Tomorrow will be the re-rollout for the healthcare.gov website. So before the media begin searching high and low looking for sketchy, unconfirmed, undocumented stories to fit their narrative that problems still abound, here is my first-hand account of successfully enrolling myself and my wife in ObamaCare on November 24, with a perfectly-working healthcare.gov website. To set the stage, I begin with my personal journey through the pre-ObamaCare private insurance market, including the frustrations of obtaining a policy; the significant and constant rate increases we experienced each year (back when no one had even heard of President Obama); and, the huge out-of-pocket expenses I was left owing when I had to actually use our private policy.
I have been self-employed as an attorney for 23 years. I am not eligible for employer-subsidized group coverage or government-subsidized Medicare or Medicaid or any other type of subsidized coverage. I am one of the 5% who has always had to get coverage from a private policy in the private market where I pay 100% of my own freight.
THE HIGHER COSTS OF INSURANCE IN THE PRIVATE MARKET
The costs of insurance for us in the private market have always been higher for two reasons. First, we pay 100% of our own premiums. People who work for employers with group coverage either pay nothing or pay a small portion of their actual premium, while their employer picks up the tab for the largest portion of the premium.
Second, for us in the individual private market, the underwriting departments at insurance companies look solely at our individual medical records to determine what their risk exposure will be and, our rates are calculated accordingly. For group coverage, the insurance companies operate under the theory that there will be many people in the group who will never use the coverage, so the premiums paid by these people (or paid on their behalf by their employer) will help offset the medical expenses for those in the group who do present medical bills. Everyone is able to pay less because the costs of the sick individuals are spread among everyone, including the healthy ones. Yes, that is technically socialism, but this is how employer-provided group coverage has always worked and why it is less expensive than what we in the private market can get.
In the late nineties, our premiums began going up at an average rate of 28% per year. In 1998 alone, we had a 70% increase. That was while President Obama was a freshman in the Illinois state legislature and had not yet even had dreams of ObamaCare.
Each October I would get a letter from my insurance company saying the premiums would be significantly higher for the next year; or, I could choose a higher deductible and then my premiums would “only” increase by a slightly-less percentage. A second way of getting a lower premium was to change companies, because they all start out with a teaser-rate for the first year before they begin raising the premiums each year thereafter. But at some point this was no longer an option because a male over 40 with diagnosed elevated levels of blood pressure and cholesterol could not even buy a policy in the private market – at any price – because the underwriting departments look at him and see a $120,000 stent procedure.
HISTORY OF MY ACTUAL PREMIUM INCREASES FOR THE PAST 18 YEARS
Here is the raw data for my monthly premiums for the past 18 years for me and my wife together:
1997 $158.63 United Healthcare ($1,000 deductible)On two occasions during the time I had Blue Cross, I attempted to change to a new company. The first time involved gathering all of my medical records from my teen years forward and listing every doctor I had ever seen, every prescription I had ever taken, every accident, every injury, every hospitalization, complete with current phone numbers and addresses of all providers. It was an unbelievably huge undertaking. And after all of that, I was denied. So the next time I thought of trying to apply for coverage with a new company, I told them to let me know upfront if they had benchmarks for age, blood pressure and cholesterol, so I wouldn’t waste my time futilely going through their rigorous and time-consuming application process. That’s when they told me that a male over 40 with elevated levels of blood pressure and cholesterol, shouldn’t even bother applying for coverage. So I was stuck with the steadily-rising Blue Cross policy.
1998 $269.54 (70% increase)
1999 $344.65 (28% increase)
2000 $444.02 (29% increase)
2001 $202.00 (decrease because we changed to Blue Cross)
2002 $265.00 (31% increase)
2003 $359.00 (35% increase)
2004 $422.00 (17% increase)
2005 $122.00 (decrease because we changed to a $10,000 deductible)
2006 $186.33 (53% increase)
2007 $212.64 (14% increase)
2008 $253.32 (19% increase)
2009 $317.61 (25% increase)
2010 $375.12 (18% increase)
2011 $449.94 (20% increase)
2012 $548.71 (22% increase)
2012 $367.61 (decrease in March 2012 when we changed to Golden Rule)
2013 $419.74 (14% increase)
But in March of 2012, I was finally able to change companies again. I can only assume that this was due to the soon-to-come implementation of ObamaCare; companies were relaxing their denial process knowing that they were soon going to be required to accept all applicants, regardless of medical history.
