Saturday, November 14, 2015

Nobama Care?

After nearly three years on our legacy plan, we are now forced to sign up for Obamacare.   Damn, but it is expensive!

One of the things that has me a little down right now is shopping for health insurance.   We pay about $350 a month for a "legacy" health care plan, but these are slated to go away at the end of December.   We have to go on Obamacare now, and it isn't cheap.

The cheapest plans are around $950 a month (and no, we don't qualify for a subsidy, you have to be living near or at the poverty line to qualify!). So we are looking at a $7200 a year increase (at least) in our health care budget.   I am not sure where this money will come from.

I have mixed feelings about Obamacare and how it was implemented.  However, I think with some tweaking, it could still be fixed, but of course, Republicans don't want it to be fixed, but would rather see it fail.   And oddly enough, my insurance agent thinks Democrats want the same thing - to see Obamacare fail, so that a "single payer" (government healthcare) system can be implemented.

Now, to be fair, I am cooking the numbers when I say that my costs will go from $400 a month to $900 a month.  First of all, to stay with my current doctor, I will likely have to pay about $1100 a month for a POS plan, as opposed to an HMO.   In some hospitals, not every person you see will be covered under your new Obamacare plan, particularly if you are in an HMO.  As a result, you may get some staggering medical bills if some doctor or specialist or even emergency room physician comes by and takes your temperature.  Going with the very cheapest plan might be a false economy.

But as I noted in an earlier posting, my health insurance rates were much higher in the past - approaching $650 at one point, until I changed to my current, cheaper plan.   As I noted, in these plans in the past, people would sign up, and then get sicker and older over time - and rates would go up.   Because of the "pre-existing conditions" issue, the sick could not leave the plan.    But the healthy would be motivated to shop around for a new plan, or be courted by competing insurers, who all wanted to cherry-pick the folks who generally don't get sick much.   So over time, each plan ends up with a core group of sicker, older people, and the premiums skyrocket.

Two years ago, this happened to me.  My costs were over $600 a month and the nice people at Blue Cross actually called me to suggest a new plan for less than half as much.   And over time, this plan, which stated out at $240 a month, has crept up to $340 a month.  Even without Obamacare, my costs would likely rise over time, albeit not to $1,100 a month for some time.

The second bit of accounting trickery I am using is comparing apples to oranges.   My present plan has a $10,000 deductible while the highest you can go with Obamacare is about $5,500 or so.   The Obamacare plan also covers more - things like mental health care and whatnot.   So it is more coverage, which of course, costs more.

But the biggest bit of chicanery in my cost comparison is that my present plan doesn't cover pre-existing conditions.   In the old days, if you got sick, and didn't have insurance or wanted to change plans, you weren't covered.    The Obamacare plan covers you, regardless.

So yes, the Obamacare plans cost a lot more, but they are real insurance and they cover more.

Now there are some problems with this pre-existing condition situation.   As my agent noted, many people are still not getting coverage under Obamacare.   For a lot of folks, it is cheaper to simply not sign up and then just pay the "fine" every year with their taxes.   They make too much money for the subsidy, and the fines are too low to be of significant consequence.

Since Obamacare covers pre-existing conditions, and since you can sign up at any time if a "life-changing event" occurs (which can include moving to a different county), then it makes financial "sense" if you are healthy to not sign up and then if you get cancer or in a car wreck, to then sign up for health insurance.

As my agent put it, it is like selling Life Insurance to people after they have died.   You collect one premium and then have to pay out the full amount.   It is a bit of a crazy system.

And bear in mind that the plans I am looking at are the Bronze plans with the highest deductibles and lowest premiums.   The idea of Silver, Gold, or Platinum plans is just out of the question, as is add-on coverage like dental insurance.

Platinum plans are not being offered in our State.   My Agent tells me that companies quickly realized that the only people signing up for Platinum plans were folks with serious, pre-existing illnesses.  If you have cancer or some debilitating disease, it makes economic sense to spend $5000 more a year on a Platinum plan than to spend $5000 a year on a deductible.

And as a result, some health insurers are losing money on this deal.  Some of the "co-ops" are going bankrupt.   It begs the question, where is all the money going?   Patients are paying more for insurance (except those who are very poor, who are getting free or low-cost insurance for the first time in their lives).   Doctors are feeling the squeeze in the form of fixed payments and increased paperwork.   The health insurance companies are being forced to raise premiums - and getting "bailout" money from the government - money that is slated to evaporate in 2016.  Where is all the money going?

It is a good question.   Part of the problem with "free" medical care is that there are a core group of people who go to the doctor all the time if the cost is zero.   For example, a friend of mine had trouble sleeping.   So they went to a "sleep therapist" who saw them several times, prescribed drugs, and then had them sleep in a sleep laboratory overnight while technicians watched them and took notes on their sleeping habits.   As you can imagine, the cost of this was pretty staggering, but since "insurance covered it" you might as well do it, right?

