ObamaCare’s New Normal: The Healthy Self-Employed Now Pay For Their Sick Neighbors

Finally the national discussion is beginning to address the big three-and-a-half year old elephant in the room regarding ObamaCare: many (most?) people with individual health care/insurance plans will lose these plans in 2014.

Note, for clarity: I’m not saying that we’ll lose access to coverage. We’ll simply lose the plans we have now and be forced to sign up for new plans.

This goes quite contrary to the talking point Mr. Obama liked to repeat, saying if we liked our health plan, we could keep our health plan. That’s only true if you’ve had your health plan since before March 23, 2010 (when he signed ObamaCare into law) and if you haven’t made any changes to your plan since then.

But we all know all this now. And knowledge is a good thing, though it’s likely far too late to do anything about it for 2014. What’s important is that we all understand why this must be so.

For Every Action There Must Be an Equal and Opposite Reaction

Perhaps the most popular bullet point of ObamaCare is the fact that it will allow people with pre-existing conditions to get coverage.

For the record, that’s always been the case for people participating in group insurance, with their employer or other organization. For as long as I’ve been buying insurance (20+ years), group plans have had several mandates: they must cover everyone (even if that means raising the group’s premiums to do so), they must cover maternity care, and there are minimum levels of coverage they must carry. These mandates were presumably put into place to protect unsuspecting employees from signing on with a company only to find out the company’s health plan didn’t carry something (or someone) they assumed would be covered. (I say shame on that employee for not researching before accepting the job offer, but … I digress).

Prior to ObamaCare there were also such things as true “individual” health insurance plans: you’d apply and then go through an underwriting process where they blood tested you, drug tested you, and asked you a pant-load of questions after which they would come up with a rating. That rating would range from “preferred plus” with very low rates for people with no health issues at all to “no freakin’ way” with very high rates (or a “no, thank you”) for folks who were sick.

ObamaCare does away with this latter portion. No, I don’t mean it does away with the latter portion of the last paragraph: it does away with the whole last paragraph. There are no more individual plans, no more underwriting, no more preferred rates for healthy people. In order to cover people with pre-existing conditions, we all will be placed into groups organized by locale: the healthy people will be put into groups with the sick people β€” and our rates are averaged out.

Individual plans were typically purchased by two groups of people: the self-employed and the unemployed (or retired). But since we all have to be in groups now it means that starting in 2014 healthy people will be subsidizing their sick neighbors’ healthcare. If you, as a family, make more than $94k/year on paper you also don’t qualify for any subsidies/discounts on your insurance, either. This paints a huge target on the self-employed as the source for funding this new provision of our national healthcare.

My family’s insurance currently costs us $480 per month. We were (and still are, thankfully) quite healthy when we went through the underwriting process. Starting in August, 2014 (our plan’s anniversary and now termination date) we will likely have to sign up for a plan that costs almost $1,000 per month. After all, I have to pay for my sick neighbors’ health care now. It’s how ObamaCare works.

You’re welcome.


19 Responses to “ObamaCare’s New Normal: The Healthy Self-Employed Now Pay For Their Sick Neighbors”

  1. Laurie A. Duncan Says:

    Normally I just ignore stuff like this because I’m not all that interested in trying to convince people that their thinking or opinions are wrong or misguided or that my opinion or way of thinking is somehow better or more informed than theirs. First off, it’s usually not that black and white, and secondly, I’m not likely to change anyone’s mind on this subject or or any other, and that’s ok. It’s how the world works.

    But in this case, I’m going to respond because I like and respect you, Dave, even though it’s been a few years since we’ve partied and geeked out together at Macworld πŸ™‚ And I think you make some very valid points. You’re rational, at least, which is more than I can say for most of the folks who rant on this topic.

    I am a sole proprietor – one of those self-employed people that you say has a target on their back and I am thrilled to be getting rid of my very expensive premium that still has high out-of-pocket costs and trading it in for a lower premium and significantly lower out-of-pocket costs. No one else pays for or contributes to my health insurance. I’ve been paying for my own insurance for many years and it’s expensive as hell and in recent years, the coverage has gotten worse instead of better.

