One of the biggest questions about Obamacare is whether its new consumer protections might lead to higher costs for some people buying coverage on their own — or through small groups — when they purchase it via the online insurance marketplaces that open for enrollment Oct. 1.
It’s a question that Obamacare plans might lead to higher premiums? Only in rare case is it a question, such as states that already had numerous mandates or guaranteed issue policies.
That out of the way, the article contains links to pricing from various states that might be of interest to readers.
Delta Air Lines letter to the Obama administration
June 13, 2013
I want to thank you for the opportunity to meet with you at Grady Hospital in Atlanta recently to discuss the impact of the Affordable Care Act (ACA) on Delta Air Lines. The small group setting allowed for a good exchange of ideas that I found very valuable. As you know, I and the other large employer representatives in attendance did not agree with your initial assessment that the ACA means “business as usual” for large employers. Since you committed to share our concerns with Secretary Sebelius and the President, I thought it might be helpful to summarize the major points for you here.
As you heard from many of us, the ACA will result in increasing costs, for both our companies and our employees, and will also reduce the benefits provided. Here are some of the major drivers of these effects:
The Reinsurance Fee — The ACA requires large employers to pay an annual fee of $63 per covered participant in 2014. For Delta’s roughly 160,000 enrolled active and retired employees and their family members, this represents more than $10 million added to the cost of providing health care next year. As we discussed, this fee, which is meant to help stabilize the state exchanges as they get started, provides absolutely zero direct benefit to our participants. It is, essentially, a direct subsidy form us and our employees to those who participate in the exchanges.
Covering Children Until Age 26 – There is no doubt that this has been a popular provision nationwide and at Delta we have seen more than 8,000 children added to our rolls resulting in a permanent increase in our overall costs of about $14 million per year. We are required to charge the same for these children as we do for any other children covered by our plan. However, our experience shows that, on average, these children are consuming considerably more health care than other children we cover. In essence, we are experiencing adverse selection in this population and that is having an impact on the costs that we and our employees pay for coverage.
The Individual Mandate – As you know, in 2014, the individual mandate under the ACA kicks in and those not currently covered under any plan must enroll or pay a penalty to the Federal government. Our actuaries have estimated how many of those who currently opt out of our coverage will now opt in. Their estimates are that this requirement will add another $14 Million in costs to our plan each year, net of the premiums paid by these individuals.
Thirty Hour Rule – As you heard at the meeting, many employers are planning to reduce employees’ hours to less than thirty per week in order to avoid the requirements to either provide health coverage or pay fees for those employees. Delta is not one of those employers, and we do not plan to force employees to work fewer hours as a result of the ACA. For others, however, this represents one of the negative unintended consequences of the ACA and we support efforts to raise the limit to 40 hours per week rather than thirty.
Pay or Play Penalties – The group health coverage Delta provides to its full time employees more than meets the definition of “affordable coverage” as defined by the ACA. However, the proposed regulations that implement this provision of the law are very complex and, when finalized, may unnecessarily impose HR information systems changes that will be costly to build and maintain. In addition, there are many unsettled principles surrounding this provision of ACA and based on the fact that it is already June, employers will not have time to react should final regulations be issued this year. This puts employers at risk of being assessed these penalties in innocent situations (such as when employees take voluntary leaves of absences) and imposes additional costs, even in those situations where the vast majority of employees are offered affordable, comprehensive coverage.
Cadillac Tax – Recent data released is evidence of what you heard in the meeting–employers are reducing or eliminating rich plan designs in order to ensure they do not pay the tax, since doing so would represent a significant waste of money. At Delta, we did that last year as we eliminated one of the plan designs available to our pilot group specifically because it would have risked being subject to the Cadillac tax. However, keep in mind that, eventually, it is not just the “rich” plan designs that will be affected. Essentially, the Cadillac tax level represents a “ceiling” on the value of benefits provided in health plans. However, that ceiling rises each year only at the rate of the consumer price index (CPI). On the other hand, medical inflation is rising at a higher rate than CPI. The way the math works, given enough years, all plans will eventually risk being subject to the Cadillac Tax and as they do, the natural reaction will be to continually reduce benefits provided in order to avoid the tax.
At Delta we are doing a lot of positive things to provide a platform for our employees to live healthier, more productive lives. We offer free preventive coverage, we offer telemedicine services, a concierge nurse line and great tools that provide vital data (such as it exists) on quality and cost among the provider community. We provide incentives that reward employees for doing the things that help lead to better long-term health. But make no mistake—the costs imposed on Delta and our employees are very real and they are escalating. The costs mentioned above, when combined with normal medical inflation and the end of the [Early Retiree Reinsurance] program mean that the cost of providing health care to our employees will increase by nearly $100,000,000 next year. Delta will have to absorb the vast majority of that increase in costs so that we continue providing a high value, high quality health plan, but some of it will have to be shared with our employees as well. And of course, the balance that the company pays simply means less left over for other investments that make our business stronger.
In closing, the ACA is anything but business as usual for large employers like Delta. It represents real and significant changes that provide real challenges for both our company and our employees. Thank you for the opportunity to provide this input. If I can be of assistance in any other way, please do not hesitate to contact me.
Robert L. Kight
Vice President, Global HR Services & Labor Relations
The Star-Ledger warns that B&E customers who don’t qualify for a federal tax credit to purchase insurance can likely expect an three or fourfold increase in the cost of their next plan. According to Rutgers University’s Center for State Health Policy director Joel Cantor, the monthly plans of $150 for a 25-year-old male or $1,100 for a family with parents in their 40s will “easily” be three or four times more for a standard policy on the individual market. (B&E is basic and essential coverage)
One would think that people who don’t qualify for tax credits due to higher income would select a plan with more benefits than a B&E plan. The flip side is why pay for more coverage than you need? I’m sure there’s a socialogical term that refers to people suspending their belief that serious illnesses can possibly happen to them.
