Tuesday, June 22, 2010

Patient Protection and Affordable Care Act (PPACA) - Affordable? Not!

Kaiser Family Foundation
June 21, 2010
Recent Premium Increases Imposed by Insurers Averaged 20% for People Who Buy
Their Own Health Insurance, Kaiser Survey Finds

People who buy their own insurance report that their insurers most recently
requested premium increases averaging 20 percent, according to a new Kaiser
survey examining the experiences and views of people who buy health coverage
in the non-group or individual market.

Most say they paid the increase, but 16 percent of all policyholders say
they switched plans, either buying a less expensive policy from their
current insurer or switching companies altogether. After these so-called
"buy downs" are taken into account, people who faced a premium increase
ended up paying 13 percent more than before.

Many people report being in plans with high deductibles, including one in
four (26 percent) with an annual deductible of $5,000 or more and 6 percent
with a deductible of $10,000 or more.

Overall, the average deductible reported for single coverage is $2,498,
almost four times the $634 deductible reported on average for
employer-sponsored PPO coverage.  Those with family coverage whose
deductibles must be met on a per-person basis report an average deductible
of $2,959, while those with a family deductible (the total spending required
across the entire family before coverage kicks in) report an average of

More than one in five (22 percent) say over the past year they or a family
member covered by their plan did not get needed medical care because of the
cost, and a similar share (20 percent) say they skipped filling a
prescription due to cost.

Nearly four in ten policyholders (38 percent) report at least one problem
getting their insurer to pay a bill.

"With people in the individual market being hit with average increases of
20%, the survey shows that the steep increases we have been reading about
over the last several months are not just extreme cases," Kaiser Family
Foundation President and CEO Drew Altman said.


Comment:  This survey is very important because it shows that outrageous
insurance premium increases are not limited to the anecdotes that we have
been hearing, but rather are a pervasive problem, inflicting the nation with
an average 20 percent premium increase in the individual insurance market.
Those who say that the Patient Protection and Affordable Care Act (PPACA)
will fix this had better take a closer look.

With these increases, it is not surprising that many looked for less
expensive plans, usually opting for higher deductibles. But look at the
numbers. The average deductible for a family is now over $5000, and for
some, $10,000 or more. In spite of all of the buy-downs to higher deductible
plans, people still ended up this year paying an average of 13 percent
higher premiums - paying more and getting less.

Will PPACA provide relief from these high deductibles that are impairing
access to needed medical care? No. The plans will be required to have an
actuarial value of only 60 percent, or 70 percent for the exchange plans
eligible for premium credits. When the patients' share averages 30 to 40
percent of the costs (plus the premium), it is inevitable that the plans
will have high deductibles.

Will the cost sharing subsidies of the exchange plans adequately ameliorate
the impact of the deductibles? No. Lower income individuals do not have
adequate disposable income to meet their portion of the cost sharing, even
with the subsidies. For those with incomes over 250 percent of the federal
poverty level ($55,125 for a family of four), there are no cost sharing
subsidies beyond the equivalent of a 70 percent actuarial value. The portion
of the subsidized insurance premium that this family would still have to pay
is $4438 (8.05 percent of income), so with a $5000 deductible, they would
have to pay over 17 percent of their income before coverage begins (except
for limited preventive services), and even then they would still have
coinsurance payments plus costs for non-covered or most out-of-network
services. By any definition, that is underinsurance, which will become the
norm for the United States.

The problem is not the total cost of health care for our nation. We can
afford it, though we are nearing our collective tolerance. The problem is
the fragmented, dysfunctional financing system that results in tremendous
inequities and runaway cost increases. A single payer national health
program would fix this.

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