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Sticker Shock' Ahead on Health Insurance


'Sticker Shock' Ahead on Health Insurance
By David Pittman, Washington Correspondent, MedPage Today
Published: February 05, 2013

WASHINGTON -- Separate surveys released this week give dramatically different outlooks for two groups of people under the Affordable Care Act (ACA): the young, healthy worker and the part-time worker.

Premiums for a healthy, nonsmoking, 27-year-old in a "bronze" -- or relatively inexpensive -- small-group or individual policy would increase on average by 169% in five markets in 2014, a survey of major health insurers by the conservative American Action Forum (AAF) found.

Meanwhile, premiums for an unhealthy, 55-year-old smoker in a more generous gold-rated policy would decrease by 22%, on average, in those same five markets in 2014.

"The results surveyed above indicate that there will be massive sticker shock to the relatively young and healthy in both the small group and individual markets," the AAF report said. Those increases essentially subsidize the ACA mandated coverage of sicker individuals and limits on variations in premiums between groups of insured such as men and women, the report noted.

ACA mandates coming in 2014 include the mandate for individuals to purchase insurance; minimal coverage requirements for insurers; coverage of pre-existing conditions for adults; limits on premium variation based on age, gender, health status, or group size; new fees and taxes; and other new rules.

The AAF sought to understand how these changes would play out in different markets. It sent a survey to an unspecified number of major insurers and asked them to forecast the ACA's impact on small-group and individual plans in six cities.

Results showed premiums would increase for young, healthy individuals by an average of 190% in Milwaukee and 157% in Phoenix -- the city with the lowest increase for the group.

To put a dollar amount on that, the average current monthly premium in Chicago, Phoenix, Atlanta, Austin, and Milwaukee is $2,047 for young, healthy workers in a small-group plan. The AAF survey found it will jump to around $5,124 in 2014 with the ACA changes.

However, premiums would drop 32% for older, less healthy individuals in Austin, Texas, the largest drop for the surveyed cities, and by 15% in Milwaukee, the smallest drop for a city.

Premiums for older, less healthy workers in a small-group plan in those same five cities would drop from $14,534 today to $10,706 next year, the AAF survey found.

Both groups of enrollees would be helped economically in some cases by federal tax credits available for those making between 100% and 400% of the federal poverty level, if they purchased insurance through a health insurance exchange.

"By eliminating or constraining these 'rating factors' that result in the variation in today's market, the ACA in 2014 increases the premium for the young and healthier and lowers the premium for the older and sicker," the AAF survey said. "The same would be true if there were a law reforming automobile insurance."

The AAF survey didn't specify which health insurers participated in its survey but did say it wouldn't have published results without at least four respondents for each city. Albany, N.Y., was the only city it asked about whose results weren't published.

A separate survey from the ADP Research Institute, also released this week, says the ACA's penalties for employers to offer coverage to employees could result in more of today's part-time workers receiving coverage.

"The shared responsibility provision of the ACA may result in employees who are currently classified as part-time being reclassified as full-time, meaning the employer must offer coverage to those employees or face a potential penalty," ADP's 2012 Study of Large Employer Health Benefits said.

In 2012, 23% of all employee positions were classified as part-time and only 15% of those were eligible for benefits, the survey found. The survey was based on roughly 300 companies with at least 1,000 employees.

The ACA mandates that any employee working at least 30 hours per week, or 130 hours per month, must be offered employer-sponsored health coverage that meets certain requirements if the business employs 50 or more full-time workers.

"The ACA will require employers to extend health coverage to more part-time employees, and employers need to carefully consider the best approach for their organization," the report stated.

On Monday -- the same morning the AAF released its survey -- Health and Human Services Secretary Kathleen Sebelius said the government must reach out to young people currently uninsured who may not know they can gain federal assistance to buy coverage through a health insurance exchange or marketplace. Young people are particularly tough to reach, she noted.

"If we're going to fulfill the full promise of the Affordable Care Act and insure millions of Americans, we need to reach these people," Sebelius said Monday.

http://www.medpagetoday.com/Washington-Watch/Reform/37205
48 Responses
Avatar universal
The more that comes out the worse and worse this looks. $$$$$$$$$$. Our current healthcare system was not broken just flawed and could have been addressed several other ways then this which ultimaly will mean higher taxes for all.
1310633 tn?1430227691
"The ACA will require employers to extend health coverage to more part-time employees..."

