlette, others are more expensive.  A Maryland Health Care Commission report from last year, for example, said the state’s requirement that insurers include maternity coverage added about 4 percent to the cost of a premium.

The actuarial firm Milliman estimated that changes from the health law – including the take-all-applicants provision – could be expected to result in about a 14 percent increase to the average premium in California.  On top of that, general medical inflation from 2013 to 2014 would add another 9 percent. Of all the factors, the biggest cited by Milliman was the guaranteed coverage provision.

Actuaries say the impact of that provision on premiums is unlikely to recur in future years because insurers are factoring in this cost now, based on projections of the ratio of sick to healthy customers.  “Once it’s built in, unless they were wrong, it won’t be repeated,” said Axene.

But insurers’ estimates may be off. Troubles with the federal website and some state sites may discourage enrollment by younger or healthier people who see less incentive to buy coverage. “All insurers I talk with are absolutely terrified,” said Brian Haile, senior vice president, health care policy at tax preparation firm Jackson Hewitt.  “They made assumptions about the number of young people entering the market … which may now be overly optimistic.”

Brady Cass, president of Asuris Northwest Health in Washington State, said only time will tell. Asuris, a subsidiary of Regence BlueShield of Washington, estimated that the requirement that they take all applicants will add about 8 percent to the cost of next year’s premiums.

“Did we overshoot the runway or come up short?  Only way to get there is to get to the end of runway and look back,” said Cass. “The hope is the actuary team has done a very good job at predicting the risk mix coming in.”

If they underestimated, premiums might rise more in future years, he said. If they overshot, some consumers might see a rebate, as required by the health law. Asuris is getting a lot of calls from people wondering why, if they’re healthy, that they have to pay more to cover those who are not.

“It’s the many helping the few,” he said, likening it to buying home owners insurance and paying in year after year, money that goes to help other people whose homes burn down. “That’s the concept of insurance, lots of people coming together to help those in time of need.”

–Julie Appleby, Kaiser Health News

Print Friendly, PDF & Email

18 Responses for “Popular and Consumer-Driven Provisions Fuel Sticker Shock of Obamacare Premiums”

  1. Charles Ericksen Jr says:

    This article ,from an actuary’s point of view is but partially true. As the article states, ALL policies must include the mandatory benefits, some in particular, maternity and mental health. I think we will all agree, that the birth rate is down, and some of us have aged, so not ALL need to assume the expense of maternity, yet everyone has to pay for it. The same is true about mental health, in thie particular case, many more need it than use it, yet we all are charged for it.
    Historically, medical expenses have gone up 2x, the cost of living every year..and more over the past years when the cost of living has been low, or supposedly non-existent, except for those over 65 and on Medicare and Social Security. Now, just WHO, causes this ? The Insurance Companies?? No sir,, The culprits are more the providers ( Hospitals and docs), who charge rediculous fees for simple procedures, split procedures down into pieces to charge more by the piece, than the total procedure, Just like the person, who steals a car, takes it to a chop shop, and cuts it up in pieces and makes a greater return by the piece.
    The hospitals, who all have multi-million dollar robotic surgery instruments, costing a million+ $’s , when one would suffice, in a region, with it running 24 hours/day. Every hospital has to have what the other has. Too much duplication, to much overhead, that needs to be put back into the rate setting formula..
    Bottomline..It’s not the Insurance Companies, filling their pockets/stockholder’s returns, they charge to cover the costs, charged by the providers.
    The real problem, is that we have elected officials, who have no experience in running a company, staffed by even less talented folks, making decisions, that are supposedly for the good of , the people, but have NO practical Industry knowledge. We elect someone who talks well, and has no experience in anything, except being a lawyer, and I’ll leave it to you, to joke about that.

    Next they will allow, homeowners to elect home insurance, while the fire trucks are pulling up ..

    Let people select WHAT they want, and “take the risk” on other coverages. I don’t need to have maternity coverage..I don’t need mental health coverage. Why should I pay for it??