    But here are some numbers… I’m 42 years old, single (Ron and I have been together for 15 years, but we’re not legally married), and overall quite healthy. I pay $800/month in premiums for a pretty average plan (from Oxford) that is missing a lot of the things I’d like to have covered (or more covered), but the next step up would’ve cost almost twice that, so I decided against it. I’ve been fortunate to be able to cover my out of pocket expenses because I make a decent living so when I have a prescription that costs a few hundred dollars and my insurance company has decided that they only want to pay $20 of that (or nothing at all, because some bureaucrat thinks I should take a different drug then what my Dr. prescribed) or I need to have some tests done that the aforementioned bureaucrat thinks are unnecessary, I can cover those expenses myself, without aid from anyone. No subsidy, no handout… just my own hard-earned cash.

    As of Jan 1st, my premiums are going to be almost HALF of what they are today, and my benefits will be better than what I have today. I’ll still be seeing the same doctors and specialists I’ve been seeing, but I’ll be spending less to get more comprehensive care. That’s a big win for me. And I’ll still be footing the bill myself – no subsidy, no hand out. I’m springing for a Platinum plan, which will run me $520/month. I’d have an even lower premium if I wanted to just go Gold (around $400) or Silver (closer to $300). I’ve done the math and looked over several years of medical expenses including premiums and deductibles and co-pays and other out of pocket costs and I will be MUCH better off with the new plans available to me than I have been for quite a few years. I’m healthy, sure, but things happen. Last summer I suffered a very serious injury when some volleyball players in the park decided that practicing on the lawn was ok while they waited for a court to be available. One of them dove for the ball and while trying to jump over us (we were sitting on a blanket enjoying the sun, playing backgammon), he fell short and landed on my lower leg and did quite a bit of damage. Months of treatment was expensive and most of it came out of my own pocket.

    There’s a history of breast cancer in my family. My grandmother had it. My mother didn’t, but she died in her 50’s of pancreatic cancer, so who knows if she might’ve gotten it, had she lived long enough. It would be smart for me to have yearly mammograms now that I’m over 40 + an MRI, because I’m high-risk and have dense tissue that makes a regular mammogram much less effective in detecting cancer early on. But my insurance company didn’t think paying for a yearly breast MRI on top of the mammogram was good business for them. And since I really didn’t want to eat the cost myself, I’ve skipped them. Now I won’t have to.

    24 years ago I wasn’t so lucky. I had gallstones the size of golf balls and needed expensive emergency surgery to have my gall bladder removed. I spent 2 weeks in Cabrini Hospital recovering from the surgery and the pneumonia I developed post-surgery. I have an 8-inch scar running from my rib cage to my hip to show for it. Since I was 18yo and not in college, I was no longer covered under my mother’s health insurance and I didn’t yet qualify for health insurance through my union at the time (Actor’s Equity, I was a stage manager in those days).

    The bills started pouring in shortly after I got home from the hospital. I paid some of them in dribs and drabs, as I could, when I could spare the money after my rent and other bills were paid. But the bills kept coming and then the collection agencies started calling – at all hours of the day and night. I stopped answering the phone and only picked up after screening. My answering machine (remember those?) became my best friend. It was years before those calls and letters stopped coming and probably only because I had moved so many times in my early 20’s that they lost track of me, since the technology to track down deadbeats wasn’t nearly as sophisticated back in those days. My credit was destroyed and I even got turned down for a job once because of it (I got a MUCH better job instead, so no harm done, except to my pride!).

    I was 25 years old before I was able to start getting my life – the financial part of anyway – back on track, despite the fact that I was pretty highly paid in those interim years. All because I had the nerve to get sick and need surgery and a long hospital stay when I was 18 and uninsured.

    You have your politics and I have mine. But this isn’t about politics for me. This is personal. Very personal. And personally, I’m going to come out in the clear with the Affordable Care Act. For me it’s doing exactly what it’s supposed to do. It’s giving me better coverage for less out-of-pocket. And it’s doing the same for many people I know.