So, not only is the corporate tax rate not being dropped by a noticeable and meaningful percentage, but now businesses both large & small are going to have MORE money coming out of our pockets to insure part-timers...

I understand the need to insure the uninsured. You won't get an argument out of me on that.

But at what cost?

This landmark legislation (ie: ACA, Obamacare) will get the uninsured, insured, yes... but in the same breath, it's going to put a lot of people out of work.

The first thing employers will do, is let their part-timers go, and put the work-load on the full-timers.

That's what WE'RE going to do (here at the office).

They were in such a rush to push this on the American people, that they failed to look at the ramifications.

Good article Mike.
Avatar universal
But, everyone will have insurance not matter what it costs them.... oh joy.
179856 tn?1333550962
The first thing employers will do, is let their part-timers go"

Part timers dont get medical insurance so really it wont save them much - full time workers will be more at risk because they can be replaced with cheaper part time employees that do not require benefits and would be much cheaper therefore by the hour.

Why not hire two part timers that cost $8 an hour each at $16 rather than one person who makes $60 with their salary and benefits? I dont even know what my benefits cost the company but I make $$$ an hour without any benefits added....please dont tell me they can't replace me easily (that does not include my profit sharing or 401k match either) and I am not even an Executive, I'm only an Executive Assistant. $60 an hour is looking pretty low ball right now.
Avatar universal


On Monday -- the same morning the AAF released its survey -- Health and Human Services Secretary Kathleen Sebelius said the government must reach out to young people currently uninsured who may not know they can gain federal assistance to buy coverage through a health insurance exchange or marketplace. Young people are particularly tough to reach, she noted.
----------------------------------------

Is this assistance the "federal tax credits available for those making between 100% and 400% of the federal poverty level" ?
Avatar universal
Most full time jobs people will not work part time to perform those duties. Most full time jobs require someone to be there 5 days a week to keep working on things not only 20 hrs and let someone else pick up the other 20 hrs.

So hiring part time is not a answer for a company. Of the 2 jobs I have worked since I have been out of school you could not hire 2 people part time to do the work. You need training and experience.
1310633 tn?1430227691
The article above, specifically says... ""The ACA will require employers to extend health coverage to more part-time employees..."

The whole point is, employers are going to be FORCED (required) to extend a benefit package to part-time employees.

We hire part-time people, and have them work JUST SHY of a full 40 hours, so that we DON'T have to offer benefits. Now that we'll be forced to offer the part-time people benefits, we just won't hire part-time folks anymore, and the existing part-time people, we'll just fire them and dump their work-load onto the full-time employees that are already on the payroll.

Whoever thought up ACA, didn't think it all the way through. There will be massive repercussions, for forcing employers to offer benefits to part-time employees. Massive.

I think the days of part-time employment, where you could just go and get a job working 20hrs a week, is about to undergo an overhaul.

We talked about this very subject in a managers meeting this morning, and it was decided that we're not going to be hiring anymore part-time people, and that our existing part-time employees, would be phased out of existence.

Oh well... sorry part-timers.
Avatar universal
So the tax credits the Government offer you will not make it possible to offer care to your p/t workers?

My son will be facing the same problem in NYC. He says it may be cheaper just to pay the fines as they will go bankrupt if they must pay the heath insurance for their p/t workers.
He is no fat cat, just a hard-working guy with a team he loves...
Well, we will see how all this unfolds, maybe the tax credits will make it possible.
Avatar universal
Back in the dark ages my Mother had a medical problem that necessitated an annual procedure that was extremely painful and had severe side effects. I was about 22 years old at the time and my Father told me there was a new machine available - there was only one in the country - and that it would eliminate the need for that brutal procedure my Mother had to get yearly. I was younger and dumber then and this was before the time when insurance paid for everything. Anyway, my Dad told me they had an appointment scheduled for my Mom and I asked him how much it was going to cost. He said $25,000. I said "Man, that's expensive." and he said "Mike, that's the only GD thing money's good for." I know now a lot better than I did back then how true those words of his were. I suspect that anyone whose dealt with a serious health problem knows that too. When you get really sick your health is the only thing money's good for and I believe that everyone should have access to the medical care they need...even if it is  expensive. We can find the money if we aren't too greedy to try.
1310633 tn?1430227691
"We can find the money if we aren't too greedy to try..."