    Yes, I did work in the Insurance Industry for 30+ years, and there is more to the story, that should have been told, prior to any supposed “Affordable ” Car Act..

    • Steve Wolfe says:

      Mr. Ericksen, I am glad that my opinion Is not too far from yours. I think you put it more clearly than I could; however, I have to take exception with your belief that doctors are the culprits. Doctors have been forced to pay ever-increasing malpractice insurance premiums, in addition to the overhead of staff, office space, equipment and supplies, not to mention the six figures for student loans that they will be paying off for much of their career. Doctors are the point man of the entire health care industry. They are the direct contact with the patients, yet get stuck between the best interests of the patient and whatever treatments and expenses the insurance companies will allow. Doctors are possibly ordering more diagnostics than ever in order to come to a precise diagnosis out of fear of a malpractice suit. They don’t want anyone to be able to accuse them of falling short. This practice of over-investigating symptoms with all the latest tools at their disposal jacks up costs, which are also reflected in insurance premiums, just as when more people wreck their cars, we all bear the increases in auto insurance premiums. We have very high expectations for our health care, but we must remember that doctors are not nameless, faceless insurance companies, but rather must do battle with them. Doctors have to navigate around malpractice concerns. Doctors are people, too, and very important people to us, at least when we get sick.

  2. djsii says:

    With all due respect to Brady Cass, “It’s the many helping the few,” ……………. “That’s the concept of insurance, lots of people coming together to help those in time of need.”, is really a false statement. They are not in the business of handing out cash to those who are less fortunate; they are IN BUSINESS to make a profit. They do not want to break even and they certainly don’t want to take a loss.

    The concept of insurance (whatever the kind home, boat, auto, health, etc.) is nothing more than a TRANSFER OF RISK from one party to another………..period.

    Insurance companies are in the business of ASSUMING THE RISK of others for a price. With respect to health insurance, the cost of premiums are based upon the level of risk that they are assuming for either the individual or group of individuals.

    I’m not very sure that anyone can predict the total effect of adding millions of uninsured people to the insurance companies pool , or the effect it will have on existing insured clients. I would wager that the insurance companies do not plan to lose a single dime on the transformation of health care.

    Then there is the other side of the equation. Once all of the uninsured are in the program and have the ability to obtain healthcare there has to be adequate healthcare service available. (SUPPLY & DEMAND) Are doctors now able to “Cherry Pick” the type of patients they will service within their practice? Will they work for the wages that are allowed within the various plans, or will they look to fill those slots with patients who have “Cadillac Plans”? My own in Palm Coast experience is that the doctors can be, and are, selective on the type of insurance plans that they will participate in and will avoid those that are less desirable / profitable. With some many people (now millions more) needing healthcare the healthcare industry will have to revisit their business model to accommodate such a significant shift.

    ACA will not survive if only the chronically ill, the less fortunate, or those with pre-existing medical conditions are the only people signing up. They are the ones who will reap the vast amount of the subsidies (especially the less fortunate). In order for it to work there must be a VERY LARGE number of young healthy people signing up since they will not CONSUME as much healthcare and therefore reduce the risk to insurance companies and the Government. Yes, I said the Government because now, through their subsidy program, they are partially ASSUMING this healthcare risk to reduce the cost of insurance. So, this is why it the enrollment numbers seem to be extremely important to politicians and insurance companies alike. It not just the number of people….its the number of healthy people that really count.

  3. A.S.F. says:

    Considering the number of senior citizens with Obesity, HBP, Heart Disease, Osteoporosis, Cancer, stc., I think ir was foolish not to draw the line more firmly with insurers about how much more they could charge and how little we would demand to negotiate rates, as we do with Medicare providers. The rest of the American public deserves the same considerations and treatment that older citizens receive, just because they happen to be over age 65.