    I’d be curious to know how your numbers really compare? Not just premiums, but deductibles and maximum out of pocket costs. Especially with kids, who have a tendency to pick up all sorts of nasty germs and bring them home to the rest of the family. Granted, you’re not in NY anymore, but still πŸ™‚ Maybe you’re right and you really are getting a bit screwed by this, and if so, I really am sorry. But I truly believe that in the not-too-distant future, you’re going to find that you’re actually ahead of the game, financially as well as from a health perspective. And 10, 20, 30 years down the line? You’ll be thankful that the foundation for good health that we’re laying the groundwork for now. Just like you’ll be thankful (as will your kids) for the Social Security payments and Medicare you’ll one day take advantage of. You don’t have to publish your tax returns, but I’m curious how it is that your monthly premiums are going up so much without any subsidy available to you?

    It’s not a perfect system and it’s not a perfect plan. Hell, it’s far from a perfect country. So far from it. But what we’re leaving behind is much much worse. I know you’re smart enough to realize that it’s not all just about dollars and cents. I know you’re capable of seeing the bigger picture and longer-term implications. It’s a start. It’s better than the current status quo. There will be growing pains, but we’ll all be better off for it in the long run. I really do believe that. You might not, but I think one day you’ll come around.

  2. Toxic Says:

    Just a quick comment, what you described above is how insurance works. I haven’t had an auto accident in 25 years, yet I am paying for those who do. I feel your pain, but if you feel that you are just now paying for their care, you have been paying for it for years. Last I heard it was $49 billion a year in unpaid medical costs. The question I have is are we going to get lower taxes to compensate the fact we have shifted where the money is coming from? Probably not. Keep up the good posts and keep us thinking. Cheers.

  3. Dave Hamilton Says:

    Laurie, thanks for this. I’m actually glad to hear that someone like you is seeing a reduction in premiums, and a significant one at that. To answer your question, we maintain what I consider true insurance for our family: high deductible, low premiums, and it protects us from bankruptcy.

    Like you, I do the regressions every year and, for us, it always makes sense to do it this way. I posted details about this last month http://www.davethenerd.com/blog/davehamilton/category/2013/9/30/you-dont-have-health-insurance-but-i-do but, in a nutshell we’re healthy people with a "preferred plus" rating from Blue Cross on our individual (family) plan. But things happen, and each year we have some major "event" or another. Even with that, it’s been way cheaper for us to have this type of plan despite the occasional cash flow interruption.

    We’ve also done the math and never carried maternity coverage, even through having children. It’s cheaper to pay for the pregnancy and delivery costs than it is to pay the premiums for even one year (and any "complications" of pregnancy would be covered! once we hit our deductible, of course).

    And yes, I’ve done the research on new plans. Our current plan costs us $480/month, and a new plan would cost us about $980, and my remaining out of pocket costs will largely remain the same (again, based on past year regressions β€” it’s handy to have those spreadsheets built at the ready to test this stuff!). So that means starting in August (when our current plan is sunsetted by ObamaCare) we’ll be paying $500 more per month for no add’l benefit. I’m sure we’ll find a way to afford it, but… It will hurt in a significant way. Like you, our annual income prices us out of the range of any subsidy-type discounts.

    For the record, this is not about politics for me, either. I didn’t vote for Obama, but I didn’t vote for Romney, either. In fact, I was mostly behind the concept of ObamaCare until recently when I bothered to learn more about it.

    I DO like the fact that ObamaCare shakes us out of the status quo. That’s necessary. I just made the mistake of believing the talking points about how I’d get to keep my plan if I liked my plan. As I dug deeper I realized how screwed up ACA became during the "compromise" process. Really it’s nothing more than a huge gift to the insurance companies (mandating all those new customers!). But that’s how the political machine works. Occam’s razor says that someone in power isn’t going to let the will of the people impact their ability to stay in power, and the insurance companies are certainly in a powerful position. πŸ™‚

    So yeah, perhaps because of our different locales, you get a nice windfall on this one and I get screwed. I mean no I’ll will or even sour grapes when I say this: enjoy it, eh? We don’t always get to pick the good things that happen, but it’s important to appreciate them nonetheless!

  4. Dave Hamilton Says:

    I’m curious, Laurie, with your current Oxford plan have you been given a "preferred" rating or is it one of the higher risk ratings? You don’t need to publicly post details, I’m just curious how an $800/mo premium exists for a healthy person.