We're looking at laying off 1/3 of our work-force (the part-time folks) because the gov't is forcing us to give healthcare benefits to all of them. That's going to cost us an additional 12% off our bottom line. A bottom line which is only 27% to begin with. We're not greedy, but we DO enjoy putting a few dollars in the bank at the end of the year. Unless of course, you think that defines "greedy"? Any money "left over" after all their expenses/overhead is paid, used to be called "profit". I guess it's now called "greed".

Rivll: I'm like your son... hard working, and by no means a 'fat cat'. But at the end of the day, I have to look out for the health of my COMPANY. We're in business to make money, not to provide healthcare to our part-time workers (contrary to the popular belief of some). The tax-credit(s) we receive from the gov't, aren't enough to offset what we'll be paying OUT in health benefits.

FORCING us to provide healthcare to part-time workers, is going to cost those workers their jobs.

Again... sorry part-timers.
Avatar universal
I find this heartbreaking. It is not rhetoric when my son says they will have to shut down. His team loves him. They come from other jobs so delighted to eat for free and to have a compassionate and accommodating boss, who pays them a few dollars more than minimum wage because he knows for some they are supporting families and have night shifts elsewhere.
The workers deserve health care, I just hope that the Government tax credits will be enough to make it possible for them to stay open and run the business.

Mike: Your Dad was spot on. The apple didn't fall far from that tree.
Thanks for sharing that story.
Avatar universal
Single payor option is on the horizon. Universal healthcare is the answer.
Avatar universal
Yes indeed!
179856 tn?1333550962
suspect that anyone whose dealt with a serious health problem knows that too. When you get really sick your health is the only thing money's good for and I believe that everyone should have access to the medical care they need...even if it is  expensive. We can find the money if we aren't too greedy to try. "

AMEN AND AMEN AND AMEN!
Avatar universal
Weve got health insurance.  Good health insurance.  Blue Cross/Blue Shield.  The whole family went to the eye doctor yesterday. All had exams and each exam was $10.  Yeah, $10 bucks!!!  Pretty awesome.... glasses for the whole outfit excluding me, even with good insurance is going to cost $700.  

So much for that good insurance. Who knows what it would have cost if I was going to get glasses....
973741 tn?1342346373
Brice, you forget to include your premiums you pay on a regular basis.  Add that into the mix.  We actually pay a large amount each month in premiums.  Do so willingly though as I am not in favor of a universal healthcare system.  

I can't even imagine if our govt. ran all healthcare in this country.  
1310633 tn?1430227691
"...I can't even imagine if our govt. ran all healthcare in this country...."

It would force those of us with real health problems, to seek private health insurance, at additional cost to ourselves.

Take Canada & the UK for instance... I have relatives in both countries, that carry their own, private, insurance (additional cost), because the "state run" healthcare is inadequate for their particular needs.

I, for instance, couldn't survive in a "universal healthcare" type of system. There's too much waiting around. If I get a kidney-stone, I need it taken care of IMMEDIATELY. My uncle (in the UK) got a kidney-stone. He went to the hospital and they stuck him in a hospital room, put him on painkillers, and he waited 4 days, before they finally got him in to remove it.

I'm sorry... I can't just sit around for 4 days, waiting on gov't red-tape, before I go in for surgery.

The way it is now, is I arrive at the hospital, they stabilize me, and I get the next available surgical slot. If there aren't any, my doctor creates one, and does the necessary procedure.

Universal Healthcare is asinine.
Avatar universal
I still see this as the "haves and have nots".  If you have money, you'll pay dearly... if you have little money.... don't sweat it.  Everyone else is paying.

Avatar universal
brice that is downright offensive. I dont have health insurance and due to pre existing cannot get it for any amount of money. I would gladly pay premiums instead of everytime I get sick, realizing I cannot go to a doctor because most will not see someone without insurance coverage. Even the hospitals now altho they must see and treat someone, just stablize you and unless you are on your deathbed, the doctor on call has the right to refuse to treat you. In my case money has nothing to do with not getting coverage. That narrow view of things from a limited perspective is what is wrong with this country.
Avatar universal
And I will only add that altho you may pay premiums, lets remember you get that cost because you belong to a pool of people making it possible for you to get that rate, and when you go to the doctor there is an agreement between your insurance company and the provider of that cost of service. That deduction if you will. When you are private pay and go for that same treatment, you dont get discounts, you get the full amount billed to you. So there are always two sides of the same coin.
Avatar universal
Well said teko.
1310633 tn?1430227691
One of the only ways to not have health insurance due to a pre-existing condition, is if one has a "lapse in coverage".

