Gerri Willis of Fox Business Answers Your Questions on Obamacare
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Good morning all! I was approached last week by Fox Business to do a brief Q & A related to Obamacare and changes we’ll see coming in light of it. I was, of course, more than happy to provide a platform to answer a few of the questions as I believe it brings some very important changes to the health care landscape as we know it. Personally speaking, we’ve become more aware of the costs of health care with our needing to purchase coverage after starting our own business last year.
That said, I was very honored to be able to highlight the expertise of Gerri Willis from Fox Business to answer some of the questions submitted by Frugal Rules readers. If you have the time this week, I would recommend her special on Obamacare running this week as a way to try and make sense of the changes that will be coming. Due to time constraints, comments are not open on this special post. Without any further ado, let’s get on to the questions.
The Willis Report will host a week-long special entitled ‘A User’s Guide to Obamacare’ beginning Monday, September 30th at 6PM/ET. Anchor Gerri Willis will break down Obamacare for the everyday consumer and provide viewers with a closer look at what to expect from your employer, how much it is going to cost, and how this new healthcare law will affect each individual and family. Gerri took some time to answer some questions for us below.
What is the most important thing we need to know about Obamacare?
Watch out for glitches and errors. Up to the last minute, exchange operators were struggling with software which sometimes failed to price the insurance correctly. Some exchanges were pricing policies incorrectly while others were calculating subsidies wrong. In other words, it is likely to be tough going especially in the initial weeks and possibly months, as the government attempts a near impossible technological feat of linking the major bureaucracies of Medicare, Medicaid and CHIPS with state exchanges. Understand the entire system is a work in progress that may or may not be ready for primetime when the starting gate opens Tuesday.
Generally speaking, what are the costs for current plans vs. the various new plans? What will the cost disparity be state to state?
Exchanges will be different state to state. Different insurers are participating in each market. While Washington’s Health and Human Services Department says the average number of plans per state is 53, averages mislead. The number of plans available ranges from just six to 169. What’s more, don’t expect to see the big brand name insurers you’ve come to know in these new marketplaces. They are more likely to be dominated by smaller, lesser known rivals. Costs will vary, too. While the White House says the average premium consumers will pay is $328 a month or $3,936 a year, that is unlikely to be what you pay. Variation in prices is big and depends on where you live, how old you are and whether you receive subsidies from the government. In Alburquerque, NM, for example a 27 year-old non-smoking man would pay $126 a month for a bronze plan, but in Little Rock, Ark., the cost for the same type policy would be $190 a month. If you are already in the individual market, you may be better off staying put.
How will my rates be impacted if I have pre-existing conditions?
Having a pre-existing condition cannot be a prerequesite for coverage. Insurers have to accept you and they are not supposed to charge you more than healthy people. It is this policy that was the primary allure of Obamacare to many. However, a government plan to care for people with pre-existing conditions in the meantime, the Pre-existing Condition Insurance Program, has been a failure and bodes ill for Obamacare generally. That’s because this program which funded the sickest of Americans is running out of money. In 2010, the Obama administration estimated that 375,000 people would enroll in PCIP, but just 107,139 did. Even so, claims were 2.5 times greater than anticipated. Its $5 billion budget shot, the government has shut down enrollment.
In your view, how will Obamacare impact healthcare costs for younger Americans?
By nearly every estimate, costs for younger Americans will rise under Obamacare. Let’s face it, even working young people sometimes opted not to enroll in their companies’ plans because of the high cost. Or, many chose high deductible plans which were cheap but barebones in terms of coverage. But Obamacare policies will be more expensive. According to an analysis by the Manhattan Institute, Obamacare will increase underlying insurance rates for younger men by an average of 97 to 99 percent, and for younger women by an average of 55 to 62 percent. Worst off is North Carolina, which will see individual-market rates triple for women, and quadruple for men
How will Obamacare be able to reduce the amount of healthcare spending? What is in place to try and mitigate spending?
The underlying bet of Obamacare is that higher incoming premiums from younger people getting insurance in these government exchanges will help pay for older, sicker people. It’s still unclear whether the bet will pay off. Younger people could opt to simply pay the penalty for failing to comply with Obamacare — which will be under $100 in the first year — rather than buy coverage. So far, the promise of Obamacare has increased prices for people in company-sponsored plans. Premiums have been rising as the health industry prepares for the big changes that Obamacare brings.
Photo courtesy of: Fox Business
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