Under Obamacare, Will Out of Pocket Spending Be Higher?

Not long ago, the Fear-Mongers were warning that under the Affordable Care Act, insurance premiums would spiral, causing “sticker shock.” Then the rates were published, and it turned out that, thanks to transparent markets in the exchanges, insurers had to compete on price, and premiums are lower than expected.  

But don’t worry, reform’s opponents haven’t run out of talking points. (I expect that long after most of the country has begun to enjoy the benefits of Obamacare, out-of-touch conservatives still will be muttering to themselves – rather like Japanese officers who held out in the jungles of the Philippines after WW II ended, unable to accept the fact that they had lost the war.)

In search of a new meme, they have latched onto the idea that, in the exchanges, customers will face “Staggering Out-of-Pocket Costs.” Sure, premiums may look low they say,, but wait until you try to use the policy and find yourself laying out $6,000. . Not long ago, Fox News summed up the argument: If the policy you bought in the individual market is cancelled because it doesn’t conform to the ACA’s rules, and you are forced to purchase coverage in an exchange, co-pays and deductibles will soon make you realize that the ACA is really “The Unaffordable Care Act.” 

Fox picked up the theme from a Bloomberg News story that went viral:“Obamacare Deductibles 26% Higher Make Cheap Rates a Risk,”  the Bloomberg headline screamed. As evidence, Bloomberg pointed to a survey of seven states, done by HealthPocket Inc., that compares the average deductible a consumer will face if he purchases a Bronze Plan in an Obamacare exchange to the average deductible in the private-sector market where 5 percent of Americans have been buying their own coverage. (These are the policies that are disappearing because they don’t meet the ACA’s standards.)

It turns out that the survey greatly exaggerates out-of-pocket spending in the Exchanges by focusing only on Bronze plan.  Meanwhile, the media ignores the most important number: what is the Maximum that an insurer can ask you to pay out of pocket?

The problem with many of the policies that are now being cancelled is not just that they were studded with holes  (some didn’t cover hospitalization; some didn’t cover chemo), but that in many states, a family could be asked to pay $30,000—or more—in co-pays and deductibles. . In a few states, there was no cap on the a patient’s liability.I This is how families lose their homes.

I’ve written about this here on healthinsurance.org. Read the entire post and, if you like, come back here to comment.

12 thoughts on “Under Obamacare, Will Out of Pocket Spending Be Higher?

  1. Don’t know about all that…all I know is that my family plan of $150 a month with a $3500 out of pocket maximum (*reached that once in 2006 because of an emergency surgery and then specialist followups/therapy, otherwise never met the $1,000 deductible), was changed in 2012, losing grandfathered status while adding free health checkups twice per year and doubled to $294 a month with a $7500 out of pocket maximum. It is being canceled on January 1 by Covered California/Obamacare. I do not qualify for a subsidy. My Covered California options:

    1) A plan with a similar out of pocket maximum, called a silver 95, is $1,092 monthly.

    2) A plan with a $11,200 deductible, called a bronze plan, is only $480 per month.

    Curiously, neither plan includes a specialist my wife sees, nor our primary care physician. Our old plan covered every doctor/hospital/lab we ever went to.

    I will not be buying insurance in 2014 for the first time as an adult.

    • Jorge–

      $1092 monthly for a silver plan that covers a family is a very good deal.– a bronze plan that cost $480 per month is an excellent deal–assuming
      no one in your family requires surgery.

      Have you looked at at all of the free preventive care included in those plans? In the Exchanges 62 services and products are absolutely free– no co-pays or decutible.

      These services and products cover most of the reasons that relatively healthy people and their children go to the doctor: vision checks for kids, cancer screening
      (colorectal cancer screening, mammograms, Pap smears),dental checks for kids up to age 10, birth control (it’s not just the visit, but the birth control itself that is free), blood pressure checks, cholesterol checks, help losing weight, help stopping smoking (with free nicotine patches), a dozen vaccines that kids need, depression screening (very important for some older adults as well as new Moms who are feeling blue), tetanus shots, flu shots, urinary tract infections.

      Then there are the things that your $150 a month $3500 out of pocket maximum plan didn’t cover.

      It sounds very much like a very popular plan in New Jersey (now cancelled) that didn’t cover chemotherapy and ambulances.
      The holes in these bargain-basement plans are incredible. And you don’t find out about them until you fall thorugh one of them.

