Obamacare Question

There are plenty of people who are well-versed in partisan talking points around Obamacare (ACA), plenty of folks to push hot buttons. Heck, you don’t even need to be partisan to be upset with the roll outs (federal and California) – pathetic is too nice a term. And there are real big questions like whether young, healthy people will sign up. Is it in their interest? It seems with pre-existing conditions and lifetime maximums eliminated, the logic of “rolling the dice” is better than ever, especially for healthy, no assets individuals. Am I missing something?

But what I really want to know are simple, useful facts to be an informed consumer. Like, um, what are the rules regarding switching plans under the ACA? Can I switch at will from ACA-compliant plan “X” to ACA-compliant plan “Y”? What if I become ill or have a bad accident while covered by Plan “X” and then switch to Plan “Y”? You see where I’m going – what about signing up for a bare bones plan and switching to a low deductible, low copay plan if I develop an expensive medical condition. Can I?

These questions are essential for me to make an informed decision. I’ve searched with no luck. Does anyone know?

I think that one goal of the ACA is to provide transparency (e.g. standardized plans offered on exchanges), but I wonder whether they want to bury certain details that expose how the new system can be (quasi) gamed?

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5 Responses to Obamacare Question

  1. dbatty@yahoo.com says:

    I certainly share your concerns regarding both “gaming” the system and whether they can get enough young, healthy people to sign-up.

    I am not terribly familiar with some of the administrative details of the healthcare exchange since we get our insurance through my wife’s work. However, I did find a partial answer to your enrollment question. At least according to this article, you can only change plans during an annual “open season” which partially limits the type of “abuse” you are suggesting. The ability to eventually switch plans will still tend to warp enrollment patterns (i.e. Healthy, well-informed people would favor catastrophic plans but that is going to happen anyway and hopefully the insurance companies and government have already modeled that bias correctly) but perhaps not as dramatically as if you could switch plans almost immediately.

    http://www.npr.org/blogs/health/2013/10/14/231462087/so-whats-the-real-deadline-for-obamacare-sign-up

    (Third question)

    • tward says:

      Thanks. Yeah, as the link describes, folks who don’t currently have insurance and aren’t excited about it can wait into Q1 before purchasing.

      I do think that “healthy, well-informated people” (with assets and without access to substantial subsidies) would gravitate towards plans with the lowest coverage, since it seems the only financial risk for for one year’s worth of delta between the low and high coverage plans. In the old system, if you went with low coverage and then came down with a long-term issue, you would be stuck with the low coverage in perpetuity, because the pre-existing condition would keep you from getting a new plan.

      HOWEVER, the ACA is designed to basically eliminate true catastrophic plans. That’s what this whole “substandard plans” rhetoric is about. Allowing true catastrophic plans to continue would be too similar to allowing people to opt out of the risk pool – you’re right back at adverse selection. Because the ACA forces so many items into plans, it’s less subject to this kind of gaming. Also, the ACA may – I’m speculating – limit the premium difference between bronze and platinum, which is another way to capping arbitrage benefits.

      It is worth remembering that many of the people involved in the ACA design are smarter than us (gulp, heavens no!, I went to beeeeezzzzznis school!!!!) and, in particular, are deep SMEs in healthcare and macro / game theory. Obama is certainly no expert – while campaigning he was against a mandate. Without a mandate the whole thing falls apart. http://www.theatlantic.com/politics/archive/2012/06/how-obama-broke-his-promise-on-individual-mandates/259183/

      • David Batty says:

        Good point regarding “true catastrophic plans” and the ACA. As you said, the regulations largely eliminate those from the individual market. I should have said people will tend to gravitate toward the so-called “bronze” plans if they want to self-insure as much as possible.

        Although I understand the need for the regulations to make the whole structure of the ACA work, I do have major concerns about how limiting the types of plans available impacts the growth of costs. One of the (many) reasons medical costs keep growing so quickly is that most people don’t know what medical procedures cost. They are aware of their co-pays but they are often unaware of (and often don’t care about) the total billed rate. Obviously the insurance companies are the ones who negotiate these rates and it is tempting to think they would control costs, but since they are acting as a middle-man in the transaction, it doesn’t function nearly as well for containing cost growth. As long as the insurance company can get their “cut” (and can continue to pass the bulk of the costs to the insured), it doesn’t really matter to them.

        By forcing more people into plans where this problem is more prevalent, you exacerbate cost growth. I find many of the arguments regarding features of the ACA that are supposed to contain the growth of costs unconvincing at best. You can claim that it shifts costs, but it does very little to control their growth.

  2. It’s very confusing right now. Maybe a good place to look is at MA where the very similar Romneycare has been implemented for a few years?

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