We have been in the trenches with the healthcare reform roll out also known as Obamacare. We have seen and experienced all sides of the new Affordable Care Act (ACA) law and the impact it has had on Hoosiers.
The Affordable Care Act has had a huge impact in the area, along with the rest of the country.
There has been a lot of good things about the new law. Many Hoosiers and their families have had huge benefits.
The Good
1. Guaranteed Issue. No one can be turned away for health insurance because of ongoing health conditions. This is one of the biggest positive aspects of the law. Many Hoosiers were able to obtain new health insurance who were originally denied coverage. I can’t begin tell you how many people were able to benefit from this aspect of the law. We had cases where people had been diagnosed with major conditions that were able to get a policy that would cover that condition. This happen both on and off the exchange.
2. Tax Credits on the Exchange. This was one of the primary selling points of the ACA. If your household income fell under the 400% of federal poverty level you had premium joy. There were many early retirees that went from $1,400 a month down to $2oo a month in premium cost. This was huge for many Hoosiers. That kind of savings creates large amounts of disposable income and makes the health policy more than affordable. Large families were able to get significant tax credits. We had families of 5 that were used to paying $1,200 a month and now pay as low as $400 a month. We also saw a lot of individuals get a policy for under $100 a month.
3. Cost Sharing Reductions. This benefit is where the out of pocket max is reduced because household income is under 250% of the Federal Poverty Level. We had families that elected to go with $200 deductible plans with $600 out of pocket costs for very little monthly premium. With the cost sharing reduction we also saw how a Health Savings Account through Anthem had huge incentives. A good example is with a lot of business owners or contract worker. They were able to elect a $1,100 Health Saving Account with 100% co insurance. In this situation they insured would only have $1,100 out of pocket expense for the entire year. Then they are able to write off their medical claims. This option created a tax benefit. Then there were others who had high claims, where this plan was a great choice. Here is an example; if you are incurring $100k a year medical claims and now all you have to pay out is $1,100 this was a huge win especially for Hoosiers that were used to paying large out of pocket fees. This kind of option really can only be explained by a broker like myself that has experience in health insurance and claims.
The Bad
1. Enrollment Process through the Federal Facilitated Exchange. The launch of the website was an absolute disaster. The customer services at the healthcare.gov was very poor. The government brought people right off the street that really had no clue about health insurance or customer service. Then when you add in difficult questions, it was a mess. They would then pass you on to management that fell into the same category.
2. Preparation. The insurance community was not prepared for the volume of calls they received. They underestimated what kind of services were needed. This is partly the fault of the government. The insurance industry estimated that they would receive 300,000 calls a day at an average of 12 minutes per call. The actual volume was around 1,000,000 a day with the average time of 29 minutes. The insurance carrier that had resources then shifted everyone they had to assist with open enrollment. This created a lack of customer service representatives for the other areas in the insurance companies like groups.
3. Lack of Information. The market place and insurance companies were unable to provide a summary of benefits of the plans that were being offered. The insurance industry did not have SBC until the middle of February. Hoosiers were buying plans where they had no idea what the benefits where. To make matters worse, the navigators were really unprepared to answer any questions. Even from a broker standpoint we had to do a lot of research to find out what was in the plan designs. I have over 16 years of experience and it took me some time. So there is no way a navigator that has zero experience could help someone understand.
4. Narrow Network. Many Hoosiers were confused about network access. Anthem created a narrow network for Pathway X for exchange business. The online network search feature was down most of January and February. Even when it was working correctly it did not show all of the participating medical providers. Even the medical providers themselves did not know what networks they were accepting. Many Hoosiers had to make decisions about getting new doctors.
The Ugly
The ACA has had a very negative impact on the Middle Class that do not have access to group health insurance. The middle class is absolutely getting hammered with increased premiums. The ACA has initially increased premiums for anyone that in not eligible for a tax credit. This has devastated many families. You take a family of 4 that is use to paying $600 a month for their health saving account plan, now they are paying $1,100 a month. This may be an extreme case where the premium doubled but we witnessed this with about 30% of our clients that were unable to qualify for a tax credit. The average increase was around 60%. Many people were able to get an early renewal and thus delay the impacts of the ACA but that will come to an end in December of this year. I am telling families right now that they are going to have to start budgeting for higher premiums.
Small group health plans also fall into the ugly category. We are seeing anywhere from 35%-55% increases. This type of increase is unaffordable to the small groups and the employees. These rate increases are a direct result of the ACA. In the 4th quarter of 2014 we have over 80% of the small group health plans coming up for renewal. There is going to a mass exodus of small groups dropping these employer sponsored plans because of cost.
On large group health plans we have seen an increase in fees/taxes on premiums. These fully insured groups are getting hit with 4.9% tax increases. Some people may think that is not a huge percentage but if we are talking about $500,000 in annual premium, that is a $24,500 tax increase which goes to fund the ACA. Is that fair? Many owners and employees would say no.
As we move closer to the 4th quarter, the ugly aspect of the ACA will become more and more known.