I hate to say this, but if one has a medical condition, it's ONES personal responsibility to make sure one has continuous-coverage, so that there are no "gaps". If one has no "gaps" (ie: lapses in coverage), there's no 'pre-existing medical condition' issues.

Even when I've been in between jobs, I've MADE SURE that I cover my healthcare with COBRA (continuation from my previous employment healthcare). Yes, it's expensive as hell, and I was broke while paying for COBRA, but it was MY responsibility to cover my healthcare.

And when my COBRA ran out (due to not being able to find a job within 13 months), I got myself covered by an EXTREMELY expensive private insurance, JUST so that I'd have minimal healthcare coverage, so that there'd be no "gap" (lapse in coverage).

Health insurance is ones own personal responsibility.

And for the homeless people that have no money and have a severe medical condition... No job. No money. Pay no taxes. Do not contribute to society in any way shape or form. My apologies. I don't want to, nor should I be forced, to cover YOUR healthcare needs.

Call me heartless...
Avatar universal
Again, you show your lack of knowledge. We lost our employer sponsered insurance when the recession hit, and we tried to continue it on our own. Again we were told no, we were high risk. I am self employed which makes it even harder. The only way for us to get insurance is to take a job of somekind that offers employer paid insurance where we are once again in a pool. And I may eventually have to quit my own self employment and go to work for Costco or someone that carries it and take the hit on income. Some of us do not survive off your taxpayer ***. In fact I pay more out of pocket for taxes than you do, so? Of course if I quit my self employed position and my husband does too, we still would not be eligible to live off the teet because we have no children. Again, the lack of knowledge is astounding. And even if we did get a job that carried insurance it used to be any pre existing didnt get covered for the first year, altho under obamacare I do think that has changed.  So you see, your not paying for anything for someone like me. Im not on welfare, medicaid or any other government program and pay more out in taxes than you do.
1310633 tn?1430227691
Didn't mean anything offensive, in anything I wrote, and I hope you weren't offended by my words.

I stand corrected, on my original comment to you about the "lapse in coverage" pre-existing conditions, thing.

I didn't say that lapse in coverage was the only way... I said it's "ONE of the only ways".

"...In fact I pay more out of pocket for taxes than you do..."
Is that a FACT? It's curious that you know exactly how much $$$ I pay in taxes. I'll have to talk to my accountant. I guess her security isn't tight enough, and my information is leaking out onto the interwebs! You must be a pretty good hacker!!!

"...And even if we did get a job that carried insurance it used to be any pre existing didn't get covered for the first year..."
If you walk into a new job, not having had healthcare coverage, yes... there's a 1-year waiting period for pre-existing conditions. If you walk into a new job, having NO lapse-in-coverage (you were carrying private insurance, or had COBRA, right up to the point of new employment), there's a 30-day waiting period, for ALL coverage, pre-existing or not (then you're covered 100%). I'm not sure what the Obamacare rules will be, but if pre-existing conditions are covered immediately (with NO 1-year waiting period), then that's a good thing.

Obamacare isn't 100% bad. There's some good stuff in there. SOME. It's all the extra stuff that bothers me, and puts my back up. Requiring employers to offer part-time employees healthcare, is just one thing that should be removed. It'll cost jobs, which in case no ones noticed, are kind of in short supply right now!

My condolences for your lack of health insurance coverage, teko. I don't wish that on anyone, especially someone that I know. The downturn in 2007-2008 hit some harder than others, and it looks like your healthcare coverage was one of the casualties. I'm not sure that "condolences" was the right word, but I both sympathize AND empathize with your situation. Been there, done that, and with MY condition, it was hell, going to a "free" hospital (Ben Taub Hospital, here in Houston, is our local ghetto-hospital... not a fun place to be, especially when you have a kidney-stone).
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