Skip to main content

Obamacare's Silver Surprise

There was some surprisingly good news this month about the cost of insurance under Obamacare.  It will be cheaper than expected.  But it remains to be seen – will cheaper insurance satisfy Obamacare doubters on either the left or the right?

I doubt it, but first let’s take a look at the details.

A few months ago, the Wall Street Journal warned of health insurance sticker shock when the Obamacare insurance exchanges open for business in another ten weeks. 

There could be an up-to-50 percent increase in health insurance premiums, the Journal warned.


Based on data from the first eleven states reporting actual premium numbers, ASPE now says that insurance costs for Obamacare “silver” plans for individuals will be 18 percent lower than originally projected by CBO.

Premiums for the least expensive plans were averaging around $321 per month – before income-based tax credits were subtracted from those costs.

And in five states plus the District of Columbia reporting small group plan numbers, insurance premiums for the all-important “second lowest cost” silver level plans will range from 6 percent to 36 percent less than they would have been if Obamacare were not the law of the land.

What makes a plan a “silver” plan?

Despite what you might assume from the headlines, plan categories are not based on insurance premiums.  They are based on the percentage of the total cost of health care that the plan will pay for everyone in the plan, versus what the plan’s policyholders will pay out-of-pocket.

There are four categories of plans – bronze, silver, gold, and platinum.  All plans will provide coverage for the same group of essential benefits.  But bronze plans will cover 60 percent of the cost of these benefits, silver plans will cover 70 percent, gold plans will cover 80 percent, and platinum plans will cover 90 percent.  Policyholders will pay the rest.

This does not mean that if you have a silver plan, at the end of the year you will have paid 30 percent of your total health care costs and your insurer will have paid 70 percent. 

Those are just the averages, and everyone’s individual experience will vary from the average at least somewhat.

There are two reasons that the cost of the silver plans will get so much attention.

The first is that, along with gold plans, they will be the most widely-available plans.  The second is that the tax subsidies built into Obamacare are based on the projected cost of the second-lowest-cost silver plan.

But not all silver plans will be alike.

One silver plan, for example, may charge a higher premium than another silver plan.  But that plan might cover 75 percent of hospital costs, while the other pays only 70 percent.

Other silver plans might be less expensive than some bronze plans – particularly if they provide less “first dollar” coverage for care – or more expensive than some bold plans.

But while the premium costs of the silver plans may dominate the news and public policy analysis in the coming months, I don’t think that how good you feel about Obamacare is ultimately going to be based on the cost of a silver plan. 

Here’s why.

Deductibles, co-pays, and uncovered health expenses also factor into how satisfied we are with our insurance.

If you believe that being expected to absorb, on average, 30 percent of your health care cost burden when you already have insurance is too big a price to pay, then you will not be happy with a silver plan.  You will either hope you or your employer can afford to pay extra for a gold or platinum plan if one is available, or you will complain as much as you do today about your lousy coverage.

And you will dream again of government-sponsored health care for all.

Conversely, if you think that Obamacare goes too far in requiring insurers to cover at least 60 percent of the health care costs of the people they insure, then you may decline to participate in the system at all and pay the small fine.


Paul Gionfriddo via email: gionfriddopaul@gmail.com.  Twitter: @pgionfriddo.  Facebook: www.facebook.com/paul.gionfriddo.  LinkedIn:  www.linkedin.com/in/paulgionfriddo/

Comments

Popular posts from this blog

The Missing Mental Health Element in the Ferguson Story

By now, everyone has heard the news from Ferguson, Missouri.  An unarmed 18 year old named Michael Brown was shot and killed by a police officer.  Michael Brown was black. Some of the events surrounding the shooting are in dispute.  But what isn’t in dispute is that for the past two weeks, a community has been torn apart by race – a community that until recently was best known for its proximity to St. Louis and its designation as a Playful City, USA . Picture credit: Health Affairs Media reports since the August 9 th shooting have focused almost entirely on one angle – race relations.  We’ve heard about unrest in the city, the National Guard, police in riot gear, and danger in the streets.  We’ve heard about the District Attorney’s ties to law enforcement, and concerns that a too-white Grand Jury may be racially motivated not to indict the police officer involved in the deadly shooting. But the media have been strangely silent about a different angle – this comm

Celebrating Larissa Gionfriddo Podermanski Five Years Later

My daughter Larissa died of Metastatic Breast Cancer five years ago, in May of 2018.  She had only two wishes at the end. One was that we plant a tree for her. We did - in a Middletown CT city park - and it has grown straight and tall. The other was that she not be forgotten. Larissa's family and friends took pains to reassure that she could not be forgotten. If you were fortunate enough to know Larissa, you would know why. Still, I wondered how I might celebrate her a little more now that some years have passed, while sharing some of her memorable spirit with others (some who knew her and others who did not), while reminding us why she was such an extraordinary woman. In early 2017, Larissa started a blog called Metastatically Speaking, through which she chronicled her life with MBC. Unfortunately - and through no one's fault - her blog disappeared some time after her death. So, if you search for it now, you can't find it.  However, I was fortunate enough to see and retain

Judgment Day

Ironic. I was not as nervous as you would think on April 23 rd .  Martin, my mother and I drove up to Dana Farber.  All weekend I wanted plan for Poland, Barbados and Florida, as we brainstormed ideas of what could be attainable or possible. I started to realize I looked pregnant… but that couldn’t be. When the appointment began I noticed it felt like a routine visit. Everything went smoothly, but what were we focusing on? It was this: if I did nothing the outlook for me was living three weeks to a few months longer. So, is that my only option, I wanted to know?   No, I was told we can try a low dose chemo and see how it works.   Since it is low dose, they said, it won’t do much harm, but we truly don’t know how it will work. It’s not a treatment we have used a lot at low dose and technically you are in liver failure, leaving you with limited options.   Of course, the goal would still be to get you to be stable; however, this is a blind treatment. We don’t know if this approach w