San Marcos Mercury | Local News from San Marcos and Hays County, Texas

by EDGAR WALTERS

The Affordable Care Act will increase the average cost of insurance premiums, making health care less affordable for those Texans on whom the system financially depends, according to a report from a conservative think tank.

The report, released Monday by the Texas Public Policy Foundation, says that premiums for health insurance plans will increase for young, healthy Texans under the Affordable Care Act, also known as Obamacare. The health care law requires private insurers to cover essential health benefits and establishes a federal marketplace for insurers to sell coverage plans, among other requirements.

The report concludes that premiums will be on average “significantly higher than coverage available on the individual market in Texas prior to the ACA.” Nonetheless, it concedes that comparing pre- and post-ACA health care plans “presents some difficulties” because of the costs associated with mandating that health plans cover essential benefits, and because the impact on individuals will vary depending on age, gender, location and other factors.

As an example, the report highlights changes in premiums for catastrophic plans for young people living in metropolitan areas. Catastrophic plans have lower premiums than comprehensive plans but provide protection only from worst-case scenarios. John Davidson, the report’s author, said those plans are the most attractive to young, healthy Texans, and that they operate “the most like insurance” of any health care plan in the insurance marketplace.

“For a 27-year-old, non-smoking male in Austin, low-cost catastrophic plans on the exchange, which are available only to those under 30 or those with low incomes who qualify, will be on average 84 percent more expensive than pre-ACA catastrophic plans,” the report found.

Proponents of the health care law say, however, that the comparisons are misleading.

Stacey Pogue, a senior policy analyst for the left-leaning Center for Public Policy Priorities, says the pre-ACA premiums — what she calls “teaser rates” — analyzed in the report do not reflect average rates paid on the individual market. “These are the advertised rates by insurers,” she said. “Some young, healthy people get the teaser rate, but certainly not everybody does. To represent that as the average rate is misleading.” 

Davidson rebuffs the term “teaser rate,” preferring “listed rate.” “Rather than just take the lowest one that was advertised, we averaged the three lowest ones we could find to come up with an average picture of the low-cost catastrophic rates in Texas,” he said.

Plans available under the Affordable Care Act are more comprehensive, Pogue said. They cover more medical services, including pre-existing conditions, and have lower out-of-pocket maximum costs. On the other hand, the pre-ACA insurance market is one “where the policies you can buy are full of holes, whether it’s mental health coverage or out-of-pocket costs that can be up to $13,000 a year,” Pogue said.

Davidson agrees that policies will change under the Affordable Care Act, and he attributes their higher costs to those changes. “It’s precisely because of the changes in the plans that they’re more expensive,” he said. “And they’re most expensive for the people who had the ability to get the cheapest insurance before the ACA.”

The federal government will offer relief for some facing higher costs in the marketplace. Texans with incomes between 100 and 400 percent of the federal poverty threshold will qualify for subsidies to offset higher health insurance premiums. Texans below the federal poverty line will not qualify for those subsidies and are instead encouraged to apply for Medicaid, although many will not qualify for Medicaid either. Gov. Rick Perry and the Texas Legislature did not to expand the program to cover impoverished adults, with many citing concerns about a system they say is not efficient.

The TPPF report says that many Texans in their late 20s and early 30s will not qualify for subsidies because their incomes are too high. “Young, working Texans are most likely to bear the brunt of these higher costs,” the report says. “Premiums for ACA-compliant plans for Texans in their late 20s and early 30s are significantly higher than pre-ACA plans currently on the individual market.” The report says those individuals have little incentive to follow the ACA mandate that they enroll in an insurance plan, and predicts that many will instead opt to pay a fine rather than sign up for a plan.

Health care officials say the exchange system under the ACA will depend on having a broad participant base, not just the elderly and afflicted.

“The success of the program is really contingent on young, healthy adults being able to broaden the risk pool and pay premiums to allow them to be more affordable for the older, sicker populations,” said David Gonzales, executive director of the Texas Association of Health Plans.

But Gonzales was hesitant to draw comparisons between pre- and post-ACA coverage. Asked whether rates had gone up, he said, “Unless you’re comparing apples and apples, it’s hard to really know.”

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EDGAR WALTERS reports for The Texas Tribune where this story was originally published. It is made available here through a news partnership between the Texas Tribune and the San Marcos Mercury.

