In 2010, the Patient Protection and Affordable Care Act (or Obamacare) was passed by the Democrat controlled Congress and transformed the US Insurance and Healthcare industries from a free market system with less government control to one of much tighter government control.  Many of its supporters hailed the far sweeping legislation as the next step towards a universal healthcare system (read Single Payer) that would allow all Americans to get the health care they need.

The main tenants of the law are:

• Increase individual responsibility of paying for health care costs
• Prevent insurance companies from denying coverage for pre-existing conditions
• Provide health care screenings for women at no cost
• Remove lifetime caps for coverage
• Provide marketplace exchanges that will allow individuals who are not covered by their employer to shop for coverage
• Provide subsidies to individuals for low income individuals so they can get coverage

Enforcement provisions include:

• Individual Mandate:  You must have coverage or you pay a tax penalty
• Employers with 50 or more employees must provide coverage for workers who work more than 30 hours a week, or face a fines per employee not covered
• Employer plans must offer comparable policies to minimal plans on the exchanges.
• Insurance companies must pay eighty percent of premiums towards coverage.

The selling points:

• If you like your plan, you can keep it (period)
• The average family of four will save $2,500 a year in premiums
• Low income families can get subsidies to offset the costs of the plans
• Health care costs to consumers will be reduced.
• Catastrophic medical care would no longer send people to bankruptcy.

The proponents of the measure, in addition to the selling points, claim that the goal is to get uninsured individuals health care coverage.  Their citing of forty million Americans not having insurance coverage was a big factor in this.  The problem is, the government would be on the hook for health care subsidies and increase Medicare enrollees of those who could not afford coverage, where they most likely would end up.

The other part was that no longer could insurance companies deny you coverage while in the hospital.  Except, this is not exactly true.  They can’t deny you coverage, unless the insurance company deems the procedures or other care is outside medical necessity.  There is a lot of grey area about that, but usually, its in rare cases where people just don’t understand what is covered.

Where did it go wrong?

Besides the fact that a number of selling points were not exactly accurate (such as the keep your plan, the savings per family, and lower health care costs), as well as the President having to back track on original promises, let’s not forget that he has also delayed (without statutory authority) some of the employer mandates and provisions until after the 2016 elections.

The original CBO report suggested that the ACA would cost approximately $900 billion over 10 years to 2019.  When the President then chose to delay some aspects of the health care law, including the employer mandate, that slowed down the number of enrollees and subsequent reports of the CBO showed that the period in question would actually cost less to the government.

Strategically, the President gave insurers time to come up with plans that would sell in the market places.  Although the President delayed the employer mandate and penalties, most companies were left with few options but to adopt new company plans that met the requirements of the ACA due to the insurance industry looking to make the transformation as quickly as possible.  In short, a whole bunch of people who had good employer provided plans ended up losing them to more ACA compliant plans.  And many more who bought individual plans were thrown into the market place.

Supporters will tell you that moving to the new ACA plans benefits the individual because the original plans were junk in comparison.  And if the premiums went up, it was only because you are getting things that you would need anyway.  For the purposes of that argument, that is just nonsense.  Because ACA regulatory requirements forced insurance companies to offer free or low cost services for women’s health, most plans now included those benefits, whether you are a woman or not.  For single men, this is something your premium will reflect.  In essence, your cost is higher to help cover services for others.

With so many individual plans being cancelled, the onus was on the new Healthcare.gov exchange to be ready.  Unless you were living under a rock, it was hard not to see that the exchanges were a textbook example of what happens when the Government chooses to do something better suited to the private market.  Basically, it was a disaster.

Overall, the whole transformation has been nothing short of teetering on failure.  It took far more money and time than it should have and what has been delivered has been fraught with problems.  That’s not to say that some people have benefited from the new law.  I doubt seriously, though, the number of good stories outnumber the stories of dissatisfied Americans who have thrown their hands up in disbelief.  Personally speaking, I know far more people who hate it than actually like it.  The ones who like it, though, haven’t had the chance to use it yet, and I’m about to explain why.

Nice premium, but what kind of deductible is that??

From 2010 to the present, I have been on my company’s insurance plan.  The evolution of this plan to the new law has not been what most people think.

Note:  The costs stated here are for In-Network coverage. Out of Network is significantly higher, but for the purposes of this blog entry, I only used In-Network doctors and facilities.

