The Cost of Obamacare: Health Insurance Premiums Versus Health Care

Now that the Obamacare exchanges are set to roll out, the MSM has been featuring a bunch of articles purporting to compare the cost of premiums under the new system to those under the old one, or to those that were originally predicted for Obamacare.

These latest projections tend to take the form of “it’ll all be so much better!” or “it’ll all be so much worse!” or something in between. A good example of the first type of article is this from CBS, a good example of the second is this from Forbes, and a good example of the third is this from the WaPo.

But the truth is that we don’t really know, and probably cannot know at this point (even if reports were unbiased, which they most assuredly are not). One reason is that comparison of averages is practically meaningless because there has been so much variation in previous plans among states, ages, types of coverage, medical condition of the consumer, and types of insurance. In addition, there will be major differences in premiums between those who will now be subsidized under Obamacare and those who will not.

Still another reason for the confusion is that we do not know how many people will opt out and pay the penalty instead of buying coverage, and how this will affect premium prices. All we do know is that it is highly likely to affect them at some point, and if the number is substantial it should drive the cost up -- whether through increased premiums or increased taxation or in some other way.

But the biggest confusion of all may be between the price of insurance premiums and the actual health care costs for the buyer. Those who pushed Obamacare had reasons for acting as though health insurance was the same as health care itself, and now they have reason to pretend that health insurance premiums are the same as health care costs. But of course they are not.

People who have been buying insurance on the individual market are probably especially aware of this, but anyone who has had to make decisions about health insurance should be quite familiar with it, too. The premiums are just the start of it. The rest involves the probable out-of-pocket costs which is far more difficult to evaluate. What is the deductible under this plan versus that one? What is the medication coverage like? How many times a year does the person tend to go to the doctor, and what would that person be likely to be paying out-of-pocket for those visits? How much freedom would a patient have to choose a doctor, or how limited would he/she be in doing so? How much control would the plan exercise over when a person would be covered for going to a specialist for a problem?

And also, behind and out of sight but still influencing the whole shebang is how the state in which that person is residing is funding health insurance. In other words, how much would the person be paying in increased taxes in addition to the cost of premiums in order to finance his/her health care insurance and that of others in the state?

And so it goes with Obamacare. It is hardly just the premiums that are the issue, difficult to compare though they may be. It’s the rest of it—because as everyone ought to know by now, health care is expensive, and if people are getting it, then someone is paying a pretty penny for the privilege whether that person knows it or not, and whether the payer is the person receiving the health care or not.

What’s more, some of the Obamacare plans are somewhat spartan. The Bronze Plan, for example, may not offer exactly the coverage that might originally have been expected (the following list applies to out-of-pocket costs for a Bronze Plan in California):

Deductible $5,000 Med/Rx

Preventive $0

Doctor’s Office Visits $60 per first 3

Specialist $70 *after deduct

Generic Rx $25 or less *after deduct

Brand RX $50 *after deductible

Lab Testing 30% *after deduct

X-ray 30% *after deduct

Out-patient Surgery 30% *after deduct

Hospital Stay 30% *after deduct

ER Visit $300 *after deduct

Urgent Care $120 *after deduct

Out-of-Pocket Max $6,350/$12,700 (ind/fam)

That’s fine for the extremely healthy. But bills can mount rather quickly if faced with even a non-life-threatening health problem, even one that is of fairly small magnitude. The deductible is hefty, as are the co-pays after the deductible is met, and the yearly out-of-pocket cap is fairly large as well.

What’s more, there may be rather strict limitations on which doctors a person can see under Obamacare. Remember  Obama’s famous “if you like your doctor, you will be able to keep your doctor” promise? Well, I suppose you can keep your doctor, as long as you pay through the nose to do so, because much of the cost-saving in Obamacare’s lower-cost plans comes through limiting doctor choice even more than most current plans generally do:

The low rates are possible in part because insurance companies created special plans that include fewer in-network doctors and hospitals than many current plans.

This may not be a problem for healthy people who currently lack insurance. But those with illnesses may discover that their specialists are not covered by an exchange insurance plan. Low-income people accustomed to a certain community clinic may find that going there is no longer an option. And everyone may encounter long waits to see a doctor.

And that’s just premium costs, out-of-pocket payments, and amount of doctor choice. There are also those more hidden tax consequences -- plenty of them. Here’s a list of those already known, but it’s a good bet that more will be on their way. And then there are the other “costs”: Obamacare’s disincentives to full-time employment and marriage, as well as the possible reduction of available physicians that could result.

I sometimes get tired of writing the words “this should all have come as no surprise.” But it keeps being true. Nearly anyone could and should have predicted this, and many did. And yet, here we are.