GOP touts lower premiums, but other insurance costs will rise

Associated Press

WASHINGTON

Republicans are touting lower premiums under their health care legislation, but that reflects insurance that would cover a smaller share of the cost of medical bills.

The fine print is getting lost in the translation.

Consumers might pay less up front every month, but if you break a bone or get hospitalized for a serious illness, you could be on the hook for a bigger share of the bill.

Premiums under the Senate bill would average about 30 percent lower in a few years, the nonpartisan Congressional Budget Office said in its analysis this week. What’s overlooked is that the lower premiums envision a switch to “bronze” plans that now come with a $6,000 individual deductible, as opposed to the current standard “silver” plan with a $3,600 deductible.

Another caveat: Not everybody would see lower premiums.

Insurers will be able to charge older adults up to five times more, compared with a threefold difference under current law, the health care overhaul passed under former President Barack Obama.

Also, the GOP would give lower-income people less financial help from the government, which means many might not be able to afford coverage. Lower-income people get less assistance with premiums in the Senate bill and the GOP would also phase out extra help that many receive with deductibles and copayments.

The 2010 Affordable Care Act was intended to solve problems of access and affordability for millions of Americans who don’t have job-based insurance. Instead, it’s been a roller-coaster ride, and not only because of entrenched political opposition from Republicans.

This year and again for next year, double-digit premium increases have hit many states. While consumers who get federal subsidies are insulated, several million who buy individual policies outside the program are taking a direct hit. It’s this group that some GOP lawmakers had in mind when they launched their self-proclaimed health care “rescue mission.”

“It will bring affordability to people across this country who are suffering under the curse of high premiums, and high deductibles and high out-of-pocket costs,” Sen. John Thune, R-S.D., said of the Senate GOP bill.

But experts caution that cost problems might just continue, only in a different form.

One longtime “Obamacare” critic says Republicans risk making some of the same mistakes that Democrats did with their original legislation.

Industry consultant and blogger Robert Laszewski says lawmakers should start from scratch and try to design a system along the lines of the Medicare prescription drug benefit, a collaboration between the government and insurers that has solid bipartisan support, even if its cost to taxpayers is a problem.

Republicans “are not bringing costs down – they are only bringing the front-end premium down,” added Laszewski. Healthy people looking at a plan with a $6,000 deductible might just decide to roll the dice and remain uninsured.

The Congressional Budget Office says insurance markets will be stable in most areas whether current law stays in place or Republicans pass their legislation. But many trade-offs lurk beneath that 30,000-foot level assessment.

A table at the end of this week’s report delves into greater detail, looking at how costs would change for hypothetical individuals at different income levels in 2026.

Take a hypothetical 40-year-old making a modest $26,500 a year. Under current law, that person would face a sticker price of $6,500 a year for a standard “silver” plan. Premium subsidies would reduce the net premium to $1,700.

Because of extra subsidies for deductibles and copayments, the plan would cover 87 percent of expected medical costs.

Under the Senate bill, the 40-year-old would see the sticker price silver plan premium drop to $6,400. But their premium subsidies would be significantly lower, and they’d end up paying $3,000. Caveat: It wouldn’t be the exact same plan, because extra subsidies now provided for deductibles and copayments would be gone. The new plan would only cover 70 percent of expected medical costs.

What’s the option?

The consumer could switch to a “bronze” plan, the new standard under the GOP bill. The sticker price would be $5,000, and after subsidies, the net premium would be $1,600. But the plan would only cover 58 percent of expected medical costs.