Buying Health Insurance: Back To The Bronze Age

It’s that time of year when families gather for Christmas and employees converge for end-of-year workplace gatherings. At many of these gatherings, one of the hot topics of conversation will touch on health care and the rising deductibles foisted on health care plan participants.

No one, it seems, is immune from these increases.

First, though, a recap. At this time last year, I crowed about how fortunate — yes, fortunate — I was to participate in the nation’s health care experiment. I wanted to be part of what was known derisively as Obamacare because I figured Obamacare was made for a guy like me.

When I signed up for health coverage last fall, I was an independent contractor and my wife had collected unemployment as her (very) small business was in the midst of a restructuring. Obamacare could not have come at a better time.

Because of our income, we qualified for a handsome monthly subsidy of $283. This meant that the three of us —my wife, my 11-year-old daughter and I — could afford a silver-level plan by paying $519 a month for coverage from one of United Healthcare’s high-deductible plans.

The unsubsidized monthly premium was $802 with a deductible of $3,200. Not cheap, but still something we could afford in case of a catastrophic emergency, which wasn’t likely to happen.

We have not faced any major health expenses so far this year and we’re very light users of health care since none of us engages in any activity that could be considered high risk. My daughter plays only one competitive sport.

We file very few claims and our out-of-pocket expenses are just a few hundred dollars.

As the year went on it became easy to forget that we were being subsidized for our coverage. All was good as our attention turned to work deadlines, my wife’s business and my daughter enrolling in sixth grade.

This year, when it came time to shop around for 2016 coverage, I returned to healthcare.gov where I had purchased my previous plan. I was hit with sticker shock.

Rolling over into the same plan for 2016 came with a $6,000 deductible and a monthly premium of $859.

We were hit with a double whammy for 2016. The first came from the slightly higher premium price for the same United Healthcare Silver Compass HSA plan that covered us in 2015, and the second came because we no longer qualified for the subsidy. This combination drove our costs way up.

Then there’s the deductible, which almost doubled.

Not fun. It was time to downshift and consider the D list, the bronze-level plan, four layers below the platinum, the gold and the silver plans available through healthcare.gov.

United Healthcare’s Bronze Compass HAS 5500 charges us a monthly premium of $722 and comes with a deductible of $11,000.

Sold (reluctantly)! My out-of-pocket premium is increasing from $519 to $722 — still manageable, particularly when considering that we no longer benefit from the subsidy. The real bugaboo is the deductible. We get into a medical pickle and we have to meet an $11,000 deductible before insurance even shows up.

Even if we were to roll over our 2015 silver plan into the commensurate 2016 silver plan, our deductible for the 2016 plan would come to $6,000.

So, in effect, the bronze plan is costing us a risk exposure difference of $5,00 in exchange for a lower premium — $722 for the bronze plan instead of $859 for the silver plan, or $1,638 less in premium over 12 months.

I’m not that happy about it, but it’s something I can live with.

Last year I bought coverage directly from Healthcare.gov. This year, as I shopped out my plan via an Internet aggregator site, I landed with a broker. He was dutiful and I was happy to use his services instead of buying direct. It makes no difference to us, but it does to him as he’s paid by the insurance carrier.

I am pleased to report that the healthcare.gov site ran smoothly and quickly. There were none of the glitches that marred the buying experience in 2013 and during parts of last year. In addition, the site has added some new fields for doctors and prescriptions, which is helpful.

The real issue, though, isn’t the website. What we need are more carriers to come in and compete for our business.

Sure, there were 29 plans from the four different levels available to me as a consumer. But all of them are offered by only three or four carriers: Blue Cross Blue Shield variants, Aetna and United Healthcare, which is fewer than I remember from last year.

To make health care affordable, carriers need to truly compete. When I go to the supermarket, I have options — from well-appointed full-service markets overrun with soccer moms and dads, to bare-bones caverns selling generic label goods, to low-volume specialty stores.

That’s choice.

The “choices” presented to us on healthcare.gov amount to a health insurer cartel, and that’s not going to the offer any real competition. This means there are very few substantial differences in terms of premium pricing — although there appears to be a much wider range of options in terms of deductibles and the exposures taken on by buyers.

With two or three years of Obamacare data now on the books, the writing is already on the wall: higher premiums and even higher deductibles.

But back to the big picture, for a minute, and the role of Obamacare.

It’s been nearly three years since I came off the employer-sponsored health care model and entered the individual market.

In 2013 and 2014, as an independent contractor, I was able to find coverage in the range of $350-500 per month range as carriers were gearing up for health reform. We got lucky, I accept that.

The individual market would most likely have been three or four times higher under regular market conditions. But these conditions were rapidly becoming untenable for tens of millions of people and thus ripe for reform.

In 2015, we qualified for the subsidy and, for 2016, coverage is still affordable although we’re taking on a lot more risk through higher deductibles. Still, under health care reform we were able to find coverage to tide us over until our economic fortunes improved once more.

Like everyone else, I’d rather not pay more for coverage than I have to.

What am I getting for the price increase and my higher risk exposure via higher deductibles? About the same: I see the same doctors and I have access to the same hospitals and specialists, if necessary, within a 30-minute drive of where I live.

So what’s changed, other than higher premiums? For us as a family and as three individuals within that family, not much.

As a nation, though, we have 90 percent of the country covered by some form of health coverage and that’s good because the only way insurance works is if everyone is all-in. Independent contractors have access to plans that are more affordable than they used to be, and that’s good too.

The prior model was one in which most working Americans were covered through employer-sponsored plans. But those same plans were subsidizing more and more uninsured working Americans, so the model was headed for collapse.

So when the health care discussion heats up in front of the glowing yule log and anger boils over about rising premiums, steer the discussion back to a time before 2013. Premiums were rising then as well, and far fewer people were covered.

Then drop the bomb: Obamacare was always a starting point. Now that a lot more people are covered, it’s up to the carriers and the industry to make health care more affordable.

InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].

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Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He can be reached at [email protected].