Yet another middle-income American discovers that Obamacare exchange plans are ‘junk insurance’

Written by . Posted in 2014 Campaigns, Featured, Issue Watch

Published on November 01, 2013

Matthew Fleischer writes in the L.A. Times:

I received a letter from my insurance company informing me that my plan was “no longer available” due to “new requirements for health coverage under the Affordable Care Act.” I am being funneled into the closest equivalent plan under the new California health exchange, and my monthly premium is going to rise by nearly 43% to $214 a month.  

My old plan was as bare-bones as they came, so I assumed that even though the new plan would cost more, my coverage would improve under Obamacare, at least marginally.

It did not.

Under my old plan, my maximum out-of-pocket expense was $4,900. Under the new plan, I’m on the hook for up to $6,350. Copays for my doctor visits will double. For urgent-care visits, they will quadruple. Though slightly cheaper plans exist if I decide to shop around on the exchange, I will lose my dental coverage should I switch.

This is anecdotal. There hasn’t been enough time for a detailed study that develops a vast data set on how insurance changes are affecting people in various age groups (Fleischer is 34), and it will take some time before anyone can put such a study together. But I believe this lack of data works entirely to the Obama administration’s benefit. Fleischer’s experience certainly squares with my experience on the DC Exchange, and David Frum’s experience, and health care expert Robert Laszewski’s experience, and the experience of the young lady in this CBS news story, and the experience of the older lady in this one.

You can’t necessarily judge an entire system by anecdotes. But the striking thing is, there seem to be no anecdotes out there at all of people who have had their plans cancelled but will pay less through Obamacare for better insurance. At what point does the absence of these stories suggest they are the exception rather than the rule?

There also don’t seem to be many stories (I haven’t seen any with screen captures or vetted by a reliable journalist) of people finding they’ll pay a bit more on the Obamacare exchanges but at least get a lower deductible in return. Instead, one finds story after story after story of people who will or would have to pay much more for plans with even higher deductibles and out-of-pocket limits than what they had previously. If you thought you had “junk insurance” before, you’re now getting  the dung-heap of insurance.

Even those with low incomes face this problem. Fleischer notes that if his pay were cut to $30,000 per year (not a lot in California), he would receive a subsidy of only $40 per month — which would still leave him paying more on net every month for less insurance than he had before.

How can this be? Well, sorry, but middle class people in relatively decent health are just going to get screwed by Obamacare and enjoy no benefits from it. The beneficiary is the person with a rare and super-expensive, chronic pre-existing condition who was previously uninsurable. It’s great that such people can now get coverage (although in many states the sick could have gotten it previously through a high risk pool). But as we discovered when Obamacare’s temporary high-risk program failed to attract the numbers expected, those people are the rare exception rather than the rule, and often more expensive to treat than anyone thought.

Anyone with an individual market insurance plan who does not fit that description and is not living in grinding poverty, just above the Medicaid cutoff, probably has nothing to gain from Obamacare.

Understand this as you listen to the White House’s new spin about how your old plan was “junk insurance”: Obama doesn’t care one bit about the level of coverage you had. If he did, he might have limited his ambitions to banning annual and lifetime limits, reforms that probably made you pay just slightly more for the plan you are now losing when they went into effect.

In contrast, the “ten essential coverages” and the strict grandfather rules now going into effect — the ones squeezing your plan out of existence — are just excuses to force you to sign up to pay more for less coverage as soon as possible. The fact that many ACA plans charge far more for far less insurance than what you had serves as evidence of this — and if you’re going through this now, you know exactly what I’m talking about.

The Obama administration and your insurer need you to pay much more on an exchange plan, and to take less out of the system (i.e., pay a higher deductible and higher co-pays) because you are their new cash cow for making a non-market system work. Your insurer needs you to pay more and get less so that it can cover all the people it is now forced to take on who aren’t really purchasing insurance so much as renting a financial patron at a huge discount to pay the large medical bills they are already incurring.

As much as you may want to help the uninsurable, and as much as you may be willing to do so through your taxes (as you probably once did through a state-subsidized high-risk pool), Obama didn’t want to do it that way. Obamacare instead makes you pay more now and sacrifices your future ability to pay for medical treatment so that they can more easily pay for their current treatment.

You will continue paying the same level of taxes as you did when you subsidized them (perhaps inadequately) through a state risk-pool and uncompensated care, plus you will pay a new, hidden tax through your insurance policy. You agree to pay higher premiums now, and if you ever get sick in the future, you also agree to pay your new, higher ACA deductibles and out-of-pocket limits every year, and all so that we can afford a system of insurance in which the risk of each insured cannot be adequately taken into account.

Surely, there was a better way to help people with pre-existing conditions. Democrats, who controlled everything when this bill passed, could have let them buy into Medicare, in a way analogous to how the disabled can receive Social Security benefits. They could have required states to let them into their Medicaid programs. They could have given every state a cash incentive to create a high-risk pool for people in that situation, or to offer more generous subsidies in the pools they had already.

But none of those options would have been nearly as transformative as Obamacare.