  4. Steve Wolfe says:

    We rely on the Feds to break up monopolies. Anyone else see the irony in that? Each one of the services that the Federal Government dominates is run by 9-to-5’ers, with weekends off, and for the most part lifetime security (with fine pay and benefits). Recalling the objection most people have to our medical industry being run by insurance companies, most of whom are staffed by non-medical or people with marginal medical understanding, now we are faced with our brilliant Feds also running the table on Health Insurance. The Feds have run Social Security from the start, and it is nearly bankrupt. The Feds have run Education for a few decades now, yet test scores and graduation rates all over the nation keep slipping. The Feds have run the Post Office from the start (and yes, the Postal Service is still under the watch of Congress), and that monopoly has been on a downhill slide for a decade. Housing and Urban Development has higher overhead, waste, and fraud than the worst-run charitable organization. Does anyone else see a pattern here? What has the Federal Government done to earn your trust that it will equitably and efficiently run your health care? And, being a largely politically-run machine, does anyone see a possible conflict of interest there? I for one do not believe that the new law will provide the relief it was intended, unless the intent was to relieve us of more of our money. Oh, and the IRS is in charge of that part….

    • John Boy says:

      Steve, SS’s only problem is that Congress has “stolen” 9.7 Trillion from the SS Trust Fund and doesn’t want to pay it back. The Post Offices major problem is the 75 year forwatd funding of benefits, no company could survive this plan but that was the Republicans design. I however agree with you on the Milittary / Defense Comples, the Congress has F*cked that up big time because that’s one of the areas that Congress get’s it’s bribes from, you understand bringing home the Pork, I hope.

  5. Genie says:

    This is bullshit. These policies and premiums are not the same. They vary from state to state. Some claim to find cheaper coverage, which I doubt. But most are finding they cannot afford the new premiums.

    This is the biggest fraud ever perpetrated on the American people.

  6. A.S.F. says:

    Let me tell you something I saw today that really made me think. I was sitting in a restaurant and, in the next booth, there was a couple (I’d estimate in their late thirties, early forties) who were quite vociferously complaining about Obamacare and how much more it was going to cost them, in terms of their monthly premiums. What was especially striking to me was how this couple left the restaurant, smoked two cigarettes a piece lounging around outside (after a fatty fried meal) and then hopped onto their motorcycles and sped away, without either of them wearing a helmet. And you wonder why the cost of healthcare is so high? Gee, you have to wonder how much more money they would have available to pay for that anticipated rise in their premiums if they just gave up the cancer sticks! All of us need to get smarter about our choices. We need to decide what our priorities really are and what we are willing to do about it.

  7. Pogo says:

    It’s nothing to do with insurance companies?!

    Google Wendell Potter.

  8. JL says:

    The idea of AHA was a bad idea from the start, and many of us saw that. Unfortunately, many did not and believed the BS the Prez was spewing. Everyone thought this would give them free healthcare, everyone thought this would be wonderful idea. Anything our Government puts their hands in, is bound to fail.

    I wish the voters would speak up, tell Congress to nix this and work on a better plan to get people covered without penalizing those of us who already are.

    • A.S.F. says:

      @JL says–Maybe you should relay your comments and dissatisfactions to Ex-Governor Romney and the Republican establishment, since the current ACA is based on plans THEY put forward (and, in Romney’s case, actually put into effect in Massachusetts) in the past. Republicans in Congress (especially the House) have never shown, and to this day do not show, any interest in doing anything to improve Healthcare Reform efforts. They are only interested in sinking it and, in doing so, sinking Obama and the Democratic Party with it. THAT is selfish, cynical, egotistical and just plain unpatriotic, in my book. If they really cared about the people of the United States, they’d do something to help them and improve their lives. Instead, the Republicans (especially the Tea Party contingent) have shown no interest in doing anything much other than advancing their own cause, as they see it.

  9. Sherry Epley says:

    If your health insurance premiums are too high, look to our governor Rick Scott. This from’s truth meter:

    “Florida lawmakers have left the state vulnerable to unreasonably high insurance premiums in an effort to undermine Obamacare, say the state’s U.S. House Democrats.

