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It has been three days
since ObamaCare's health insurance exchanges launched
for enrollment. Individuals can now
purchase federally qualified health plans from participating insurers. People with pre-existing conditions can no
longer be denied coverage. If you decide
to sign up for a heavily regulated heath insurance plan, you'll need to push
aside the political debates and overlook the technological glitches,
and instead be more concerned with the fine print
of the plans themselves. It's worth some
The Fine Print
The establishment and rollout of ObamaCare's health
insurance exchanges intends to provide individuals with affordable
plan options offered by an array of participating health insurers. Sounds like some solid competition and
choice, right? But, of course, all is
not what it seems. Health
insurance exchanges limit consumer choice due to three key reasons:
1. Required Benefits: Any health plan a consumer
decides to purchase, whether it be inside or outside the exchange, must include10
Essential Health Benefits as mandated by the federal law.
2. Narrow Networks and Providers: It seems
that, for states with at least half a dozen insurers on the exchanges, the
availability of more plans will also yield competitive prices. What goes unsaid
is that lower monthly premiums mean narrower provider networks,
higher out-of-pocket expenses, and providers paid at Medicare levels.
Last week's New York Times wrote:
officials often say that health insurance will cost consumers less than
expected under President Obama's health care law.
But they rarely mention one big reason: many insurers are significantly
limiting the choices of doctors and hospitals available to consumers.
The Daily Caller contributes to the issue as
Missouri: Patients of the state's largest hospital system -- which
spans 13 hospitals including the St. Louis Children's Hospital -- will not be covered by
the largest insurer on Obamacare exchanges, Anthem BlueCross BlueShield. Anthem
covers 79,000 patients in Missouri who may seek subsidies on Obamacare
exchanges, but won't be able to see any doctors in the BJC HealthCare system.
Looking at this issue from another angle, roughly 70% of
physicians are now employed by hospital systems. There was a time when the majority of medical
providers practiced independently. Ten
years ago, this statistic was flipped, as only 30% of physician groups worked
for these health systems.
Since a majority of physician practices are now under the
ownership of this excessively consolidated market, if major hospital systems
are not within an exchange plan's provider network, then patients may not have
access to the quality providers who work for that hospital system.
3. North Carolina's
Exchange: Only two insurance companies, Coventry Health Care of the
Carolinas and Blue Cross and Blue Shield of North Carolina, have signed up to
participate in North Carolina's federally-facilitated
exchange. Blue Cross and Blue
Shield already controls 85% of the individual market and is the only insurer
offering plans in all 100 counties of the state. Coventry Health Care,
meanwhile, offers plans in just 39 counties.
Subsidies Not Included
Nancy Pelosi once said that
Congress had to pass the Patient Protection and Affordable Care Act so we could
all find out what was in it.
We certainly are.
And now with the unleashing of more information on premium
rates, it remains clear that certain young individuals will not qualify for
subsidized health insurance plans as the Obama Administration once promised.
The Obama Administration incessantly advertises that
individuals and families who purchase
health plans on the exchanges may qualify for subsidies that will
offset the cost of their health insurance premiums. Qualifying
individuals earn annual household incomes between 100-400% of the Federal
Poverty Level. To put this in perspective, the following policyholders
may receive premium assistance tax-credits:
- Individuals earning up to $45,000
- Couples earning up to $60,000
- Families of four earning up to $94,000
Based on a recent study by the National Center for Public
Policy, it turns out that in two-thirds of the states, subsidies
do not extend beyond the 300% FPL for "young
invincibles" 18-34 years old. In fact, subsidies greatly diminish for
an individual of this age group earning over $25,000 a year. Here in North Carolina, subsidies
do not extend past 309% FPL ($35,504) for a 34-year old.
Find out whether you qualify for a subsidized plan here.
In a nutshell, this is another reason why ObamaCare causes chest pain.
The only way these exchanges can remain financially afloat by 2015 is IF
the young, low-risk individuals pay higher premiums, thereby
subsidizing the old. The old pay less at
the expense of the young; that is the concept of community rating. Otherwise, the exchanges will be flooded with
older, high-risk individuals paying higher premiums than otherwise promised. Since subsidies greatly tail off for low-risk
individuals between 18-34 after annual income exceeds $25,000, these exchange
plans don't look too appealing for these individuals. High premiums for the young will trigger high
opt-out rates, causing the structure of these insurance marketplaces to collapse.
Even Bill Clinton says so.
The exchanges may be open for business, but the critical
question is: "For how long?"
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