How will transition to the Health Insurance Marketplace affect costs?
While exchanges are likely to help many presently uninsured people get coverage they can afford, many observers predict upper- and middle-income people will end up paying more for their health coverage.
The New York Times reports that a state-commissioned report in California, one of the states on track to permit residents to purchase insurance through a state-run exchange later this year, predicts the new federal healthcare law “will drive up individual insurance premiums, but that subsidies will offset most of the increase for low-income people.”
According to the Times, the study indicates “premiums could increase by an average of 30 percent for higher-income people in California who are now insured and do not qualify for federal insurance subsidies.” However, the study also suggests that new limits on out-of-pocket expenses will lower the increase in total cost to about 20 percent for the average higher-income Californian.
On the other hand, the Times reports that Robert Cosway, an actuary at the consulting firm that prepared the report, predicts “health insurance will become relatively less expensive for people with chronic conditions.” The Times goes on to report that the California study predicts “low-income people would see significant reductions in their premiums and out-of-pocket costs, in part because of income tax credits and other subsidies. The total cost of care,” the report says, “will fall by an average of 76 percent for people who are currently insured and have incomes less than 250 percent of the poverty level (meaning less than $28,725 a year for an individual).”
As far as middle-income people are concerned, many observers predict premiums and other costs will rise somewhat as a result of many lower-income, higher-risk individuals being brought into the system. As a result, some observers suggest healthy middle- or higher-income individuals may drop their insurance despite the threat of penalties.
And just what does this mean to people with Medicare?
Fortunately, Medicare recipients probably don’t have to be overly concerned about the transition to Health Exchanges. For the foreseeable future, Medicare benefits seem secure, and few Medicare beneficiaries appear in any danger of losing Medicare coverage and joining the ranks of the uninsured.
As far as the nearly 50 million Medicare recipients are concerned, other provisions of the Affordable Care Act seem far more significant. Two areas in particular stand out:
The ACA provides for an increase in preventive health services. Millions of Medicare recipients have already benefited from preventive services made available by the ACA. The ACA has also made it easier for some seniors to receive medical services in their homes instead of at institutional settings such as nursing homes.
The ACA is giving people enrolled in Medicare Part D some hope of being rescued from the “donut hole.” The ACA has already provided Part D recipients the opportunity for prescription drug price reductions, and is scheduled to reduce out-of-pocket drug costs significantly in coming years.
Even though people on Medicare will not be among those most impacted by Health Exchanges, many will be observing the upcoming Health Insurance Marketplace with keen interest—and perhaps with fingers crossed for family members and neighbors who may be more directly impacted by exchanges.
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