    Gov. Rick Scott and the Legislature cynically stripped Florida of its ability to review rates for the law’s rollout, U.S. Rep. Ted Deutch writes in a letter signed by all 10 of the state’s Democratic representatives.

    The letter, which appeals to the federal government to step in on Floridians’ behalf, blames a law Scott signed at the end of May for refusing to allow the state insurance commissioner to “negotiate lower rates with companies or refuse rates that are too high.”

  10. A.S.F. says:

    Hmmmm…Maybe somebody should investigate Governor Scott’s bank account to see if he’s on the take again. Refusing to allow the State Insurance Commissioner’s Office to negotiate or effectively monitor rates? ? That’s certainly not in the best interests of Floridian consumers but it might be where private companies are concerned.

  11. Dennis says:

    If this law is so great for this country, why is it that aspects of the law are postponed until after elections? Why are 15 democratic senators running to the Whitehouse asking the president to postpone the individual mandate until after the midterm elections? For the sake of the people of their states, or because they’re worried about getting reelected?

    I think when you start hitting people in the wallet and forcing them to buy something they not only don’t want, but feel they don’t need, you going to have a tough time getting elected. Time will tell if this law will stand. If the recent polls are any indication it doesn’t look to promising. I’m sure much of it has do to with the misinformation that has been put out by the president.

    • A.S.F. says:

      No doubt, we are not off to the best start that we could be. One of the biggest mistakes Obama made was thinking he could trust the insurance industry to keep the best interests of their consumers and the public in mind. He had meeting after meeting with representatives of all the major insurers which, to my eyes, looks like it was a pretty much of a wasted effort. The Insurance industry cares as much about acting responsibly towards its consumers as the banking industry did when they got their bailouts. Now, we are seeing insurance companies beginning to act the same way as the Banks did: ” Their motto?: “I GET MINE (you get what’s leftover, maybe.”) They are the animal they are. We should not have expected them to change their spots. That’s why the profits they are trying to reap in now (to forestall their projected losses) should be monitored and accounted for as closely as possible by a government agency whose job it should be to make sure that they are complying with THEIR responsibilities during this time of change. Governor Scott is not getting Florida off to a good start by de-fanging the State Insurance Commissioner’s office whose job it is to protect the consumer. But, then again, he seems mainly interested in doing anything he can get away with doing to help healthcare reform fail. Apparently, that would make his neo-conservative base deleriously happy (because, after all, they are SUCH great patriots who care so much for our country and its future.) We need to be tougher negotiators where medical services and products are concerned. We negotiate rates with Medicare; there is no reason we shouldn’t at least try to do so across the board. As for postponements, whether certain provisions begin to take effect today, next week, next month or next year, everything should be in its best state of readiness before it actually takes effect. Let’s try to learn from our mistakes and make corrections, swiftly and in a reasonable fashion.

  12. Geezer says:

    The only thing to do was to open up Medicare to all with affordable premiums tailored to one’s income.
    This is a mess that’s doomed to fail because the insurance companies are cozy with the Republican party.

    Expect more monkey wrenches to be thrown into the machinery until the law is eventually repealed.

    Let’s just concentrate on sending our jobs to China and watching the working Americans
    fall by the wayside in poor health. We are living in the final days of America and probably the world.
    Our government isn’t of the people anymore.
    That’s why we’re dying as a nation.

    Greed is the number one religion here, and we have a lot of religious people.

