If you’re like most Americans, you probably have one big question about health care reform: will the cost of health insurance skyrocket?
“People do have some nervousness about rates going up,” says Amy Bach, executive director of the non-profit insurance advocacy group United Policyholders. In fact, cost has been a focus of debate since before the federal Patient Protection and Affordable Care Act (PPACA), also known as Obamacare, became law in 2010, experts say.
But many Americans are also wondering whether Obamacare will save them money on health care and improve their personal finances.
Can Obamacare save you money on health care?
It’s hard to tell right now whether any given consumer’s health care costs will change once health care reform is fully implemented starting in 2014. That’s partly because insurance companies’ proposed rates for plans that will be sold in the exchanges, the health insurance marketplaces created by the federal health care reform law, have been revealed in only three states so far. And officials in those states – Vermont, Rhode Island and Maryland – still have to review the proposed rates before premium prices are made final. “There’s all kinds of speculation about cost,” says Sally McCarty, senior research faculty at the Georgetown University Health Policy Institute.
But experts – and a look at the proposed rates in the states where they have been published – can provide a sneak peek at how costs might change for various groups of consumers under health care reform.
6 questions you should ask to find out if Obamacare can save you money
Here are six questions you should ask that might help you calculate your health insurance costs when Obamacare kicks in:
1. Do you have health insurance now? And if so, do you get it through work or buy it on the individual market?
If you get health insurance at your job and you work for a big company, you probably won’t see much of a change in your premiums, McCarty says. If you buy individual insurance, you could see costs go up or down depending on your age, your health and the coverage your plan offers.
2. If you have individual health insurance, what does your plan cover?
In general, the skimpier your coverage and the higher your deductible now, the more likely your costs might go up under health care reform. In Maryland, for example, the cost of an individual plan for a healthy young man from CareFirst BlueCross BlueShield, now $115 a month with a $2,700 deductible, could increase by 150 percent to just under $300, according to Kaiser Health News.
Experts say it’s important to keep in mind that the health insurance you buy through an exchange will offer much more coverage than many individual plans sold today. By law, plans sold in the exchanges must offer benefits in 10 categories, including hospitalization, emergency services, prescription drugs, maternity care, and mental health services. “The Affordable Care Act ensures that you’ll actually be getting something for the dollar you spend,” says Claire McAndrew, senior health policy analyst for Families USA, a non-profit health care advocacy organization.
3. How old are you?
In general, younger people might see premiums go up, while older people could end up paying less. Most states now allow health insurers to charge older people premiums that are five times higher than what younger people pay, according to America’s Health Insurance Plans, a health insurance trade association. But the PPACA will limit health insurers to charging older consumers three times as much. This could lead to an “overnight increase” for consumers aged 18 to 49, according to AHIP.
But experts say consumers will have choices in the health care exchanges. For example, young adults under 30 will have the option of buying a “catastrophic” health insurance plan. In Vermont, under the proposed rates, a young consumer could get a catastrophic plan for $201.70 a month. “It will have key protections included,” McAndrew says of catastrophic coverage sold in the exchanges.
4. Are you a male or female?
In most states, 92 percent of individual health insurance plans charge women more than men of the same age for a health insurance plan, according to a 2012 report by the National Women’s Law Center.
In some cases, women pay much more: for example, according to the report, one plan in Arkansas charges 25-year-old women 81 percent more than men of that age. Another plan in the state, however, charges women 10 percent more. The PPACA forbids insurers from charging different rates based on gender – and that means that women generally will see a drop in costs, says Sabrina Corlette, research professor at the Center on Health Insurance Reforms at Georgetown University.
5. Are you healthy or sick?
In general, healthy individuals could be more likely to see costs go up while individuals with chronic illnesses or other conditions could see prices drop. Starting in 2014, Obamacare will prohibit insurers from charging a consumer more based on their health status. However, insurers are allowed to charge smokers more.
6. What is your family income?
Your household income will determine whether you get a federal tax credit paid directly to the insurance company to lower your premium. If you make up to four times the federal poverty level– or $45,960 or less in 2013 for a single person – you will be eligible for a tax credit to help pay the cost of your premium. The tax credit will vary based on your income. For example, in a list of cost examples put together by the state of Vermont, a couple with no kids and a family income of $32,000 a year would receive a federal subsidy of $721 a month and pay just $134 a month. Give that couple bigger paychecks – say, $65,000 a year between the two of them – and, with no subsidy, they’d be shelling out $895 a month.
One big thing to remember, McCarty says, is that everyone who shops in a health care exchange will have multiple options at different prices: “You can shop and see what you find that fits your budget.”