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20 thoughts on “Report: Obamacare to raise premiums in Texas

  1. This article fails to mention whether the pre-ACA catastrophic plans being used for comparison are those which didn’t include coverage for essentials such as hospitalization, pregnancy, and other cost factors that render those plans “substandard” (as the President has explained). It is impossible to make an honest comparison without considering these factors so the purpose and validity of this article seem dubious, especially considering that the title, and the opening paragraph imply that the ACA “will increase the average cost of insurance premiums” as if the fact that some of the plans were not of a vastly inferior quality. Instead of making the quality and cost factors clear though, the article fails to challenge the suggestion that the very limited plans are “the most like insurance”, but that definition of insurance would better suit a game of chance than a health-care plan. And so yea, coverage that actually ‘covers’ is more expensive, but that is about all there is to it. And accordingly, that would make for an honest title: ‘Coverage That Actually Covers Costs More’.

  2. Here’s a concrete example for you…..before the nightmare that is Obamacare, I had a health insurance policy that covered myself and my family for $1,050 per month. Our deductible was $2,000 and our max out of pocket was $5,000.

    Because of Obamacare, my insurance company cancelled that plan and now wants to (a) sell me that same plan back for $1,400 per month or (b) have my switch to the exchange where my premiums would be similar but I would now have a $6,000 deductible and a $10,000 annual out of pocket maximum.

    So my choices are to pay 40% more for the same coverage or to pay the same amount for about 1/3 of the coverage.

    It’s the biggest rip off ever perpetrated on the American people, and I hope Obamacare dies a screaming ugly death.

  3. Putting the government in charge of healthcare is like asking a chimp to play 3 dimensional chess, bishops wild.

  4. Dano,

    If your carrier cancelled your policy it is because it failed to meet the minimum requirements of coverage under the ACA. So, you are making the “apples to oranges” comparison mentioned in the last paragraph of the article. Your claim then, that your insurer “now wants to (a) sell me that same plan back” is disingenuous. Millions of consumers were simply being mislead into thinking that they had cheap coverage when what they had was coverage not worth having.

  5. Ray, the point is Dano is a sophisticated insurance buyer who can determine better than you, and certainly better than the government, what plan best meets the needs of his family. He balanced the likelihood of risk of some things it might not cover, such as pregnancy, against the savings. Now, he doesn’t get to make that choice because the government determined something he had was “substandard” and that he should pay a lot more for coverage that will not materially change his health care costs, such as pregnancy.

    “Coverage not worth having” is a ridiculous statement. I have a high deductible plan for my family and we essentially self-pay the little stuff. I can afford to do that out of the savings on insurance premiums, and the insurance is there if my health care costs in a given year get higher than I can afford. That makes the most sense for my family. I don’t need an insurance plan that covers when I get a cold, because I know I will get a cold about once every two years and I can afford to pay for it when I do. This is the same reason I do not need grocery insurance, because I know I am going to buy groceries, I plan ahead on paying for the groceries, and it is within my financial ability to pay for those myself when we need them. Nonetheless, thanks to the not so smart folks in DC, I now pay 20% more every month and get no greater benefits. That is what happens when you put a government (incapable of doing anything well) in charge of more.

  6. skeptical,

    You are simply making another disengenuos argument. You are using ‘pregnancy’ coverage while ignoring ‘hospitalization’ and other loopholes that the “substandard’ plans use to limit costs. At 57 I couldn’t even venture a guess as to how many times I’ve heard consumers complain about paying for insurance only to not have coverage when they most needed it, but many, many. You are also forgetting that it is the government (us) that ends up paying for the care when the insurers don’t, so if people who can afford new cars and flat-screen TVs and $400 a game football tickets, are unable to pay for their health-care costs, how would you suggest we solve this problem if not through the government. Remember too that we are in the throes of a diet-related disease epidemic and a job crises, and our exports can’t be competitive with our health-care costs double that of our competitors…and rising at twice the rate too.

  7. Nothing about my plan was “sub-standard”. It was simply that my plan was established after the deadline where plans could be “grandfathered”. It covered hospitalization, it covered pregnancy, and it covered mental health. But most importantly, it gave me the coverages that *I* wanted based on *my* knowledge of my family’s age, health, etc.

    The bottom line:

    It’s none of the government’s damn business to come into *my* life and force me to purchase coverage that *I* don’t want or need – and make me pay hundreds more per month for it (or to accept the alternative, which is having MUCH crappier coverage for the things I *do* need/want for the same price I’m paying now).