The restaurant chain has no intention of firing members of its current full-time staff or reducing benefits as a result of President Barack Obama’s new health care law, Richardson originally said in an interview NPR published Wednesday.
Yet Richardson told HuffPost that it must consider all options with the company’s healthcare costs set to rise 35 percent once the law is implemented.
How many people are covered and how much does it cost?
White Castle employs around 9,600 workers nationwide and about half work full-time. Roughly 80 percent of White Castle’s full-time employees opt in to the company’s current health care plan and the company spends four to five times more in health care than it makes in net income annually, Richardson said.
This is mind boggling. The company already spends 4 to 5 times MORE on health care than it makes in annual net income and those costs are set to rise 35%. WOWZA!
“We are making some pretty radical changes because of ‘health care reform,'” says Purdue’s Eva Nodine. “So we wanted to make sure we had enough time to educate our employees because education is key.”
The reporter adds, “$2.8 million dollars in added fees and claims are included in the recommendations for next year. Now that’s due to the ‘Affordable Care Act.’ The medical plans and premiums will go before the full board for approval on Friday.”
Yet while private companies are getting all this unwelcome and hostile attention, local governments across the country have been quietly doing exactly the same thing — cutting part-time hours specifically so they can skirt ObamaCare’s costly employer mandate, while complaining about the law in some of the harshest terms anyone has uttered in public.
The result is that part-time government workers — many of them low-income — face pay cuts that can top $3,000 a year, and yet will still be left without employer-provided benefits.
Dearborn, Mich.: “If we had to provide health care and other benefits to all of our employees, the burden on the city would be tremendous,” said Mayor John O’Reilly, explaining why the city is cutting its more than 700 part-time and seasonal workers down to 28 hours a week. “The city is like any private or public employer having to adjust to changes in the law.”
There are a multitude of additional examples at the link.
Let me get this straight, private companies don’t have these or similar issues as well?
I’m eagerly awaiting reports of what our local municipalities and school systems are doing from the Boulder Daily Camera and the Longmont Times Call.
When she was 32, Wendy Drabick opened her own IT and accounting consulting business and started paying health insurance premiums for herself and her family, now a hefty $1,100 every month. That’s about $10,000 more each year than she’d be paying if she worked for a large employer who paid most of the premium. Drabick isn’t complaining, but she would like to know if her premium will go up under the Affordable Care Act (ACA, also known as Obamacare), and if so, how much. Nearly all Americans will need to have coverage, many through state marketplaces, beginning January 1, 2014.
The article doesn’t directly mention two issues that will have a direct effect on the cost of one’s coverage:
A person’s age. The older one is, the greater the self employed person will benefit from the 3:1 maximum difference in premiums between young and old
Income. Subsidy eligibility determines how much you will actually have to to pay.
The Obama administration says the Affordable Care Act will provide cheaper health insurance for millions of Americans.
But some people, particularly young men who aren’t insured through their employers, could see their premiums go up once coverage in the state-based insurance exchanges begins in January.
How will premiums most likely change?
Taken together, men ages 25 to 36 could see rate increases greater than 50%, according to Milliman’s O’Connor, but women of the same age will only see their premiums creep up 4%. Meanwhile, men age 60 to 64 could see their premiums drop by 12%.
The big question is…
At this point, everyone — including the insurers — is just guessing at what premiums should be. That makes next year a giant experiment. Will younger, healthier people purchase coverage, or will they skip it and simply pay the fine? Next year, the fine starts at $95 per adult — a rate likely to be cheaper than any individual plan available on the state exchanges. (emphasis added)
Imagine a giant experiment depending on young healthy men participating in the health insurance risk pool. That’s not a recipe for sleeping well at night for Obamacare supporters.
Internal cost estimates from 17 of the nation’s largest insurance companies indicate that health insurance premiums will grow an average of 100 percent under Obamacare, and that some will soar more than 400 percent, crushing the administration’s goal of affordability.
New regulations, policies, taxes, fees and mandates are the reason for the unexpected “rate shock,” according to the House Energy and Commerce Committee, which released a report Monday based on internal documents provided by the insurance companies. The 17 companies include Aetna, Blue Cross Blue Shield and Kaiser Foundation.
But don’t worry, according to Health and Human Services Secretary Kathleen Sebelius..
“These folks will be moving into a really fully insured product for the first time, and so there may be a higher cost associated with getting into that market,” she said. “But we feel pretty strongly that with subsidies available to a lot of that population that they are really going to see much better benefit for the money that they’re spending.”
Last Monday night, Democrat Elizabeth Colbert Busch who faces off with Republican Mark Sanford at the polls for South Carolina’s First Congressional District on Tuesday called the law “extremely problematic” during a debate with Sanford and attempted to distance herself from it.
“Obamacare is extremely problematic, it is expensive, it is a $500 billion [higher] cost than we originally anticipated, it’s cutting into Medicare benefits and it’s having companies lay off their employees because they are worried about the cost of it. That is extremely problematic, it needs an enormous fix,” she noted in one report. But the worry doesn’t end there.
When even a key architect of Obamacare says the law’s implementation will resemble a “train wreck,” it is clear that its biggest remaining supporters need to finally level with the American people about what’s in store — starting with President Barack Obama.
The president must step into the breach and explain to the public that skyrocketing premiums and a raft of new taxes, penalties and fees are coming their way.