“Covered California“, the California Exchange Marketplace for Obamacare, announced Thursday May 23rd the rates for individual plans starting January 1, 2014. So far, only the rates for ages 25 and 40 have been disclosed. The announcement shows a comparison of new rates vs. existing rates. The point of this “PR” was to show how much less it costs compared to what everyone expected.
The problem with the comparison is, they compare 2013 group health insurance rates to the new 2014 individual rates. What they fail to mention is, most of the current individual rates are lower than the new 2014 Covered CA individual rates. Along with that there are more individual plan options available currently than what will be available in the Covered California Exchange Marketplace.
Let’s compare plans and rates available today vs. the Covered California rates announced on May 23rd for ages 25 and 40 (for the Silver, Bronze and Catastrophic plans).
A 25 year old person with a $4500 deductible HSA plan is currently paying $84 per month, the Covered California Catastrophic plan has a $6400 deductible HSA plan and will cost $130 per month. That’s a 55% increase in cost with a higher deductible.
A 25 year old with a $5000 deductible PPO Bronze plan will be paying in Jan 2014 at least $183 per month and a similar plan today with a $3500 deductible is only $82 per month. That’s a 223% increase in cost with a higher deductible.
A 40 year old with a $2000 deductible PPO Silver plan will be paying in Jan 2014 at least $308 per month, whereas the same person today could pay for a similar plan as little as $205 per month but only have a $1500 deductible. That’s a 150% increase in cost and a higher deductible.
A 40 year old with a $5000 deductible PPO Bronze plan will pay in Jan 2014 at least $233 per month and the same person today would only be paying $101 per month for a similar plan but with a $3500 deductible. That’s a 231% increase in cost with a higher deductible.
The costs are going to increase significantly, as you can see, but the deductibles are also increasing. The combination adds up and comes straight from your pocket. (This is the part you won’t hear on the NEWS)
Let’s use a car example…. Imagine the government wants you to buy a 2014 Honda Accord. They boast to you about the low cost they negotiated from the car company. They compare the 2014 negotiated price to the cost of a 2013 Honda Accord to show you how “cheap” it is… However, you currently own a 2013 Honda Civic. No matter how the numbers are twisted, you will still pay more for the new car. Fact is, most people are happy with their current car and the monthly payment for it. No matter how you compare it, the current individual rates are much lower than what Covered California is offering.
By the way, when most people buy a car they first get a loan (to purchase the car) based on their credit history. If your credit history is very good you pay one rate, if you have an OK credit history then you pay a little higher rate, if you have a very bad credit history, you pay an even higher rate or can’t get a loan at all. Doesn’t that sound similar to how we all purchase health insurance currently?? If it is OK to get a car loan that way, why is it not OK to purchase health insurance that way??
In a perfect world, why shouldn’t the people who can’t get Health insurance (due to their health history) be offered one of the Covered California plans (that will be guaranteed to them) and let the rest of us go through the health questionnaire process to get the lower cost and benefits that meets our needs, not the benefits that the government thinks we should have.
If they can offer automobile loan rates based on credit history, why can’t we offer health Insurance based on health history??
Today’s guest post was authored by Craig Gussin, CLU a health insurance agent for over 20 years. You can reach Craig at 858.546.4101 or by email: firstname.lastname@example.org