So had it not been for ObamaCare, I would still be stuck with my Blue Cross policy which was costing me $548.71 in February 2012. And that was two rate changes ago. Adding up the 14 rate increases listed above and dividing that number by 14, yields an average annual rate increase of 28%. But let’s just use 20%. A 20% increase on the $548.71 in October 2012 (the time of year I always got my rate-increase notice telling me how much higher my premiums would be for the next year) would have resulted in a 2013 monthly premium of $658.45. And a 20% increase on the $658.45 in October 2013, would have resulted in a 2014 monthly premium of $790.14. And that's figuring it conservatively...I also turned 50 in November 2012, a huge benchmark for an additional rate increase over the standard annual rate increase, so the increase at the end of 2012 would probably have been even higher than the 28% average increase. (The average increase of 28% includes both the standard annual increase and the additional increase each year when one of us celebrated a quinquennial birthday.)
THE NOT-SO-STELLAR COVERAGE IN THE PRIVATE MARKET
Now let’s look at what kind of coverage I was getting for these prices. The deductible for both the Blue Cross policy and my current Golden Rule policy is $10,000. But that is only part of the equation. Once a deductible is met, there is usually also a “co-insurance” requirement which is the percentage a policyholder must pay out of his own pocket for all bills above the deductible, until he reaches his maximum out-of-pocket limit. The co-insurance percentage on my Blue Cross policy was 30%, up to a maximum of $5,000, causing the yearly out-of-pocket maximum to be $15,000 ($10,000 deductible + $5,000 co-insurance). The co-insurance percentage on my current Golden Rule policy is 25%, up to a maximum of $10,000, causing the yearly out-of-pocket maximum to be $20,000 ($10,000 deductible + $10,000 co-insurance).
In 2009, I awoke on a Saturday morning with the worst abdominal pain imaginable. I suffered through it all day thinking it would get better, but it only got worse. About an hour before a nearby immediate-care facility closed that night, I went in, doubled over in excruciating pain, and was diagnosed – by symptoms – as having a ruptured appendix. My wife was out of town, so I managed to drive myself over to the hospital ER where a phone call from the immediate-care physician had cleared the way for me to bypass the waiting room and the registration process and go straight to a CT scan and a very welcomed injection of morphine. But the initial reading of the scan apparently showed my appendix to be normal. So all night Saturday and all day Sunday and all night Sunday, my only treatment was a morphine injection every three hours, which would wear off in two, leaving me doubled over in tears for the third hour until it was time for a new injection. On Monday morning, they decided to do a new scan, this time using contrast. And this time when they finished, they came running in and wheeled me down to the operating room because my appendix needed to come out “immediately.” Because of the complications resulting from the delay in removing it, I had to stay in the hospital until Friday afternoon – a full week.
The total cost for that was $33,068, broken down as follows:
$ 654 emergency room physician
$ 1,804 surgeon
$ 215 gastroenterologist
$ 131 pathology
$ 787 radiology
$ 1,310 anesthesiologist
$ 1,094 hospitalist
First, Blue Cross adjusted off $9,563.56 to reflect the negotiated in-network prices (which wouldn't have been done if I had gone to the "wrong" hospital). The next $10,000 was my responsibility. Out of the remaining balance of $13,504.44, I had to pay $4,166.81 (30%) and Blue Cross paid $9,337.63 (70%). So my total out-of-pocket responsibility was $14,166.81 ($10,000 deductible + $4,166.81 co-insurance).