    From what I’m hearing from others, it’s really those of us with preferred ratings that get screwed by ACA, because the rating system no longer exists, so there’s no more discounts for being healthy (or, more accurately, no more discounts for being "low risk" in the insurance company’s eyes)

  5. Laurie A. Duncan Says:

    I am not rated at all that I’m aware of. It’s a sole proprietor plan. So it’s technically a Group plan, for a group of 1. Those are no longer possible since now a group needs to be 2 or more and sole prop goes into the individual market. I’ve had no real individual plan options for a long time. The Healthy NY plans are for people making much less money than me and/or are HMO plans that I am not well-suited for and a purely catastrophic plan from Blue Cross/Blue Shield (their Indemnity Plan), while cheap at about $200, was not very appealing. I actually tried it for a year after Freelancer’s Union dropped the old plans to create their own insurance company (with higher premiums, higher deductibles and worse coverage) and it cost me too much in the end because I had no prescription coverage and no coverage for routine care or labs or imaging or specialists or outpatient surgeries, etc. Basically that Indemnity plan covers you if you’re hospitalized, and only then after a high deductible. It’s probably what you have. No physical was required for any insurance I’ve had in the 12 years I’ve been self-insured – but I’ve always had continuous coverage even when changing insurance companies.

    I like the comfort of knowing what my healthcare expenses are going to be up front, within a very small margin. I’d much rather pay $500/month than have an unplanned $5000 expense 6 months down the line. I like knowing that I can see a doctor for preventative care instead of only to be treated after something is already wrong. If the unpredictability of those expenses works for you, then I am truly sorry that you can’t continue on that road. But I also truly believe you’re going to be better off – and the country is going to be better off – for it in the long run.

  6. Dave Hamilton Says:

    The plan we have is mostly what you describe, with huge exception when it comes to preventative care. That we get paid for from dollar one (a 3-year old provision of ObamaCare that kicked in immediately, and a provision I wholeheartedly agree with).

    In addition, we also pay for weekly chiropractic visits for our whole family. We do this preventatively, and I truly believe it is one of the fundamental things that keeps our family as healthy as we are. Our insurance plan doesn’t pay for this or really even let it go towards our deductible (at least not easily) but we don’t care. It works for us and serves us very well.

    Yes, we’re ok with paying significantly less in total annual costs and trading that for the potential risk of a cash flow disruption at any point. We do the same with our high deductibles on our cars and home, too.

    You were almost certainly given a rating for your current plan. They asked you a bunch of routine questions, they reviewed your medical records, and they have you a price. You may not have realized it, but you were definitely underwritten for that policy. Not every plan requires physicals and drug tests. That’s probably more the exception than the rule. Going forward, of course, no plan will: those of us buying individually are actually just lumped into a group with our same-aged neighbors.

  7. Laurie A. Duncan Says:

    I’m with you on the chiropractic care. I pay out of pocket for regular visits as well πŸ™‚

    If I am rated, I’m rated within the context of the group, since mine is really a group plan, not an individual plan. I didn’t answer any questions at all before I had a quote (except my zip code). I was completely anonymous, looking at already-published rack rates and a summary of benefits for the plan I was interested in before my age or gender was even known. That rate didn’t change after I answered all those questions and submitted my application and my "proof of continuous coverage". When that rate was increased at the beginning of the following year, my increase was identical to everyone’s else on that plan and matched their new published rate.

    May I ask who your current insurance company is? And your new rate – that’s the best rate you found on the Exchange or just the rate that your current insurance company told you you’d pay for the new comparable plan they offered you?

  8. Dave Hamilton Says:

    Ok, yeah, so you were with some sort of group for the self-employed? Or maybe NY law is different enough to allow that sort of thing without actually joining a group. In either case, I grok now. Thanks. πŸ˜‰

    We’re with Blue Cross/Anthem here in New Hampshire currently, and Anthem is the ONLY carrier that has any ACA plans. I’ve looked on Healthcare.gov (with no technical problems at all, ironically), and also directly with Anthem. The costs and plans I’m quoted are exactly the same with both. No differences.

    The only other ACA-compliant options I can get are with Assurant (I think that’s who it is) β€” they offer nationwide ACA plans, but it’s super expensive (because it’s nationwide instead of localized and places like San Francisco are more expensive then Durham, New Hampshire). So… yeah… I have one option in terms of companies (and I’m OK with that part of it… Anthem’s been fantastic for us).

