Readers push back against this post:
Some people are going to lose, but look at this chart from TPM. Considering all the changes, 3% “losers” is pretty darn good. Like Gruber said, “… no law in the history of America makes everyone better off”. Indeed.
Josh Barro identified significant problems with that chart. A reader from the 3 percent writes:
I’m one of the people who got a “cancellation” letter. Blue Shield told me the individual policy I have for my healthy 17-year old will end Dec. 31. They said if I do nothing they will enroll my son in a new plan that will be $7 more per month. It is just about equal to the old plan, except the co-pays will double, and vision care has been added. It is November, and my son has had zero visits to the doctor this year, so no co-pays have been shelled out. He has terrible vision and needs an annual eye exam. I figure it will all even-out over the course of the year. Put me in the “no big deal” category of the 3 percent whose individual policies went away.
Mr. Laszewski doesn’t say what “Obamacare rule” purportedly makes his current coverage not “good enough.” Maybe that’s so, and maybe it isn’t, but it’s hard to evaluate his complaint based on no information.
David Frum apparently found a policy substantially identical to the one he currently has on the D.C. Exchange for $200/month more, and acknowledges that that is the likely cost of community rating. High income wealthy people who are currently in the individual market are going to pay a bit more under Obamacare – that’s the cost of not quizzing people about preexisting conditions. In any event, he didn’t lose his coverage.
Sorry if I cannot muster much sympathy for someone who can afford a Cadillac Plan. After I finished grad school and before I had my first real job, I had to muddle through without health insurance for about 9 months. I got one lousy urinary tract infection (read: INCREDIBLY treatable) and it ended up costing me a little over $800 because the initial antibiotics didn’t work. Oh, and I had a catastrophic plan. Some help those are! So yeah, sorry if I’m not bringing out the violins about some rich dude having to pay more for his extravagant plan.
I know a lot of people are commenting on the rate shock some people are experiencing when looking on the exchanges for insurance, even those who have very expensive health insurance today. I think there’s a very big piece of the puzzle most people commenting on this rate shock are missing.
Insurance companies on the individual market are in a bit of a fog for next year with pricing their coverage options. Many of them have never had to cover as many benefits as they are now. Many of them have no idea how many claims new people purchasing their coverage will make. They all know for sure that the premium rate review rules will stop them from making up potential losses next year with bigger premium hikes in the future. The confluence of these events has potentially pushed companies to overprice their plans.
What people are forgetting is there is a stopgap that prevents these companies from gouging people if they did end up overpricing. Plans on the exchange must spend at least 80% of their premium on actual health care services; similarly, businesses offering insurance to their employees must spend at least 85% of their premium on actual healthcare services. If they fail to do so, they are legally obligated to send their beneficiaries a rebate check for the difference. That will stop insurance from getting too expensive.
Of course, if it turns out the companies are spending enough on healthcare to avoid sending rebate checks, then the insurance companies will have done their job and actually paid for their beneficiaries’ healthcare! People love getting refunds on their taxes. I presume people will love getting refunds on their health insurance as well.
It’s worth remembering that Cadillac plans create serious cost problems for our healthcare system. If they are tax-deductive, then it’s a huge tax expenditure, but even when not, they encourage over-utilization. There should be cost sharing mechanisms that put a slight disincentive on healthcare spending, especially utilization all over the place, where there are no shared medical records, tests are likely to be duplicated and there is more defensive medicine due to this.
As a physician, I see a lot of patients with disabling neuromuscular conditions. Many are forced to stop working, and thereby lose their insurance. I see this over and over again. There is just no comparison the gain these patients are getting by being able to get insurance, compared to this guy who has to either pay more for a Cadillac plan, or get a more regular plan.
At the very end of Robert Laszweski’s post he states that he will actually be keeping his Cadillac plan until at least December of 2014. It seems like an important point to make that he left hanging until the 2nd to last paragraph. A lot can change in 14 months …