When health reform’s insurance marketplaces open this fall, several rate calculators suggest that 50-something Boynton Beach waitress Karen Crivellone will qualify for a substantial government subsidy, in the range of about $5,000 toward her mandatory health insurance bill.
But given the cost of insurance, Crivellone worries it won’t be enough, and that she may wind up twice insulted — not only uninsured, but penalized 1 percent of her income when next year’s tax refund arrives.
“Does that seem fair? They’re going to penalize me for not buying something I cannot afford?” she asked on seeing projections assembled by the California-based Kaiser Family Foundation and GoHealth.com., a private on-line insurance exchange. “Everybody I work with is in the same situation or worse.”
By October, everyone who cannot obtain health insurance through their job will face the complicated and highly personal math of health reform. Are they better off buying insurance through an online exchange, or absorbing a tax hit for not enrolling, and gambling that they’ll stay well?
Studies attempting to predict how mandatory insurance will affect consumers suggest that the results will vary greatly by the individual and the state.
People with chronic diseases who have been totally uninsurable will see a huge benefit when they finally gain access to the market. A significant number of people won’t notice any increase in cost, because federal subsidies will erase their hit. However, a fraction of people will find themselves paying more for insurance, and a few may be priced out of health insurance altogether.
Florida’s Office of Insurance Regulation is still in the midst of reviewing next year’s proposed policies. A report issued this week by Washington D.C.-based health consultancy Avalere Health found that in nine states releasing premiums so far, charges are coming in lower than predicted — ranging from an average of $205 a month for a 40-year-old’s “silver” next-to-cheapest plan to be sold on Oregon’s health insurance exchange to $413 for a corresponding plan in Vermont. Part of the difference reflects different states’ requirements for what constitutes the “minimum benefits” to be offered in their plans.
Federal officials say they are taking steps to stabilize insurance premiums in every state. Insurers must now give consumers rebates if the companies fail to spend an average of 80 percent of collected premiums on actual health benefits. Officials have also created a “risk adjustment” plan to essentially insure the insurers, so that a few ultra-expensive consumers — those who may have had pent-up medical needs due to years of going without care — don’t destabilize the market.
Edith DeLeon, 59, is one of the lucky ones. She supports a son in college and earns just above minimum wage, working full-time at a retail boutique in Lantana. Because she lives so close to the poverty level, her household of two can expect major help from the Affordable Care Act, according to Kaiser and GoHealth’s estimates. DeLeon described a recent humiliating experience of having an infected tooth and no dentist willing to treat her without cash up front, despite her pain. She had to cobble together over $300 before she could get a prescription, which prolonged her agony.
“I don’t understand the opposition to this law,” DeLeon said. “People with insurance are carrying the people without it now, so things are going to be better.”
It’s people who earn around 2.25 percent of the federal poverty rate, or about $25,000 for a single person, who appear to be most affected by the twin pressures of higher insurance premiums and insufficient subsidies, according to a study in the actuarial journal Contingencies. Restaurant and retail workers, who make up a large part of Florida’s workforce, are typical of the group.
Premiums are predicted to rise for three main reasons, insurers say:
• The end of hated pre-existing condition exclusions that have made it nearly impossible for people treated for cancer or other diseases to buy insurance once they’ve left a job and lost coverage.
• A requirement that insurers have three rate tiers for young, middle-age and older customers, instead of the more typical five, to limit the hit on those nearing retirement, who are typically sicker.
• Insurance rates will have to be unisex, so women of childbearing age aren’t penalized just for being female.
Collectively, it means that while some people benefit – older, sicker males and some women — others’ insurance costs are going to rise. They’re the ones paying least now — younger, healthy men — said Jon Urbanek, Florida Blue’s senior vice president of commercial markets.
“Because of the subsidies, you’ll have people who’ve been wanting to do this for a while finally being able to buy insurance. On the other hand, people who have been in the system whose costs will go up may get out of the system,” Urbanek said. “You’re seeing some national carriers say the younger males may see rates go up 100 percent.”
Florida has about 4 million uninsured. Florida Blue projects about one-third of those Floridians will buy a plan on the new federal exchange. The company plans to offer several policies with different price points. Insurers Humana and Amerigroup have also confirmed they plan to offer policies to Floridians through the federal marketplace. The entire roster of companies hasn’t been finalized or released by the state.
Several private calculators have been created to offer ballpark estimates. GoHealth and the Kaiser Family Foundation both have calculators that are in close agreement for most people.
They suggest that a couple age 40, with two children, earning around $50,000 a year, will see a subsidy of about $8,100, for a “silver” policy that covers 70 percent of their medical costs, for a premium of about $11,500. Bottom line? Their share of their insurance bill will be about $3,365. Their additional out-of-pocket costs would be capped at $10,400 a year.
Meanwhile, a 27-year-old single man who earns about $30,000 a year would see a much more modest subsidy of about $650 toward insurance that would cost $3,150.
That describes Rasheeal Dixon, a self-published author in Lake Worth who has an Internet radio program. He’s healthy, he said, so he’s been going without insurance. That probably won’t change next year, unless he takes a new job.
“You put in the old home remedy methods – stay in shape, go to the gym, eat right,” he said.
The calculators project DeLeon’s family’s insurance will cost close to $11,000, but her subsidy will cover most of it – almost $10,500, according to the Kaiser calculator. DeLeon was elated to see what next year could mean for her and her son’s ability to get insurance.
For Boynton Beach waitress Crivellone, because she is over 50, the calculators project her premium will be about the same next year as she’s been quoted this year. It’s on the expensive side at close to $7,000 annually, which she can’t afford right now. But even with the federal subsidy next year, she’s looking at having to shake about $160 a month from her tips. That’s not easy. It’s a car payment.
“I could probably pay it during season, when we’re really busy, but this time of year? Crivellone said. “I don’t know. It depends.”
Estimates of plan costs
The plans and prices for Floridians aren’t out yet. But several on-line calculators offer estimates of how much consumers can expect their subsidies to be, and how much the policies will cost.
Here’s a snapshot from the Kaiser Family Foundation http://kff.org/interactive/subsidy-calculator/ and GoHealth http://GoHealthinsurance.com/subsidy.
1: A couple, age 40, whose family income is $50,000 a year.
Both husband and wife don’t smoke. They have two children in middle school.
— Kaiser Family Foundation annual estimate for silver plan (which would pay 70 percent of medical costs)
Federal subsidy: $8,182
Premium after subsidy: $3,365
Premium without subsidy: $11,547
— GoHealth annual estimate for a silver plan
Federal subsidy: $8,541
Premium after subsidy: $3,366
Premium without subsidy: $11,907
2. A single mother, age 27, who earns $22,000 a year.
Mom doesn’t smoke. Her child is in elementary school.
— Kaiser Family Foundation estimate
Federal subsidy: $4,305
Premium after subsidy: $775
Premium without subsidy: $5,079
— GoHealth estimate
Federal subsidy: $5,224
Premium after subsidy: $774
Premium without subsidy: $5,998
3. A widowed man, age 60, who earns $65,000 a year.
He smokes. His kids are adults over age 26, who don’t live with him anymore.
— Kaiser Family Foundation estimate
Federal subsidy: None
Premium: $12,287 ($4,096 is due to a smoking surcharge.)
— GoHealth estimate
Federal subsidy: None
Premium: $9,428 (GoHealth doesn’t address smoking surcharge)
STARTING OCT. 1
People who cannot get insurance from their employer will be expected to buy it on a federally-run insurance marketplace.
The plans and prices for Floridians aren’t out yet.
But several on-line calculators
Plan prices and how Feds would help.