      You were lucky. I hope you and your family remain that healthy–and lucky–in the future. If you don’t, you could a) not receive the care you desperately need or b) lose your home.
      Medical bills are the leading cause of personal bankruptcy in this country.

  2. While I certainly have not researched all the premiums, I did find the Bronze plan that I signed up for to be incredibly high. Yes, there were some subsidies. However, if the insurance companies receive the stated amount, their bottom lines will be terrific. And sadly, health care will not. Personally, for me it doesn’t matter. I’m very healthy.

    Candidly, I think the only winner will be the insurance companies.

    • Ken–

      Today the largest insurance company in the country announced that it’s stock will lose value ($1 a share) because of Obamacare.
      The for-profit insurers are not making $$$ on Obamacare. This is why so few of them are participating in the Exchanges.
      Most of the insurers that are selling policies in the Exchanges are non-profits.

      The Insurance industry is very unhappy about all of the regulations under Obamacare. They agreed to them initially because they thought that in 2006 he would be defeated, and they would be able to persuade Congress to “fix” the regulationss

      If the premium for your Bronze plan seems high that is because, in this country, doctors, drug-makers, device-makers and hosptials charge very high prices–much higher than in any other developed country in the world. Thus insurance is expensive. High insurance premiums reflect the underlying cost of care.

      Because you are very healthy, I’m guessing you rarely see a doctor and probably never spend time in a hospital.

      As a result you just don’t know much health care costs.

      Hopefully you will remain healthy–though at some point, like all of us, you will age.

  3. There are some other key questions about out of pocket maximums:

    a. do premiums count toward the out of pocket max?

    probably not

    b. does the deductible count toward the max?

    c. do out of network expenses count toward the max?

    d. do name brand drugs count toward the max?

    I do not know if these items are regulated by the ACA or if they are up to each carrier.

    Just things for buyers to watch for.

    Incidentally, in one of the comments above, something is fishy about a family plan that ever cost $150 a month. Not covering chemo or ambulances would not normally get it down that low.

    • Bob–

      Good questions.

      No, premiums do not count toward out of pocket expenses, but deductibles do.

      Out of pocket expenses are defined as all co-pays or co-insurance and any amount that you pay toward
      the deductible.

      Out of network expenses do not count toward the max.

      I should add that throughout the last twelve years I have had insurance that required that I stay “in network” and I have never found that to be a problem–even though I ran into a couple of serious health problems.

      When insures do not include a provider in their network it is usually because the provider is unwilling to
      negotiate prices. These providers feel that they have no need negotiate–they have great market clout because they have
      a brand name and thus can charge whatever they choose.

      But medical research shows no correlation between higher provider prices and higher quality of care.

      Co-pays for band-names drugs do count toward the max.

      ACA rules determine the MAX and what counts toward the max.

      Carriers can decide how much to charge in co-pays and co-insurance for particular services, but the
      amount that they can ask people to pay out of pocket is limited to 10% of the cost of covered benefits under
      platinum plans, and 40% of covered benefits under Bronze plans– up to the max ($6,360 for an individual, $11, 700
      for a family)

      And all carriers must cover 62 preventive services and products without charging any co-pay or deductible.

      So insurers have relatively little wiggle room.

      You are right– $150 a month sound very unlikely for a family plan.

      But pre-Obamacare that plan could cover NO Hospital costs (only doctors’ visits) and come with a $50,000 deductible.

  4. OK for anyone wanting to a real review about Obama care. My daughter and her husband applied. They make right at $25,000 per yr combined because she is in school and works part time and he works full time . They are both 26. They have 2 children that have insurance thru peachcare so the cost given is for the adults. The cheapest policy was the bronze. At $333.00 per month they can get a $17,000 a yr deductible,, after the deductible is met the insurance kicks in and pays 40% of the doctor and hospital visit. Also before you say they would get subsided your wrong. Sense the state of Ga did not expand medicaid they do not offer a subsidized plan. Yep Obama is really taken care of the ones who don’t make anything. If they accepted this, they would be on the street because they still have to pay rent, groceries, auto insurance and utilities out of their checks. Now they will have to pay a penalty they also cannot afford so some low income person somewhere else can have healthcare. They do not qualify for medicaid because for a family of 4 you have to make less than $960 per month in Ga.

