Peter Lee's announcement that the Covered California health plans will cost the same or less in some areas has drawn a lot of press this week. Is he right or wrong? Is he comparing apples to apples or apples to oranges? Well, here it is in a nutshell. The premiums he is comparing over the two year period are 2013 small group premiums and what will be 2014 individual premiums. Those of us in the insurance business have known that small group benefits are richer than most individual plans, thus they have historically cost more. That being said, many individuals were able to get a break on prices for picking plans that do not offer all those rich benefits that were mandated into small group plans. Some of these touted benefits are prescription drugs, free physicals, free oral contraception, physical therapy, and prior to last July maternity. Thus prior to the health care law a single male that was healthy and not on any prescriptions could benefit from a lower priced plan and not worry about the plans benefits not being as rich as group plans. For many this was seen as a positive. For some however, these watered down benefits were a disaster. If someone purchased a bare bones, high deductible plan because it was cheep then had developed health problems they were stuck in that plan. In a sense they were paying for something that was not giving them any benefits. I believe this became such a big problem, because more and more individuals purchased their insurance on-line or without a broker. They did not have anyone explain the risk they were taking on by purchasing these low cost plans. As a broker I know I would steer my clients away from such plans. Only in a few instances were these plans appropriate. But for the people that these plans were appropriate for the law adversely affects them. They are now forced to buy richer plans.
The unfortunate thing about this law is that what happened before will still happen. People that can not afford a rich plan, gold or platinum, will buy a bronze plan. Bronze plans actuarially work out to be a 60% - 40% plan, meaning that the insurance carrier pays 60% of the expenses and the insured pays 40%. A very simplistic example of this would be a person that goes to a doctor and the bill is $100.00. The carrier would pay $60.00 and the insured would pay $40.00. That sounds fare right? Well what if they need to have a procedure that cost $10,000.00? The carrier would pay $6,000 and the individual would pay $4,000.00. Most people that chose to be on a basic plan still can not pay $4,000.00 for a service. I see just as many people having trouble paying for their care now with this law as I did before. Even when you factor is the subsides that many people will be able to receive and that most people will be on silver plans (70%/30%) people will be forced into delaying care or forgoing it all together.
To avoid these pitfalls it will be imperative that people talk to professionals and know what their financial situation can handle. We don't have crystal balls to see into our future and planning for the unplanned is what insurance is all about. Don't go it alone.
If you have questions about health insurance please feel free to call Angela and Lisa at 714-680-5900 or email us at info@ansainsruanceservices.com . For information on Covered California check out their web site at www.coveredca.com .
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