Much of healthcare journalism is about policy choices and the debates that shape them. The full implementation of Obamacare, however, calls for something different—old-fashioned consumer reporting. Many features of the Affordable Care Act are already in place, but now comes its central pillar: the requirement for most Americans to carry health insurance, starting January 1, or face tax penalties. Most people—insured through their employer or through Medicare or the military—won’t see much change. Some with low incomes will be able to get benefits for the first time through Medicaid, at least in the 26 states that have currently agreed to expand that program. But those who buy their own insurance—about 15 million Americans already and maybe another 9 million or so who may buy it for the first time—will need help.
These people can buy coverage via the new health insurance exchanges that are being set up in each state—some by the states themselves, some through state/federal partnerships, and some by the feds alone (in states where the legislature chose not to take part). How the exchanges will function is anyone’s guess. So is the question of affordability. Some people will receive government subsidies to help them pay for coverage; others won’t.
Critics and backers alike agree that implementing a vast and complex program that affects family budgets and family health will be fraught. Readers and viewers will be forever grateful if journalists help them find their way through the confusion of the liftoff. Here is a case study that illustrates some themes for journalists to consider, and a down payment on what they need to know.
Carol’s story: One woman tries to navigate the insurance jungle
A Pennsylvania woman we’ll call Carol contacted me not long ago with a vexing problem. She is 59, “a self-employed individual buyer of Aetna health insurance,” which “just raised my rates by $100 per month,” she wrote. Aetna told her that her premium—for its HMO 30 plan, a managed-care policy with what the company calls “moderate” premiums—would increase 17 percent, from $604 to $704 a month. That’s $1,200 a year, bringing her annual insurance outlay to nearly $8,500. These days, such increases are not uncommon in the individual insurance market.
Aetna’s Dear Customer letter gave a rationale: higher medical costs plus Obamacare. “I live in Pennsylvania,” Carol protested, “so I don’t understand why Obamacare would cause my rates to go up, because our governor has not opted into Obamacare.”
For starters, Carol had a misperception about the law, one that’s often heard in states that have chosen not to operate their own healthcare exchange. The state may not be taking part, but the federal law still applies—whether the state, the federal government, or a joint partnership between the two operates the exchange. Carol has the option of continuing with her existing policy for another year or trying to do better by shopping in her exchange, which in Pennsylvania will be run by the feds, and for which she is eligible. She could also decline insurance and pay a tax penalty. She says she won’t do that.
Meanwhile, Carol’s premium is already going up. “I think they are gouging me,” she said, and set out to find out why, though she didn’t expect to find answers. “I feel powerless,” she told me.
Many of the 15 million people who, like Carol, buy insurance on their own, without the help of an employer making decisions about price and coverage, feel just as powerless. They will soon be joined by another 9 million or so who are currently uninsured and who will be turned loose in the uncharted insurance jungle starting October 1. Carol’s story is emblematic of all those people looking for answers.
She began her quest with Aetna, where a customer-service rep advised she would have to write to the carrier’s grievance-and-appeals department because it has no phone number. The Aetna rep also told her that the state of Pennsylvania had allowed the premium increases, so if she wanted to appeal, she should contact state insurance regulators in Harrisburg.
Instead, Carol called the office of Steve McCarter, her representative in the state House of Representatives. “They told me to fill out a complaint form and to check out the federal exchanges in October,” she recalled. Her next stop: the office of Patrick Meehan, her congressional representative. There a staffer informed Carol that a complaint about high premiums was a legislative issue, and the office would call her back. By the end of May, nobody had called.
Carol feared a runaround and she got one. But Aetna’s hefty premium increase is not simply a consumer’s complaint. It is a big dollars-and-cents issue for thousands of families like hers that have seen their premiums climb into the stratosphere over the past decade—a problem unlikely to quickly disappear under Obamacare. A look at her current predicament may help illuminate the kinds of choices she and many others face in coming months.
Carol had chosen her HMO 30 policy because it appeared to be the cheaper option at the time. It covers her and two adult children in their early 20s, who stayed on her policy after college, thanks to an Obamacare provision that lets young adults remain on their parents’ plan until age 26. (Her husband, 59, a former railroad worker, is disabled because of a job-related injury. He gets a pension from the Railroad Retirement Board and health coverage from Medicare.) Carol earns about $20,000 a year as a freelance proofreader. Before premiums got so expensive, she had coverage from what is called a preferred provider organization, a PPO. “I loved it,” she said.
Who wouldn’t? She could go to any doctor, and the out-of pocket costs and the premiums were reasonable. The PPO got too expensive, so she chose a new plan called the HMO 15, a managed-care policy with restrictions on which healthcare providers she could use, but with reasonable copays. Premium increases continued to pile up, however, and she switched again—to the HMO 30 plan, with slightly lower premiums but much higher copays and more cost-sharing. She didn’t shop for insurance from other companies. “It was so hard to compare plans,” she said. “I just gave up.”