ANOTHER EXAMPLE – A COLONOSCOPY
The surgeon from the appendix surgery wanted me to have a follow-up colonoscopy before the end of the year. The December 2009 colonoscopy cost a total of $4,038.00, itemized as follows:
$ 747 physician fee
$ 760 anesthesiologist
Blue Cross adjusted off $1,605, leaving a balance of $2,433. My part of that was $730 (30%) and Blue Cross paid $1,703 (70%). This put my total out-of-pocket responsibility for the year at $14,896.81 ($14,166.81 on the appendectomy + $730 on the colonoscopy). If I had incurred just a few more bills where my 30% equaled $103.19 or more, I would have only had to pay $103.19 to finish out my yearly requirement of paying $15,000 out-of-pocket before Blue Cross would have become obligated to pay bills at a rate of 100%.
But that was a rare year. In most years, I would not have already met the deductible, so I would have had to pay the entire $2,433 for the colonoscopy, out of my pocket. And if I had gone to a doctor of my own choosing rather than going to an in-network doctor, I would have had to pay the entire $4,038 cost of a colonoscopy, out of my own pocket, because there would have been no adjustments to the costs for in-network negotiated prices.
OPTION TO KEEP OUR EXISTING GOLDEN RULE POLICY
Our current Golden Rule policy is not ObamaCare-compliant, for two reasons: 1.) it does not provide for free preventative care; and, 2.) it is considered to be a "catastrophic" policy because of the $10,000 deductible and additional $10,000 out-of-pocket co-insurance. (The ACA does not allow a person over 30 years of age to have a catastrophic-only policy.) Nevertheless, since our policy was grandfathered-in (like all real policies were) and since Golden Rule (unlike many other companies) was honest about our options, the letter we received expressly said that we could keep our coverage "in 2014 and beyond" and it also properly and correctly told us that we had the option of getting a new policy on the healthcare.gov website, without having to go through medical underwriting and, it informed us that we may qualify for "tax credits to reduce your premiums," if we chose to go that route.
LETTER WE RECEIVED FROM OUR CURRENT INSURANCE COMPANY
Here's a link to the letter if your device doesn't display the Scribd Viewer above.
ENROLLING IN OBAMACARE
When the ObamaCare website first went online, I unsuccessfully tried several times to create an account. After a couple of weeks, I was finally able to create an account but I could not complete an application. On one of my many attempts, I did manage to complete the application, but when I logged in again later, it had disappeared.
This was around the time that the hand-wringing media frenzy reached critical mass. The site was then taken offline for awhile and when it came back online, I was immediately able to complete the application. But then, I couldn’t get to the last step of selecting a plan. I tried that last step several times before I left it alone for a couple of more weeks. Then, this past Sunday, on November 24, I logged in again. This time my completed application was still intact. I added my wife, completed her application and moved immediately to selecting a plan for both of us. It took less than an hour this time.
Yes, it was frustrating. But that process does not even begin to compare to the hugely time-consuming and frustrating process of trying to get 30 years of medical history and records together for the underwriting department at a private insurance company. For example, when we decided at the end of 2011 to try once again to change from our Blue Cross policy to a new company, we started the application process with Golden Rule in January 2012. The underwriting department spent January and February sifting through my medical records and on March 1, 2012, I was denied coverage because my cardiologist had not yet sent his records to Golden Rule. I had submitted my own copy of his records, but that was unacceptable to the insurance company, as they wanted the records to come directly from the doctor.
Rather than endure the appeals process, I withdrew my application, paid a stern visit my cardiologist's office and then started the application process all over again. We were finally approved for coverage on March 27, almost three months after we had started the application process, with a 10% increase over the originally-quoted rate and an effective coverage date of April 6, 2012.
So having to start over a few times on the ObamaCare site to complete a very simple application which involved no medical questions and no requests for medical records, was a breeze compared to the former process of applying for coverage in the private market. Too, and more importantly, I knew before I began the ObamaCare process, that regardless of glitches, the final result was going to be that I would be "accepted" for coverage, because they could not deny me. Being "denied" is exponentially more frustrating than applying.
OUR NEW OBAMACARE PLAN
We decided on the Humana National Preferred Bronze 6300/6300 plan. The premium for both of us together, without any subsidies, will be $529 per month. Our coverage will begin on January 1, 2014, since we completed enrollment before December 23rd. (Enrollment can be completed all the way up until March 31, 2014, but it must be completed by December 23rd in order for coverage to begin on January 1, 2014.)