  9. Laurie A. Duncan Says:

    Ok, so NH is partnering with the federal guv for the Exchange and I di see that Anthem is currently the only provider for your state. But the rates I’m seeing for a family with 2 adults and 2 kids, assuming no subsidies, starts at $530.96 for Catastrophic and, $628.10 for Bronze, several levels of bronze and silver plans, and doesn’t get close to $1000 till you get the the Gold level, and then slightly more than $1k for Platinum. So if I’m reading this right, your assertion that you have no choice but to go from $480/month to almost $1000/month is assuming that you’d jump from the catastrophic plan that you currently have all the way up to the Gold plan that has far more coverage then you say you want. Either I’m missing a significant part of this equation or you are. I’m just trying to understand. I’m not being a smartass or trying to discredit you in any way. I genuinely want to understand because I do believe this is a critically important issue and although I am getting a better deal (and NY has it’s own Exchange with many more providers), I’d like to know more about how it really works for the very small (less than 5%) population of people who really will be paying a lot more and whose choices are limited to a single provider.

  10. Dave Hamilton Says:

    Ok, so… the only people who qualify for "catastrophic" plans are those who can prove "hardship" so… that’s not even an option for us. For some reason "Platinum" is also not an option for us (not sure why, but I find that curious that you saw it β€” i thought it wasn’t even offered in NH). Bronze plans for us start around $775. Not sure why you’re seeing a ~$150 delta β€” maybe the ages of my wife and I? Or that one of our kids is a teenager and perhaps needs to be considered covered for maternity care? Not sure why, but that’s what we’re seeing. AND… the Bronze plans will require more out-of-pocket than the "catastrophic" plan we now have will. Our current plan is now more in line with what they call the Silver plans, and for us those are in the $980 range. Gold goes up to $1100 or so.

    Based on my research, Silver plans don’t currently make any sense, financially β€” they’re there for the same sales-related/human nature reason you’d have any middle option: folks who don’t want the worst but don’t want the best. I think you’ll see the super-healthy people choosing Bronze plans, and the sick or risk-resistant choosing Gold plans (and I totally grok you choosing the convenience of risk-resistance/cost-prediction for yourself, Laurie). Silver will be for idiots who choose not to do research and just go with the "not the best, not the worst" choice.

    Additionally, because we have kids we have to choose pediatric dental with our plans now. This will by definition cost us more than it pays out for us. The annual premiums cost more than the maximum allowed annual payout. And that premium adds on to the numbers, too (perhaps that’s what your calculations are missing? though I think there’s more to it than that).

  11. Laurie A. Duncan Says:

    I was taking the info direct from the federal exchange site, where I plugged in your info in order to browse rates:

    Now that you’ve given me more info, I do see why your options – if you MUST include dental – actually start at this plan: Bronze DirectAccess w/Child Dental – cdaa
    $712.64 – Estimated monthly premium for You, your spouse, and your children

    I’m not aware that dental for children is mandatory in NH, though. I’ll admit that I know the least about that area since I have no children, so I haven’t done as much research about those requirements. I thought it was only mandatatory for individual plans in a few states? I used to pay for a Delta Dental policy for myself, but despite the very low premiums, I found the coverage itself so useless, that I dropped it a while ago and have no intention of reinstating it any time soon. I haven’t had any new cavities in a while, and only one scare when I thought I needed to have an old root canal re-done, and that turned out to be a false alarm. CUNY’s City Tech dental school is near me, in downtown Brooklyn, and I’ve gone there for my yearly checkups and cleaning for about 8 years now. $25 gets me the works, including a full set of xrays. It’s a great deal πŸ™‚

    Anyway, if pediatric dental IS mandatory, then I must admit that you’re getting a bad deal, based on the info available to me. That really does suck. You’re one of the elite few, the small percentage of families that will pay more. You’ll get more, too. But I totally understand that you don’t want and didn’t ask for more than what you had.