    • A.S.F. says:

      I agree with you, Geezer. The current ACA was a ass-kiss to the Republicans and to the insurance industry and, still, they totally reject it. The plan is based on the theory that free market competition will drive prices down and make insurance rates more affordable. In other words, THIS attempt at “trickle down” is not going to work any better than other attempts in other areas have, primarily because business is business and the insurance companies will do whatever they need to do to keep their accustomed profits flowing in, uninterrupted. Also, many younger, healthier individuals would have to be willing to sign on and they may not feel like they, as a group, are getting their money’s worth. Therefore, the risk pools do not have a chance to cancel each other out and equalize the system. The President should never have gone as faras he did to try to placate certain parties who will never be satisfied. No matter what you do or how hard you try to negotiate. It is always “their way or the highway.” Since they have very clearly shown their spots, It is time to push back.

  13. Sherry Epley says:

    It’s interesting that my two past professions, as a health insurance underwriter (11 years) and in the employment placement field (18 years) has come into focus for me, in these discussions.

    I completely agree with Geezer and ASF!

    My job as a group health insurance underwriter for a major carrier was to create profit for my employer “first and foremost.” When I was initally hired, I had zero white collar business experience. I did receive training, but only for the minimum of what was needed to do my job, and I was grossly underpaid for the amount of responsibility I had.

    Looking back, I am embarrassed to say that I had the final word on whether much needed insurance policies covered certain employees of small businesses. It was my job to keep those who needed insurance the most from getting it! I am certain there were times, when I REJECTED an applicant (and therefore their family) for coverage or RATED (increased) the cost of their coverage, that I actually put a person’s job in jeopardy. I never thought about the repercussions of my job, during those years.

    If you, for one moment, think that insurance companies, hospitals, doctors and pharmaceutical companies are not maximizing profits by playing two games, you are quite mistaken.

    GAME ONE= Managed Care. . . In this game, insurance companies do everything they can to DENY/DELAY coverage. Their tools are:

    Underwriting- To “cherry pick” only the healthiest policy holders. NO LONGER ALLOWED BY THE ACA
    Claim Examining- Hire those with no medical training, to do everything in their power to deny or delay payment or approve payment only for the CHEAPEST treatment for your complaint. . . no matter what YOUR DOCTOR recommends. PREVENTATIVE SERVICES with no co-payment is required by the ACA.

    President Obama made a huge error when he believed the insurance companies would “do the right thing” and fore go some of their profits in order to provide a higher quality of health care coverage for ALL citizens of the USA.

    GAME TWO= Charge the Maximum of What Insurance Companies Will Pay. . . In this game, doctors and hospitals are required by insurance companies to submit “treatment” codes for all services. Then the insurance claim examiners pay a certain amount according to their table of codes. The administrative staffs in your doctor and hospital offices are paid to maximize what insurance companies pay. . . regardless of whether you medically need the pills, tests or services requested. They know exactly which carriers will pay for what number of visits per year. For example have you ever felt that it was not necessary for you to be required to have an office visit just to get your “usual” prescriptions filled?

    So sorry, but. . . .Here’s the thing. . . NO ONE IS LOSING MONEY BUT YOU! These games don’t even consider what may be in the best interest of the policy holder/patient. It is ALL about MAXIMIZING PROFITS. . . while raising your insurance premiums and minimizing the cost/quality of your health care.
    Yes, I regretfully have to say that we have now all been reduced to numbers on an actuarial table/profit spread sheet.

    Again, it is all about the worship of MONEY OVER HUMANS.

Leave a Reply

FlaglerLive's forum, as noted in our comment policy, is for debate and conversation that adds light and perspective to articles. Please be courteous, don't attack fellow-commenters or make personal attacks against individuals in stories, and try to stick to the subject. All comments are moderated.

Read FlaglerLive's Comment Policy | Subscribe to the Comment Feed rss flaglerlive comment feed rss

More stories on FlaglerLive

FlaglerLive Email Alerts

Enter your email address to get alerts.


suppert flaglerlive flagler live palm coast flagler county news pierre tristam florida
news service of florida

Recent Comments

FlaglerLive is a non-profit 501(c)(3) organization | P.O. Box 254263, Palm Coast, FL 32135 | Contact the Editor by email | (386) 586-0257 | Sitemap | Log in