Clever Handle has a diary up about Michael Olenick's article today at Naked Capitalism, and this diary should be regarded as somewhat of a companion piece, addressing some different issues than the ones that CH addresses.
Basically, Olenick has been trying to compare plans and price them, and determine which plan would work best. Given the healthcare.gov website's technical problems, he decided to download the insurer's information and brochures, and put together a spreadsheet comparing over 130 plans. The results are, as the understated British might say, a wee bit disquieting.
If my numbers, and Olenick's numbers are right, there is every reason to believe that a family of three could easily be looking at an annual out of pocket cost of 33.74% of their annual income, if someone were to get sick. Spoiler alert: MATH below the orange squiggle of DOOOOOMMM!!!
Let's start with Olenick's basic family information:
I don’t like disclosing personal information but it’s impossible to entirely understand these plans without doing so, and it isn’t that difficult to find anyway. We are a three person family. I am in my mid 40’s, my wife is in her mid 30’s, and we have a child. At the worry of putting a hex on I’m thankful that everybody is healthy. Our ZIP code is 33405. Nothing more should be needed to obtain healthcare quotes ...
Then let's look at the results of his research:
There are 132 plans, a relatively large sample size: 38 are bronze, 46 silver, 33 gold, and 15 platinum. Florida Blue offers 76 plans, Ambetter Health has 27 plans, Cigna has 11 plans, Aetna has six plans, Humana offers five plans, Coventry Health offers four plans, and Molina Health has three plans. Sixty-three plans are HMOs, 17 are PPOs, and 52 are EPOs. The average premium is $916.14; the median is about the same at $923.90. The average deductible is $6,581.82 and the median is $6,000. Thus the average plan requires families that actually plan to use healthcare pay $17,575.54 (total monthly premiums plus deductible) before the plan pays much (or anything, depending on the plan); the median is $16,971.38.From there, Olenick extrapolates that a family that experiences an acute (as opposed to chronic) illness lasting 6-20 months could easily find that they would have to meet the out-of-pocket max for two plan years: e.g., you're diagnosed with that tumor in June of 2013, and treatment takes 14 months, and it's August 2014 before you've got a clean bill of health again. Olenick:The average out-of-pocket maximum is $10,854.55; the median is $12,500. Finally the maximum paid per year – the price people with conditions like cancer would be expected to pay for their “affordable” care, with premiums, deductibles, and copays (but not balance-billed and other games) – is $21,848.27 per year; the median is $22.415.96.
The plans carry average premiums by metal level of $759.14, $910.86, $1,019.28, and $1,103.20 for bronze, silver, gold and platinum respectively. Average deductibles are $10,571, $7,209, $3,633, and $1,040 and average out-of-pocket maximum amounts are $12,600, $12,026, $10,115, and $4,467. Total out-of-pocket annual costs for people who rely on the plans – the sick people the ACA was meant to help – are $21,710, $22,956, $22,346, and $17,705 (if you’re sick, buy platinum, assuming that you can afford anything).
Even without tricks like balance billing, a person insured under the ACA could easily run up a healthcare bill of $43,696.54 (two calendar years of the maximum out-of-pocket) if they get seriously sick.Alright, but those costs are meaningless if you don't put it in context, right? So, let's look at the context he's using, from the comments section of the post (this is the part that brought it home to me):
The median household income in my county is $52,951 and, even with the government kicking in $3,984 year (from the Kaiser calculator), these costs are still going to be an insurmountable burden.Okay, so here's my analysis of the math: For a family of three (3) with an annual income of $52,951 (or $105,902 every two year), out of pocket costs for a serious illness that extended into a second year could cost $43,696.54, minus the annual subsidies of $3,984 per year, or $7,968, for a net out-of-pocket cost of $35,728.54.
$35,728.54 / $105,902 = 0.33737360956
That's about 33.74% of that family's income for those two years, even after the subsidies. How many people have ready access to that kind of cash? In this economy? As Olenick succinctly puts it:
Before the ACA they’d end up bankrupt. After the ACA, they’d also end up bankrupt. By any measure this is expensive and lousy insurance ...But, wait, there's more! I also want to highlight some comments from NC's coverage yesterday regarding the initial enrollment numbers rollout, which are also somewhat disquieting. Lambert Strather was trying to do some analysis just based on estimates of enrollees, and this is what she had to say:
It’s actually OK that the numbers are low in absolute terms; the MA enrollment for RomneyCare was initially low, and built to the final deadline. There are two metrics that matter: First, the order of magnitude of the enrollees compared to projections. 494,620 vs 49,462 is just barely passing; 494,620 vs. 4,946 would be very bad or, in Washington parlance, a “concern”; and even I don’t think there will be 494 enrollees. Second, the actuarial soundness of the pool; if the entire pool has a pre-existing condition, the insurance companies can’t profit. Unfortunately, the website debacle selects for the already ill, since only they have the incentive to sit through the days and the hours it takes to sign up. So I would expect the administration PR effort to: (1) roll out the heart-tugging YouTubes; (2) conceal the actuarial soundness, to avoid any hint that ObamaCare is already entering a death spiral; and (3) Focus on Medicaid signups, which are, after all, a success. And (4) claim next month will be better. Read more at http://www.nakedcapitalism.com/...
That was his view before the numbers came out in the WSJ yesterday. Regarding the numbers after they were published, Yves Smith had this to say:
The total falls below Lambert’s “barely passing” since this figure includes November to date, while Lambert was anticipating the official report for HHS, which will cover October only (not only does November to date mean an additional 10, or 30% or so days, but enrollments are supposed to accelerate over time. So his 49,462 for October should be at least 30%, or more like 40% higher to be a true apples to apples. That would mean solidly over 65,000.And the fear, that the enrollees are skewing heavily towards the unhealthy, appears to be being borne out. So this program is becoming the worst of all worlds: ordinary Americans are begin screwed through higher costs (or paying penalties) as insurers game the program, yet ironically, the insurers are still not coming out as well as they had hoped. If that is still true as of the close of enrollment, they’ll simply put through rate increases next year.
There is not amount of PR lipstick that Obama can successfully apply to this pig.
Read more at http://www.nakedcapitalism.com/...
And when will those rate increases be coming out? Anybody want to guess? Because I could easily see letters going out raising rates for this kind of barely-better-than-junk-insurance just before the mid-terms.
There have been a couple of other diaries calling out the President, and the Administration, regarding the need for an outright blitz to get more younger people enrolled, to keep that kind of disaster from happening. So far, it doesn't appear that anybody's getting through.
There's still time to fix this, but it could just as easily turn into a disaster that could stretch on through 2016.
Okay, enough doom and gloom. I'm sure President Warren will be able to solve all this handily in 2017 anyway.
Postscript: One last item, regarding Clever Handle's diary, and the other issue addressed in Olenick's article:
Moreover, the overwhelming majority of plans violate what is arguably the most important disclosure requirement in Obamacare, one designed specifically to allow consumers to make “apples to apples” comparisons. Data showing how little the plans actually pay under specific real world scenarios, as required by the ACA, seems to be purposefully omitted from healthcare.gov. The law stipulated that insurers calculate and disclose projected out-of-pocket costs for the delivery of a baby and one year’s treatment of well regulated Type II diabetes. These comparisons go the heart of the plans’ transparency. However, this data was missing from healthcare.gov for 98 of the 132 plans, available only by burrowing into the plan brochures. Read more at http://www.nakedcapitalism.com/...
Head on over to CH's diary to get the skinny on that little nugget of happiness.