There's Nothing Affordable About My Obamacare!
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The official name of Obamacare -- the Affordable Care Act (ACA) -- appears to be a cruel tactic to trick people into thinking they're going to save money on health insurance, much like early Scandinavian pioneers named the country of Greenland as a way to attract more settlers, obscuring the fact that the country is 80% covered by an ice sheet that's 1 mile thick.
I just received my Blue Shield health care premium notice for 2014, and I was stunned by what I saw. After reading media articles about how rates were going to climb, I fully expected my premium to go up more than the typical 20% annual increase I've seen in recent years. Still, I wasn't prepared for what I saw when I opened my email.
My current premium is $631.00 per month under my company's group policy, and my 2014 estimated premium is $1,596.00. That's a 152.9% increase! Here's a snapshot of part of my statement from Blue Shield:
I was fortunate to take advantage of an early renewal program that Blue Shield offered, locking in a 2013 rate of $679.00 until December 2014. Until that time comes, I'll be scrambling to figure out where to find a policy that's truly affordable.
After the initial shock, I considered that I might be able to switch to a lower-cost policy offered by Covered California, our state's ACA insurance exchange. Since I'm very healthy, I choose a high-deductible health plan with the lowest possible premiums. On the insurance exchange, plans with the highest deductibles are labeled "bronze" plans. After entering all of my family information, I received six quotes from major carriers, including Blue Shield. The average of all bronze plans was $1,079.50, a full 71% higher than my current premium.
Because of new limitations on how insurance carriers can calculate premiums based on age, it's been forecasted that younger people would pay more for insurance, but older people would pay less. That doesn't appear to be true, either. One of my colleagues is a 28-year-old male, and when he heard about my rate increase he quickly checked his own state's exchange for a price quote. The exchange price quoted a 60% increase for a comparable plan compared to his own individual policy.
It's hard not to feel betrayed by the hype that came with Obamacare. Covered California made huge claims about affordability in a May 23 press release (my emphasis added):
"This is a home run for consumers in every region of California," said Peter V. Lee, Executive Director of Covered California. "Our active negotiating will not only benefit potential enrollees to Covered California, but will benefit all Californians by making health care affordable."
However, Forbes magazine did some fact-checking by comparing Covered California's rates with what's already available on the open market. Their research showed that California premiums were going to increase by as much as 146%, with the San Francisco Bay area, Orange County, and San Diego residents getting hit the hardest. More specifically, "for the typical 25-year-old non-smoking Californian, Obamacare will drive premiums up by between 100% and 123%." For a 40-year-old non-smoker, "Obamacare will increase individual-market premiums by an average of 116%."
All of the articles I've read up until now were based on expected rate increases, with Obamacare supporters and detractors spinning their own forecasts for how rates would be affected. Now that people are starting to receive their 2014 premiums, there is no need for marketing spin. Numbers don't lie.
To put my 152.9% price increase into perspective, that's more than the total inflation (CPI) from 1996 to 2013 -- 18 years' worth of inflation in a single price increase.
2014 will be a year of big change for patients, doctors, and insurance companies as they adapt to the new requirements under Obamacare. The details of 2014 health-care plans outside of exchanges won't be known until insurance companies roll them out. However, what is clear is that the political hype of affordable health care under ACA has now been debunked with actual published rates. Greenland isn't green, and health care under Obamacare isn't more affordable.
Gary E.D. Alt, AIF, CFP, is the co-founder of Monterey Private Wealth in Monterey, Calif.
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