For months the media has been swirling with speculation about the impact of Obamacare on consumers. News outlets have been debating the expected impact of Obamacare, talking about the different provisions, the insurance exchanges, the states opting out, the massive number of waivers being given to large companies with lobbyists, companies opting to replace full-time workers with part-time workers, layoff announcements, and even some reports of disturbing realities under Obamacare, such as the fact that the young and healthy are the financial vehicle for everyone under Obamacare and the fact that low income women and children in the southern states are not going to benefit from Obamacare, despite the fact that they are the ones most in need.
Yesterday, I got a chance to look at a renewal notification and the new Obamacare plans from Kaiser Permanente. In short, monthly premiums go up and coverage goes down. For those on grandfathered plans … DO NOT switch.
While my review of the documentation only focused on one company, Kaiser Permanente, I think it is fair to say that their premium and plan changes are reflective of the changes by other competing insurance companies. At the end of the day, despite the “fierce” competition between companies and the multitude of plans they offer, comparable plans tend to only have marginal premium differences. For those that are not aware, Kaiser is a non-profit health insurance company with operations in California, Colorado, Georgia, Hawaii, Washington DC, Maryland, Virginia, Oregon, Washington, and Ohio.
Currently, Kaiser Permanente is offering ten new plans under Obamacare, the lowest cost for any plan for any age group in the rate area I examined was $123 per month, while the highest premium was over $1000 per month. The grandfathered plan that I looked at is an HMO with a $1500 annual deductible with a $3000 out-of-pocket maximum and is HSA eligible (Health Savings Account). The premium for this grandfathered plan for a person that is 35 years old is $262.
From the list of new Kaiser Permanente HMO Obamacare plans the most comparable plan is KP CA Silver HSA 1500/20%. The premium for this comparable Obamacare plan for a person that is 35 years old is $305.71. The price difference translates into a 17% increase in the consumer’s monthly premium.
The part I have not explained yet is the 20% indicator in the name. This 20% is an indicator of the plan’s consumer co-insurance. Similar to PPO’s, under these new Obamacare plans, the consumers are now responsible to further share in the medical costs even after paying their deductible and after reaching their out-of-pocket maximum. In the case I examined, once your annual out-of-pocket maximum is reached, the consumer is still responsible for 20% of the costs. Gone are the days of capping consumer medical expenses. Excluding the most expensive plans, consumers are now limited to coinsurance plans with varying degree of cost sharing with the insurance company.
Another potentially comparable plan is KP CA Silver 2000/45. However, this plan is not really comparable because the deductible is $2000 instead of $1500 and it is not HSA eligible. Even disregarding those issues, the premium for our 35 year old is $320.18 per month AND they still have a 20% co-insurance for most of the big ticket items, like hospital stays, surgery, and child deliveries.
At this point, the term “out-of-pocket maximum” should be banned until it actually means what it says. And those with grandfathered plans … keep them for as long as you can. They are cheaper and provide more benefits, but the jury is still out on whether you will actually get to keep your plan in the long run. When Obamacare was passed, they said you would not have to change insurance or give up your current health insurance plan, but they also said Obamacare would cost the government less and reduce consumer premiums.