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Rise in health care costs for some tied to more benefits

Published: Thursday, Nov. 7, 2013 10:42 a.m. CDT

MILWAUKEE (MCT) — If you like your health plan, President Barack Obama said repeatedly and emphatically, you will be able to keep it.

It was a perfect sound bite as he extolled the benefits of health care reform, and it held true for most people — but not everyone.

A small percentage of Americans — particularly those who get health insurance on their own, rather than through their employer — are now learning that the Affordable Care Act requires them to buy new health plans that provide additional benefits at a higher cost.

The situation was well-known all along, at least in the insurance industry and in health policy circles.

“It was an inevitable shoe that was going to drop,” said Tom Miller, a resident fellow at the American Enterprise Institute, a policy research organization. “That doesn’t mean that it was widely understood or perceived.

The Affordable Care Act, commonly known as “Obamacare,” imposes an array of new regulations on the market for health insurance sold directly to individuals and families.

“The entire individual insurance market is being changed,” said William Custer, an associate professor and director of the Center for Health Services Research at Georgia State University.

Under the new requirements:

—Health plans must provide a package of essential benefits, including preventive care, maternity care and mental health coverage.

—Out-of-pocket expenses, such as deductibles and co-pays, are capped.

—Health insurers are barred from charging women higher rates than men.

—Annual and lifetime caps on benefits are eliminated.

“One of the purposes of the Affordable Care Act was to try to improve the quality of insurance that people buy,” said Henry Aaron, a senior fellow at the Brookings Institution.

Estimates on the size of the individual market nationally vary widely. A common estimate is 15 million, but the U.S. Census Bureau puts it at 19.4 million people.

An estimated 156 million people, in contrast, get health insurance through an employer. For them, the only changes they will notice next year are those made by their employer.

Anthem Blue Cross and Blue Shield and Humana, two of the biggest health insurers in the Milwaukee market, did not respond to requests for information on how many of their customers’ plans were being modified or canceled.

Some people who buy health insurance on their own could come out ahead.

For example, they may have health plans that would not meet the new requirements, such as plans with very high deductibles or limited benefits, because that is all they can afford. Under the new rules, they may be eligible for subsidies, in the form of tax credits, that will lower the cost of their plan, and their coverage will be better.

The subsidies drop sharply, though, for people with household incomes above 250 percent of the federal poverty threshold, or $28,725 for one person and $58,575 for a family of four.

And without question, some people will be forced to buy more coverage, at a higher cost, than they now have or want. For instance, people who are healthy may have health plans with very high deductibles or limited benefits because they only want to insure against catastrophic medical expenses.

“There will be people who don’t want to spend as much on coverage as the administration would like,” said Miller of the American Enterprise Institute.

The higher premiums stem partly from the law’s barring health insurers from denying coverage to people with pre-existing health problems or charging them higher rates.

Those practices produced “a situation in which those most in need of health care face the highest premiums — premiums frequently so high that they are virtually unaffordable,” Aaron said.

The new rules will produce winners and losers.

In general, people who are young and healthy will subsidize people who are older and sicker.

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MCT Information Services

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