A new report from the Commonwealth Fund shows more than half of insurance plans for individuals won’t survive Obamacare. The research was published in Health Affairs and conducted by researchers at the University of Chicago and Towers Watson.
The fine folks at Stateline report:
The study analyzed individual and group insurance data from 2010 for more than 2,000 public and private employers in five states: California, Pennsylvania, Florida, Utah and Michigan. These states make up about 31 percent of enrollment in the U.S. insurance market.
Under the Affordable Care Act, health plans sold through the new state exchanges that will be operational by 2014 must cover at least 60 percent of health costs. The average group plan in 2010 covered 83 percent of costs, but a majority of the individual plans were under 60 percent.
The differences in average annual out-of-pocket expenses were striking: For a family with group coverage, the average out-of-pocket expenses were about $1,765 per year (not including premiums), compared with $4,127 per year for people with individual coverage. A family in the top 1 percent of medical spenders with an individual plan could end up paying more than $27,000 per year in out-of-pocket medical expenses.
A graphic of the findings is available here. Once you’ve read this study, read this one in the Los Angeles Times, which is on the surface unconnected, but on closer inspection shows us what’s really going on:
A Long Beach hospital charged Jo Ann Snyder $6,707 for a CT scan of her abdomen and pelvis after colon surgery. But because she had health insurance with Blue Shield of California, her share was much less: $2,336.
Then Snyder tripped across one of the little-known secrets of healthcare: If she hadn’t used her insurance, her bill would have been even lower, just $1,054.
“I couldn’t believe it,” said Snyder, a 57-year-old hair salon manager. “I was really upset that I got charged so much and Blue Shield allowed that. You expect them to work harder for you and negotiate a better deal.”
Unknown to most consumers, many hospitals and physicians offer steep discounts for cash-paying patients regardless of income. But there’s a catch: Typically you can get the lowest price only if you don’t use your health insurance.
That disparity in pricing is coming under fire from people like Snyder, who say it’s unfair for patients who pay hefty insurance premiums and deductibles to be penalized with higher rates for treatment.
The difference in price can be stunning. Los Alamitos Medical Center, for instance, lists a CT scan of the abdomen on a state Web site for $4,423. Blue Shield says its negotiated rate at the hospital is about $2,400. When the Times called for a cash price, the hospital said it was $250.
The contrast here should be clear: Where consumer-focused reformers want individuals to have more power and authority over their health care spending, and particularly to be more aware of price signals within the health care space, the current administration’s policy is designed to move away from individual-based policies and toward massive taxpayer subsidized exchanges.