We ran into this at work, back in the day.   Our insurance covered safety glasses and steel-toed boots.  So every year, everyone got new glasses and boots - even if the old ones were just fine.   When we have to pay for things ourselves, well, we tend to spend less and make things last longer.   And when a visit to the doctor costs us money, we tend to stay home and wait to get well, which half the time is all the Rx you need.

One of the reasons we have this crisis with antibiotics being over-prescribed is that people go to the doctor when they have a cold or the flu (I know I used to!) and then get an unnecessary prescription for an antibiotic (ostensibly to fight off a secondary infection from congestion or whatever).   These days, when I get a cold or the flu, I just stay home - because no doctor ever born can "cure" a cold or flu.   It just isn't possible, so why bother going?  Unless you are experiencing complications (which occurs particularly among older people) going to the doctor just spreads whatever you have to all the people in the waiting room.

Free healthcare will always be problematic, as there are folks who will jam up the system with a lot of imagined complaints (or trivial complaints), making life a lot harder for people who are seriously ill.

Could these things be fixed?   I think so, but there is no political will to do so.   As I noted, Republicans want to see the plan fail so they can lambaste Obama as a "failed President".   Democrats, particularly the far-left type, want to see it fail so we can go to a "single payer" system.  And trying to "fix" Obamacare is a tacit admission that it isn't working, so they can't propose that, either.

But there are some tweaks that could make the system work better:

1.  Go to higher deductibles:   Higher deductible plans cost less but still provide catastrophic coverage if someone gets really sick.   Yes, you still have to pay the deductible, and that motivates people to avoid going to the doctor unless it is really necessary.

2.  Increase the Fine:   The numbers we have today were based on some optimistic assumptions about the cost of care.  Now that Obamacare is here, we find that the monthly costs are far higher than anticipated.  As a result, we now have a scenario where paying the fine makes more sense.  The numbers, the way they are set up right now, make no sense.

3.  Increase the Subsidy:   Right now, if you are very poor, you can get a full subsidy for Obamacare and even sign up for a Gold plan.   However, once you start making a little more money, the subsidies rapidly disappear.   The numbers make no sense as they were based on optimistic assumptions as to what the costs of the plans would be.   As a result, you are punished for making more money if you are in the lower income brackets.   Middle-class people are getting hammered with high premium costs, while the very rich, well, they can afford it.  The way the system is ginned-up right now makes no sense, and as a result is alienating the middle class.

4.  Reduce Coverage:   Yes, it would be nice to cover mental health in health insurance.   And it is tragic, if you have a child who is schizophrenic, the costs of treatment.  But the problem is, there are a lot of folks out there who, if you told them they could see a Psychiatrist or Psychologist for free, they would go in a heartbeat.  It was very much a trend, in the 1960's, to "go see my analyst" and everyone was seeing someone about their personal angst.   But then the 1970's came along, and with a decline in the economy, health plans stopped covering this nonsense and doctor costs also started to rise.  Having an "analyst" suddenly became a very unaffordable and expensive hobby.  Yes, it would be nice if Obamacare covered "everything".   But no, we can't afford it.
Of course, these changes aren't going to happen.   As I noted, the political will to do so, simply isn't there.   Moreover, the money in the budget to do things like increase subsidies simply isn't there either.   So it remains to be seen what will happen in the next few years.   My Agent, who is also on the board of one of the insurance companies, tells me that they are asking for a 20% increase in premiums next year, based on the availability of bailout money from the government.   In 2016, this bailout money disappears, and it will be interesting to see what happens to premiums at that point.

If costs keep escalating, and changes are not made, a lot of people may make the rational decision to go without health insurance - and then sign up for an Obamacare plan if and when they get sick.   And many in the middle-class may revolt as premiums go higher and higher, to the point where they rival mortgage payments as the family's highest monthly expense.   At that point, change will come.

And it is interesting that the GOP candidates, who are making a lot of noise and smoke about issues like terrorism and immigration are largely silent on the Obamacare issue - an issue that a few years ago they were passionate about.   The problem for the GOP is that they have no real alternative to offer and have been less than helpful in trying to fix Obamacare - opting instead to hold dozens of meaningless votes to "overturn" it - votes that never pass.   And with nothing to fill the vacuum if the law is overturned, it is not clear what would happen if Obamacare was suddenly abolished - chaos would ensue without some transition to another plan.

So, 2016 will be an interesting year.   $6,000 a year is a lot more money to spend on healthcare than last year, and like I said, I am not sure where I can cut out that much money from my budget, other than to cut back on a little bit of everything.   And if a lot of Americans are cutting back like this, well, it isn't going to bode well for the economy.