Comparing plans is very hard—even for people like me who are supposed to understand them. Comparing even a few of the benefits—all the while not knowing which illnesses you or your family member may face in the next year—requires a person to calculate risks and make tradeoffs. That’s a tough exercise that requires an understanding of how insurers price their products, and what the fine print means—like the difference between coinsurance and copayments and how deductibles vary depending on where you receive care. Insurance companies tend to mix and match between various costs for various kinds of services, a little more for this, a little less for that, making apples-to-apples comparisons difficult.
For example, Carol’s HMO 15 plan required a $15 copay—a set amount for a service—for a CT scan or an MRI done as an outpatient, a $15 copay for outpatient X-rays, and blood work, and a $15 copay for urgent care. With her HMO 30, the premiums were slightly cheaper but the copayments shot way up—$250 for CT scans and MRIs, $50 for blood work and X-rays, and $200 for a visit to an urgent-care center. And while her old plan required a $15 copayment for the facility fee at an outpatient surgical-care center, the HMO 30 requires a $550 copay, an amount Carol found challenging. “I was supposed to get an endoscopy ,” she told me. “I cancelled it.”
She did make an appointment for a gallbladder-function scan because the copayment was only $50. “The average person does not understand why certain tests require a huge copay, and others don’t,” she said. Drug coverage was different, too. In short, health insurers are pushing consumers toward choices that may be best for the insurer’s bottom line.
Carol’s doubts about her Aetna coverage multiplied in March, when the company sent the letter about the premium increase. In essence, the company was telling her she could keep her HMO 30 plan, but that it might not have a lot of new benefits that policies sold after October 1 will have—benefits required by the Affordable Care Act—that she may not need. And that these new benefits come with a price that she may not want to pay.
Between the lines, it seems, Aetna was also revealing a strategy: Try to keep as many healthy policyholders on the books as long as possible. The message: Stay with us instead of venturing into the unknown in the exchanges. Carol and her children are reasonably healthy, and in terms of insurance company profits, the more healthy people on board the better. Still, she was flummoxed by the choice. “Do you want the devil you know or the devil you don’t know?” as she put it.
Indeed, Aetna was asking her to make a choice without all the facts. The company’s letter omitted a crucial factor: the possibility of an Obamacare subsidy, which would make coverage more affordable. She could only get that subsidy if she buys in the exchange. And, as it turns out, Carol is eligible for a subsidy, because her household income—her income plus her husband’s from his pension—is below $62,040, this year’s eligibility cutoff for a household like hers.
Until she begins shopping in the Pennsylvania exchange and chooses a policy, she won’t know the exact amount of the subsidy she would get, or her remaining share of the premium. The exchange will automatically calculate the amount, based on her income and the policy she selects. But a family whose income is between 300 and 400 percent of the federal poverty level, where Carol and her husband roughly fall, should get a subsidy that covers between 35 and 44 percent of the premium.
That kind of help might allow Carol to buy a better policy than Aetna’s HMO 30, with more benefits and less cost-sharing. That might make it easier to have tests like the endoscopy she decided to forego. But making the calculation is not easy.
One thing health advocates fear: The choices in the exchanges might be too numerous. In Colorado alone, 17 health insurers have filed proposed rates for 813 different plans for individuals and small groups. Research has told us that when people have too many choices, they make no choice at all. Just choosing between two plans, as Carol did recently among Aetna products, was hard enough. “The plans had all kinds of variables and, as you know, with kids, you never know what will come up medically,” she said. “So it’s hard to predict what I would need. I did the best I could with the material Aetna sent me.”
Now she must choose again. CJR will follow Carol this fall as she explores the Pennsylvania insurance exchange. Watch for it on cjr.org, in The Second Opinion section of the United States Project, our politics and policy desk. We hope other media outlets will follow people like Carol. Case studies are a good way to help readers and viewers through what promises to be a confusing time.
No one really knows for sure whether this bold experiment to give more Americans health insurance through the private market will pan out. Much will depend on the price and coverage offered by policies sold in the exchanges, and whether enough young, healthy people will buy them.
Just because some people will be eligible for subsidies doesn’t mean they will not have trouble fitting health insurance into a family budget. Coinsurance and copays and high deductibles will still be barriers to care for many, and these will continue to rise. And in any system that relies on the private market, some people will always be left out. The CBO estimates 31 million fall outside of Obamacare.
The biggest unknown of all is whether the law will really slow down the rise in healthcare costs. That’s related to whether the Obamacare provisions will change the way Americans get care, as its supporters believe. That’s the $1-trillion question.
This story includes a sidebar, “Open wide: the fine print.”