  8. Dano,

    So you believe that ‘We the People'(the guv) have no right to regulate. But what about those who would suffer or die without our aid? Do we simply let them die along the road? And when our population becomes too unhealthy to be competitive globally do we just ignore that fact. And when the markets fail to keep wages in pace with health-care costs do we simply ignore such facts and pretend that the labor markets are not manipulated by immigration policies and government interference of collective bargaining? Or is regulation by We The People acceptable in regards to immigration or labor markets, but not Health-care.

    Anyway Dano, we are a nation and we can’t all take every advantage. Consider for example what would happen if everyone followed your idealism: “it gave me the coverages that *I* wanted based on *my* knowledge of my family’s age, health, etc.”. Accordingly, what happens when market forces encourage insurers to offer plans tailored to every want and need? Company X for instance offers a policy with the entire pool consisting of 26 to 35 year old men with perfect BMIs and blood pressure ratings, and etc., and with a requirement to do 100 push-ups and run 5 miles in less than 30 minutes. This would be a low-cost pool of course but then what happens if this process is continued across the full-spectrum of society, pool by pool? Well, when we continue to exclude for all potential cost factors we end-up with pools of people who have extremely high cost factors and most of them would not be able to afford insurance. So what do… We the People do?

  9. Anyway Dano,

    Your unsupported claim: “It’s the biggest rip off ever perpetrated on the American people”, can not be supported in any honest way. The ACA has what is called a Minimum Loss Ratio Provision which allows States to regulate what percentage of each premium dollar that the insurers can keep (that being about 20%). And so, that regulation, (along with many others), limits the “rip off”. The simple truth is that our country has become unhealthy and so the demand for health-care is allowing medical professionals and the medical community in general to profit in ways that must be curtailed. The amount of profits going to the insurance companies though is only a minor factor, it and other factors such as Tort reform can be totally eliminated from the equation and little difference occurs.

  10. So some other dude somewhere is fat and MY cost of health care should go up because of that?

    There’s nothing remotely fair, or even American, about that concept. If you feel that there is, then there is clearly a gulf between us that will not be bridged.

    Simply put, it is NOT the job of government to regulate health care or any other personal service. The job of government is to provide for the national defense, provide public safety, and maintain infrastructure. The nature of the government machine means that it is simply too inefficient to handle other chores effectively.

    They screwed up when they tried to run our retirement, and rather than learning from that and backing off, now they’re screwing up our health care too……

  11. And while we’re at it, would YOU like the government coming into YOUR business and telling you what an acceptable percentage is for administrative/overhead and profits are? Because that’s exactly what they have done to insurance companies with this 80% ratio….

    If you don’t see that as a rip off, and you don’t see the increased cost of health care to responsible Americans everywhere as a rip off, then your perspective is way, way off.

  12. No Dano,

    “Rip-off” implies that ‘We the People’ are deceiving ‘We the People’ with some type of malice. You simply don’t understand the concept of a republic or a democracy. You also don’t seem to understand what it means to make a supported claim. Show for example where someone in government has something to gain from ‘ripping off’ your premium dollars.

    As for you paying for some other “fat” “dude”, well…that is how insurance works and there were plenty of us who wanted Single Payer but Americans seem to think that all aspects of Socialism are bad. The pool concept would still apply but then we would all be in the same pool. The truth is though, ‘insurance’ is socialism plain and simple, but when practiced as a market-driven enterprise the door is open for competition, and that leads to pooling which excludes those with high-risk factors, and as I explained above, market forces left unregulated will lead to pooling that excludes people for things like the potential for having children. Thus, without regulation, the system will surely fail. And of course history provides countless examples of unregulated markets(see:Great Depression or Somalia and etc.)and those always fail while economies with extensive regulation are now topping all the lists of nations with the highest standards of living (Denmark, Germany, Sweden, Netherlands, and etc).

    In any case, you and the other complainers need offer up some suggestion other than the ‘me-me-me’ argument. Health-care costs were double those of our competitors without increasing exports we can’t create enough jobs, and those costs were rising at 17% per year, what does it take for you to understand ‘unsustainable’, too expensive for the nation and not covering enough people?