COMPARING PRICE OF OUR EXISTING AND PREVIOUS PLANS TO PRICE OF OBAMACARE PLAN
Yes, the monthly premium of $529 will be 26% higher than the $419 we have been paying monthly to Golden Rule during 2013. But as I have shown in great detail, premiums have increased by an average of 28% each year, for the past 18 years, starting back when no one had ever even heard of Barack Obama. In fact, the two largest increases, 70% in 1998 and 53% in 2006, occurred when Clinton and Bush were president, both times when Republicans were in full control of congress with full oversight authority. And from 2001 until 2006, the Republican-controlled congress had unfettered authority to institute any insurance reform they so desired, as Bush did not issue even one veto until mid-2006.
Also, had we elected to keep our Golden Rule policy, the monthly premium for 2014 would not still be the $419 which we have been paying in 2013. That $419 was a 14% increase over the $367 rate which we had started with in 2012. So assuming a rate increase again of 14% for 2014, our 2014 monthly premium for the Golden Rule policy would be $478. This means that our new ObamaCare Humana rate for 2014 will only be a 10% increase over what our Golden Rule rate most likely would have been in 2014, if we had elected to keep the Golden Rule coverage for 2014 ($529 is 10% higher than $478).
Moreover, the $529 monthly rate for the ObamaCare Humana policy will be a 33% DECREASE over the $790.14 that we most likely would have had to pay in 2014 for the Blue Cross policy, if we had elected to keep it. Remember, it was costing us $548.71 per month in actual real dollars in February 2012 and, it had a documented history of increasing by 28% each year. So conservatively figuring only a 20% rate increase in October 2012, would have resulted in a 2013 premium of $658.45. And another scheduled rate increase in October 2013 of the same 20%, would have resulted in a 2014 premium of $790.14.
COMPARING BENEFITS OF OUR EXISTING AND PREVIOUS PLANS TO BENEFITS OF OBAMACARE PLAN
The new ObamaCare Humana policy has an annual deductible of $6,300, instead of the $10,000 deductible that our Golden Rule and Blue Cross policies had. And what about the co-insurance out-of-pocket requirement which is $10,000 (in addition to the deductible) on our current Golden Rule policy and was $5,000 (in addition to the deductible) on our previous Blue Cross policy? How much more do we have to pay out of pocket as co-insurance on the new ObamaCare Humana policy, after we meet the $6,300 deductible? $0. Zero. Nada. Nothing. Once the $6,300 deductible is met, Humana pays everything at a rate of 100%.
And if I had been covered by this ObamaCare Humana policy back in 2009 when I had the appendix surgery and ended up owing $14,166.81 out of my pocket? How much would I have owed in total if I had been covered by the ObamaCare Humana plan? $6,300. Period.
And what would be the cost for the $4,038 colonoscopy under the ObamaCare Humana policy? $0. Zero. Nada, Nothing. Preventive care is covered for free because catching a problem in the early stages, saves the entire system from unnecessary protracted costs which result from letting a condition progress unchecked.
COMPARING THE HUMANA BRONZE PLAN TO THE HUMANA SILVER PLAN
There were other plans available. The silver plan would have been approximately $100 per month higher and although the out-of-pocket maximum is almost the same as the bronze plan, it does offer office visits and prescription coverage, not subject to the deductible. This is similar to our current Golden Rule plan and for our situation, the prescription coverage and office visit coverage isn’t worth much. Most of my prescriptions are on the $11.99 list for a 90-day supply at CVS and my Hydrochlorothiazide is only $9.95 for a 90-day supply at Publix. And my Lisinopril is free at Publix – it’s a public service they offer to everyone. So a prescription plan which would allow me to get a 30-day supply of a generic drug for $10 ($20 for name brand) would result in me paying more for prescriptions than I currently pay outside of insurance.
Whether or not getting office visits for a co-pay of $25 is worth an extra $100 per month, depends on how often a person goes to a doctor. Assuming an average office visit of $125, a person would need to go to a doctor several times a year to come out ahead, because with only one visit to a doctor in a month, he would just break even for that month. With no visits in a month, he would lose money for that month.