In 2010 – 2012, I had a plan that cost me exactly $1,664 a year for the premium.  The company paid a large percentage of the total premium, which is not reflected in the stated cost. I got the following benefits:

• PPO preferred, no copay visits, no deductible, catastrophic coverage at 100% paid.
• Drug plan that had $5 copay, plus 80% payment on generics, 50% on brand name
• Well visits were not covered.  I had no pre-existing conditions.  Had to have referrals before seeing a specialist. $1 million lifetime cap.

My total out of pocket costs for 2010 was just the premium.  For 2011, it was an additional $175 for two health checkups.  In 2012, I paid $224 for visits my wife took, but she wasn’t on the plan at the time.  That would change in 2013.

In 2013, the company went with a new ACA compliant plan.  My premium went from $64 a pay check to $116, which was the middle tier plan.  The cheapest was $94, the most expensive was $178 per paycheck.  For the new plan, you had to choose a deductible of $5,400/$2,700/$1,000 lowest to highest paid premium.  The out of pocket costs however, were maxed at $12,200/$6,600/$3,500, again lowest to highest paid premium. The insurance plan paid benefits 80/20 once you reached your deductible.  Yearly maxed out of pocket means that’s the most you’ll ever pay for that year, the insurance company has to pay everything above that.

Included in the new plan, were of course, women’s wellness visits and exams, maternity costs.  The maternity part we didn’t need since my wife and I were not planning on having children.  In a previous plans, that would be a rider.  Now it’s not.

So for the year, my new costs are:

• Premium:  $3,016  – 80% increase
• Deductible: $2,700 – which means I’m paying that amount before benefits kick in.
• The maximum out of pocket caps at $6,600.

This is before I see any doctors.  Here is what my plan covered:

• PPO preferred, no copay visits, coverage at 80/20 after deductible, max out of pocket $6,600
• Drug plan, 80% of generics, all counts towards deductible, then 80/20 after that no max.

In short, my out of pocket expenses went from $1,664 a year, to $6,600 a year.  And, of course, my wife needed to go to the doctor more often now for various things.  I also went a few times.  Let’s just say that I not only used up my deductible each year, but in 2014, I ended up reaching the max out of pocket costs due to gall bladder removal surgery that the hospital billed for $44,000 to the insurance company.  After two months of the hospital and insurance company going back and forth on the claim, my portion was only $2,008 after hitting the max out of pocket cap, but when you think about the overall cost, I went from roughly $2,000 a year to $9,700, all out of my pocket, which is roughly a four fold increase in expenses, a major hit to the discretionary spending.

Now, I didn’t have any major issues from 2010-2012 and who knows what might have happened.  At least with the ACA, you kind of know, although most horror stories you might have heard in the past really dealt with people not understanding the coverage you pay for.  When my kids were growing up, my average cost of premiums and deductibles/co-pays averaged a total of around $3,000 a year, and included maternity care a couple of those years.   Now, I’m paying quite a bit more.  Even if you factored in the $2,500 “magical cost savings” in the talking points, I’m still paying over $5,000 more a year if I were to meet the cap.

In 2015, the company is now on a new third party benefits provider and the choices for insurance coverage are much greater.  It’s also much more expensive for new coverage with my current provider as they start to factor in their costs and new enrollees.  So I had to choose another provider and they at least, have the same coverage, yet the premium is $20 cheaper a pay period and I’m with a larger insurance carrier now.  Even so, a new year means a new deductible and a new cap to reach, and of course, new budget planning.  We’ve had to downsize quite a bit and I put off buying a car again because we now have to factor in health care costs.  The car, at least, is paid for, however, if there are repairs or other problems, this will squeeze me even more.

What does it all mean now?

The promise of paying less for health care, in my experience, is exactly the opposite of what was promised and I’m not alone.  Most people I know, all share similar stories.  It may be some time before the full effects of what was promised will have been lost to government accounting tricks and political deception, but for the working family, making up the lost discretionary funds for health care is going to be quite problematic, and most likely will show at the polls again in 2016.

For some who were able to get insurance for the first time, I see a lot of them are now wondering why those deductibles are so high.  Recent media stories report that some who signed up may have been given too high of a subsidy and will have to pay that back.  What a surprise that is going to be during tax time.  Let’s also not forget how much of burden the government is now on the hook for subsidies.  And wait until all the employer mandates take effect.  We’ll see just how much the opponents were right in the next few years. I’m almost betting on a large number of “I told you so!” moments.