    This is directly off the healthcare website, “if your state is not expanding Medicaid in 2014–and you don’t qualify for Medicaid under your state’s rules–you can’t get lower costs on Marketplace coverage based on your income. You’d have to pay the entire cost of a Marketplace insurance plan.”

    So you cannot say it is lower, it depends on what state you live in!

    • Melinda–

      You are mistaken. I checked with Georgia and on Healthcare.gov.

      I plugged in their ages, and income and said they had two children ages 8 and 10.

      The website told me that the children would be eligible for CHIP (the Peach Plan) It then said the information on
      premiums and subsidies would apply to the two adults.
      and that: “Health plans for two individuals, ages 26 and 26, living in Jefferson County, GA.
      Based on a household size of two and income of $25,000, you may qualify for a $420/month tax credit you can choose to apply to your premium for these plans. This tax credit has been applied to the premiums below.
      You may also qualify for the reduced out-of-pocket expenses shown in the plans below” You find this here https://www.healthcare.gov/find-premium-estimates/#results/&aud=indv&type=med&state=GA&county=Jefferson&age0=26&age1=26&employerCoverage=no&householdSize=4&income=25%2C000

      After applying the subsidy they would have a choice of Bronze plans that would cost them $0. One comes with a $1,000 deductible.

      (In order to get this information I had to plug in a county Since I don’t know where they live, I picked Jefferson County, but
      the subsidy would be the same in any county. It’s based on their income and the number of people they are trying to insure.

  5. Sure seems like this blog is in the bag for the ACA. My experience is: current plan cancelled; cheapest ‘near equivalent’ bronze plan has a premium for family of 4 up by 40% to $1,400/month, wife can no longer go to her MD of over 20 years; deductible up 100% to $10,500; don’t need birth control, child vaccines, and other mandated coverage–which simply means that I am subsidizing those who use those services.

    Yes, Maggie, you are right that the root causes are the high fees charged by MDs and hospitals and to a lesser extent high drug prices and over-testing. (See McKinsey’s comprehensive report on this to see >how muchconcrete, real and here and now<. This legislation was ill-thought out and designed to make people feel good. The basic economics aren't there.

    What I really want to know is how much factual evidence of the basic problems with the ACA has to accumulate before a few ACA backers have even 1% doubt about its basic economics, fairness and effectiveness?

    • William–

      The ACA is designed to distribute costs evenly– so that all of us can afford healthcare.

      This means that we all share in the cost. You and your wife pay for maternity benefits that you don’t now need.
      Younger people will pay for the surgeries. hip and knee replacements that older Americanss want.

      All of us who will help pay for the care that cancer patients need.

      Men pay for the reproductive care than women in their 20s and 30s need.

      Later, women pay for the care that mean over 60 need.. (Medical bills for men over 60 are higher than for women in the same age group. This is because women are more likely to seek preventive care earlier in life. They are more conscientious about
      asking for help losing weight, cancer screening (including colonoscopies), blood pressure checks, depression screening , etc. see.

      When men hit 60, the fact that they were not as likely to seek preventive care catches up with them.

      This is when women begin subsidizing men.

      AT different times in our lives, each of us needs more care, and others help pay for it.
      This is what healthcare insurance is all about–sharing the costs.

      You need to begin thinking about healthcare in term of “we”–not “me and my family.

  6. This paragraph in the above comment got butchered in the cut and paste. It should read:

    Yes, Maggie, you are right that the root causes are the high fees charged by MDs and hospitals and to a lesser extent high drug prices and over-testing. (See McKinsey’s comprehensive report on this to see >how much is attributable to each cause). Unfortunately, the cost increases in ACA are concrete, real and here and now< while the cost reduction features are speculative at the very best. This legislation was ill-thought out and designed to make people feel good. The basic economics aren't there.

    • William–

      The cost reduction features have already begun to kick in–

      Google Peter Oszag (former CBO director) and “Bloomberg” and “health care spending” for his ongoing, excellent analysis (on Bloomberg) regarding how the ACA has been reducing the the growth health care spending.

      (IF spending was beginning to level off simply due to the recession, we wouldn’t be seeing the effect in Medicare spending.
      Retirees haven’t been losing their jobs and health benefits. They have Medicare. Their SS income has remained stable.
      They have few reasons to seek less health care.)