One thing many people don’t realize about plans which offer office visits for a co-pay outside of the deductible, is the insurance only covers the doctor's fee for walking in the door. For example, my current plan covers office visits for a co-pay of $35, outside the deductible (meaning I don't have to have already met my $10,000 deductible in order to get the office visit for only $35). But if I go to my primary doctor and he draws blood for a lipid panel or gives me a steroid injection for poison ivy, I have to fully pay for those services out of my pocket, if my $10,000 deductible has not already been met. Likewise when I go to a dermatologist, the office visit is $35, but if she uses the torch to freeze a pre-cancer spot off my arm, I have to fully pay for that service.
1.) I have been asked about caps. Neither my previous Blue Cross policy or my current Golden Rule policy has a lifetime maximum benefit limit or an annual maximum benefit limit.
2.) While looking for the cap provisions in my original policy booklet, I found a rider from Golden Rule indicating that any terms of the policy in conflict with the new ACA requirements, would be overridden by the ACA requirements, presumably beginning in 2014, and that the premiums would be adjusted accordingly. So for 2014, the chart above would need to reflect that the colonoscopy would be free under the Golden Rule policy also. However, the chart is accurate as it now stands because the premium listed for Golden Rule reflects the current policy terms of no free preventative care. (The 10% rate increase projected for 2014 on the chart only takes into consideration a standard annual increase, not a more significant increase to cover more generous benefits.) For an accurate comparison, we would need to know the actual rate increase by Golden Rule for 2014, before changing the chart to show that the preventative care would also be free under the Golden Rule policy.
HOW THE TAX SUBSIDIES WORK
People who earn between 138% and 400% of the poverty level are eligible for tax credits to help them either buy a policy for the first time, or replace a policy which they have lost. This range works out to approximately $16,000 to $46,000 for a single person; $21,000 to $62,000 for a couple; $27,000 to $78,000 for a family of three; and, $32,000 to $94,000 for a family of four.
The tax subsidies are not government handouts. Essentially, the government is taking part of the income taxes which a person pays to the federal government and refunding that money back to the taxpayer so she can use it to help on her premiums. Logistically, this is how it works: a person goes to the ObamaCare website, creates an account and completes an application. If she falls into the income parameters listed above, she enters her projected income for the year 2014. The ObamaCare site contacts the IRS site and verifies her 2012 income. Based on the amount of federal income taxes she paid in 2012, the IRS projects how much she will pay in taxes in 2014 on her projected 2014 income. The ObamaCare site then takes a portion of that amount and divides it by 12 and informs the applicant how much of her tax money she can use for insurance premiums on a monthly basis. (The less she makes, the more of her taxes the government will allow her to use for the premiums.)
The person then selects a policy. The government will go ahead and advance the monthly amount directly to the insurance company, so the person will only have to pay the balance to the insurance company each month. The government will reimburse itself out of the federal income tax which is withheld from the person's paychecks.
For example, a single person earning $7.50 per hour working 40 hours per week for 52 weeks per year would have an annual income of $15,600. After going through the process on the exchange, the ObamaCare website will tell her that she has a tax subsidy of $265 to put towards the price of a plan. Assuming her to be a nonsmoker in her early 40’s, the price (without subsidies) for the bronze Humana plan (like the one we purchased) is $265 per month for one individual. The silver plan will cost $295 and the gold plan is $335. So using her $265 subsidy, she can get the bronze policy for "free" (the government will send $265 of her taxes each month to Humana, which will fully pay for the bronze policy); or, she can get the silver policy by sending the difference of $30 to Humana each month, to go with the $265 of her taxes that the government is sending to Humana; or, she can get the gold policy by sending the difference of $70 per month to Humana.
A nonsmoking couple of the same ages as my wife and me (she's 42 and I'm 51), with a combined family income of $40,000, can get the exact same policy (for which we will be paying $529 per month without subsidies) for only $62 per month, after the subsidy is applied.
Healthcare.gov requires a person to first create an account and complete an application before being able to check out the subsidies. However, there are two private sites which will closely approximate subsidies, HealthSherpa and the Kaiser Subsidy Calculator.