In the past month, the Obama administration has been subject to blistering criticism over its technological inability to set up working online insurance exchanges for Obamacare. The real scandal, however, is just starting to come to light—the cost of the program to young, healthy middle class people.
In California, premiums on middle class health plans are expected to jump by 30% in 2014.
I should be so lucky. I’m staring in the face of a 43 percent cost increase, for less comprehensive coverage than I have now.
Last month, I received a letter from my health insurance carrier informing me that my old catastrophic health plan was being eliminated and I was being funneled into the closest equivalent program under California’s Obamacare health exchange. Not only were my monthly premiums going up, but it appeared as if my insurance wouldn’t start covering my doctor visits until after I had spent all of my annual $4,500 deductible.
Shocked, I called the California Health Exchange information line, and was put on the phone with an extremely helpful representative named Mike. Right off the bat, he was able to take me through some of the fine print of my new “Silver” plan.
“You are able to see a doctor three times a year with a co-payment before your deductible kicks in,” he assured me.
Okay! Now we were getting somewhere. Maybe this plan wouldn’t be so bad after all. So what were the copays?
“$60 to see your doctor, $120 for urgent care and $500 for the emergency room.”
Come again? Under my old plan, I was eligible to see a doctor four times per year for a $30 co-pay.
Most importantly for me though, urgent care visits were also only $30. For a relatively healthy person like myself, urgent care meets my primary medical need—which is to see a doctor on demand when I need some antibiotics for an illness, and I can’t afford to wait around for an appointment with my regular doctor.
My urgent care clinic of choice charges $130 for a visit without insurance, which means my new insurance plan is virtually useless for my general medical needs.
Even worse, my new catastrophic protection was also inferior. My annual deductible jumped from $2,900 to $4,500.
Mike then informed me that if my income range were under $16,000, not only would my monthly premiums be subsidized, I would be eligible for a special “Silver” plan that would allow me to see a doctor whenever I want for a $3 co-pay.
I want nothing more than to provide care to the poor. And I don’t mind paying more to do so. But is it fair that I’m being priced out of medical care so that others can receive sterling care? Shouldn’t all plans be created equal?
I called David Hogberg, a senior fellow at the conservative think tank National Center for Public Policy Research, to get his take. I found myself agreeing with him more than I ever thought I would.
“With regard to the exchanges, it’s people like yourself who are young and relatively healthy who are going to subsidize the sick and the elderly,” he said. “The burden is going to fall on you folks."
There will be those who nobly say they don't mind paying more into the system, Hoberg said, but many are expected to follow their self-interest.
"You’ll see more people dropping their coverage when they realize the premium increase is considerably more than the fine they will pay for not being covered. As the exchanges get older and sicker, more young and healthy people drop out,” said Hogberg.
As far as penalties, in the first year of the program the penalty is $95 or 1 percent of income. Whichever is more. Next year it will jump to $325 or 2 percent.
The real danger seems to be in the first year. If young people don't sign up, when the penalties are still low, the rates will skyrocket for 2015. Even though the penalty goes up, insurance will be so expensive that it creates a vicious cycle that health insurance industry experts call a "death spiral." The downward trajectory begins when young people drop out, leaving older, sicker people to populate health insurance policies. Since the old and infirm are more expensive to care for, that would mean rising premiums. And you guessed it, rising premiums would mean even fewer young, healthy people who want to pay for policies... which explains why the death spiral terminology suits that worst-case scenario.
That reality would spell doom for Obamacare, as the pool of insurance payers would drop. The death of Obamacare, however, would end health care subsidies for the poor – something I don’t want to see.
So what can be done? Should the young and the middle class be rallying in the streets to scrap Obamacare in favor of a European-style single payer system?
Not necessarily, says Ron Pollack, executive director of the health care advocacy organization Families USA. Even a national European-style single payer health care system run by the government is no guarantee of quality care.
“Some people mistakenly assume single payer defines key aspect of how health care gets covered and paid for,” he told me. “It still requires rules. Even if everyone gets coverage through a single government source, it still leaves open really essential questions that will determine if the coverage is good and affordable. How do you finance the plan? Is it a payroll tax, it is corporate tax, is it income tax? What’s covered? How much do you pay out of pocket? Is it affordable, progressive or regressive? All those things still have to be decided. Whether the system is better or worse depends on those rules. The devil, as they say, is in the details.”
In other words, all health care systems have their drawbacks. And they can be tweaked to provide better, more progressive care.
The Affordable Care Act has already done a lot to ensure that many of the poorest Americans have access to health care. Which is something most individuals of conscience can agree is essential in a civilized society.
Unfortunately, the cost of that progress is being paid almost exclusively by the young, the healthy, and the middle class. Wealthy, established Americans, meanwhile (who by and large tend to be older) are able to sit the cost out while enjoying the benefits.
In that sense, Obamacare is an extremely regressive form of taxation. It needs to be fixed. Because the young and the middle class aren't going to put up with this burden forever.
And if we pull out, the whole system collapses.