    Most people have been pulling numbers out of the air and making claims that they can’t back up about how they’re being penalized and how much more this will cost them. Until someone (in many cases, me… because i love a god debate!) comes along and gives them real numbers and facts and then they clam up because they’ve been proven wrong. Your consolation prize for living in a state with no choice of provider and ending up in that tiny pool of folks who will have a higher premium instead of a lower premium is that you got to be right on this one πŸ™‚

    Your other consolation prize, I hope, is that the ACA will be successful and will be the critical brick in the foundation of true reform of this nation’s healthcare system – which won’t happen right away and will subject us all to some growing pains along the way, but eventually will afford you more options in your own state and lower costs across the board, along with better care.

    Thanks for being one of the good guys, Dave. Thanks for doing your homework and being willing to engage in an honest conversation. If only more people would do that, the country would be better for it.

    And now I’m off to go vote… for the guy who wants to make universal Pre-K a reality in NYC. Even though I don’t have any kids of my own and it might increase my taxes a bit πŸ™‚

  12. Dave Hamilton Says:

    Ok, I see where you’re getting those prices. I see those exact prices, too, when I use the estimator. But when I login to my account (which includes our full, completed application) the high/low for Bronze alone jumps to the range of $726.58-$824.37. Again, it’s probably an age thing (since pre-existing conditions wouldn’t factor in, anyway, nor do they ask me about them) or a location thing (perhaps Strafford County is more expensive?). Gold, for us, tops out at $1,194.64.

    And thanks, yeah… my biggest issue through all of this (beyond having to pay a crapload more next year… how are we gonna save for college??) is that most folks don’t do the research and simply believe the talking points. And THAT’s the most dangerous person of all.

    Thank YOU for being one of the good guys, too, Laurie. It takes people like us to move things forward here. πŸ˜‰

  13. Dave Hamilton Says:

    The "cdaa" plan for me is $824.37, FWIW.

  14. Dave Hamilton Says:

    …and not that it matters, but every single person I’ve talked to around here who is in the same boat as us will pay more. We may all be the "elite few" but… it certainly doesn’t seem like a small group based on my admittedly-limited research.

  15. Dave Hamilton Says:

    Seems "Pediatric Dental" is mandated as one of the 10 major factors with ACA. That certainly falls in line with all the quotes I’m getting, both on and off the exchange. http://www.ada.org/news/8935.aspx

  16. Laurie A. Duncan Says:

    It’s small in the grand scheme. This infographic sums it up very well, I think. http://cdn.theatlantic.com/newsroom/img/posts/keep%20your%20plan%20cropped.jpg

    Your state may be hit pretty hard so you’re going to see it more around you. And maybe your county has it worse than others in NH. You’re definitely hurt by the lack of options. With only one insurance company serving NH, you’re denied a real choice and they have no competition and no incentive to do better by you. I bet that will change in 2015. At least I hope it does for your sake.

  17. Dave Hamilton Says:

    Let me know if you find an infographic that’s not so damned biased. That thing is exactly why I got pissed when ol’ Barry referred to my insurance plan as "substandard:" people who write infographics like that actually use that as their premise … as though it’s a universal truth. Shame on them. I had a good plan, and so did a lot of responsible people I know.

    I’m sure the infographic’s percentages are right, that I don’t dispute. I just hate seeing facts presented with obvious bias without them stating, "hey, we’re biased."

    Pisses me off because it leads people to believe that crap.

  18. Merrick Says:

    Biased isn’t the wost of it. Take, for instance, the 49% who get insurance through their employer: "You’re good! You can, like, totally keep your plan." B.S. You’re keeping your plan THIS YEAR because Obama, in violation of the PPACA, delayed the employer mandate for a year. Next companies will start wholesale dumping of employees onto the exchange. I know that seems backwards, but that’s the way it’s going to work out. I know my company is talking about it (15,000 employees) and I have several friends, in companies ranging in size from a few dozen to several hundred, all highly educated, technical job type folks, and all of us have heard rumbings about the end of employer coverage. One of the clearest signals from my company this year is that while we are still in a group plan, and therefore are benefitting from a lot of the requirements and cost benefits of negotiating a large contract, the company portion of the premium is gone. That’s essentially unheard of any portion of the industries I work in until the last couple of years.

  19. KhΓΌrt Williams Says:

    Hi Dave, here’s a recent post I wrote on why I think the affordable care act may ruin my health.


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