  13. So make an arguement and push for an expansion of Medicaid for anyone who wants to use it, instead of yet more Byzantine regulations that us plebeians cannot understand. I’m having a hard time seeing how this is anything but a boondoggle for insurance companies and their shareholders as it stands at the moment.

  14. Ray, you did not explain why your hypothetical super fit risk pool with low premiums is bad. I would work even harder to get in that pool for the financial benefit, which is a positive nudge because my low risk means lowering the nations health care cost to GDP percentage you are so concerned with. You said there would be other pools with higher risk that would have to pay more, but I don’t see a problem with that. If they cannot afford the insurance to cover their higher risk, then they drop into Medicaid. It isn’t that they are left to die as one of your earlier posts disingenuously claimed. Those with poorer health would have to spend more on health. If you consider that unfair, you must also consider it unfair that those who are born dumber earn less in wages. You can’t rearrange all of life to satisfy the elusive idea of fair, if that is even an idea worth pursuing.

    But now we are all in the crappy pool and paying for it. There are no disincentives for lifestyle choices that hike up medical costs, and this system did nothing to lower our super-high diagnostic costs and even higher end-of-life medical costs. Instead it exacerbates the problem by pushing the cost away from the cost creator and onto the young and healthy. This is why ACA was opposed by a strong majority of Americans. The Democrat house members didn’t care what the voters thought, which gave us the Republican house. Hell, even Massachusetts sent Scott Brown and his truck to DC to stop the madness. That is why they had to pass the flawed bill because nothing else could have gotten back through the Senate.

    And we are the governed, not the government. The governed have limitless possibility to advance as a people and country, but the government keeps finding ways to get in the way of that. The current officeholders are doing such a good job of it, that you can now claim several European countries have eclipsed where America was in the American century. Very sad.

  15. skeptical,

    Almost a good comment except you just can’t quite grasp what ‘disingenuous’ means. So here is yet another example for you, when I say to Dano: “So you believe that ‘We the People’(the guv) have no right to regulate. But what about those who would suffer or die without our aid? Do we simply let them die along the road?

    Then you say: ” It isn’t that they are left to die as one of your earlier posts disingenuously claimed”.

    See the diff? Notice how I don’t actually say anyone is ‘left to die” but instead ask Dano if he thinks that is a viable solution.

    And what makes you think that I believe that the ‘super fit pools’ are “bad”? I just happen to be very fit and I dislike paying for the poor choices of others just as much as anyone. I was simply trying to explain that our national discourse on this subject, and our aversion to Socialism, have left us with nothing but ‘lessor of two evils’ types of choices. If we follow your suggestion and simply leave all high-risk cases to pool together with subsidies and Medicaid as the payment solution it would simply drive up taxes. There would likely be some benefits from better incentives as you say but if that is the objective I suspect that something like a sin tax would work better, and I’m all for that, and, eliminating ag subsidies would drive up the costs of some unhealthful items as well(high fructose corn syrup). But we had that part of this conversation a few years ago and most Americans want to pretend that poor health is not the issue. So now some of them will learn the hard way what it means to be overweight and made to pay their share of the costs. And the healthy and fit sect will pay for something that will put a bad taste in their mouths. But then the market forces will come along and ‘super-fit’ plans will be offered. There are no regulations restricting plans that provide the very type of incentive that you allude to, and thus, the standard plans become de facto high-risk pools. I have in fact explained these dynamics many times but most folks have trouble grasping that market forces have a mind of their own. Consider for example how the food industry fought and won against GMO labeling only to open a window of opportunity for producers of Non-GMO products to label accordingly and thereby gain an advantage. Start to understand these forces and the ACA is a work of genius in its social engineering scope. Those of us who read J.K. Galbraith decades ago were privy to how market forces will incessantly require more and more regulation. His book INSTITUTIONAL CAPITALISM is on this very subject and it is a must read for anyone wanting to understand how our system must be managed. The notion that free markets will self regulate is merely fantasy for those who don’t understand the dynamics involved.

    And the Europeans have always been ahead of us in the evolutionary and developmental sense, we just had some luck due to the world wars, and due to our abundance of resources.

  16. Ray, never argue with a drunk or a fool.
    Some people are never so comfortable as when they embrace ignorance with unbridled enthusiasm. Why get bogged down on how ‘disingenuous’ some anonymous troll is being on a blog or webzine? Just stick to the facts concerning the ACA which are clearly on your side.

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