Julia’s healthcare choice

Christina Corieri Healthcare Policy Analyst, Goldwater Institute
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Eager to silence the naysayers in the lead-up to the implementation of Obamacare insurance exchanges this week, the Department of Health and Human Services released new cost projections, touting that premiums for plans on the exchanges will be “lower than originally expected.”

Unfortunately, this doesn’t mean that premiums will be lower than they are currently. It just means that the federal government’s math changes from time to time. In reality, the cost of premiums for most Americans will increase under Obamacare, with the only thing shrinking being consumer choice.

Young Americans, many of whom still are struggling to get back on track after entering the workforce amid the worst recession since the Great Depression, will be particularly impacted by the premiums in the new government exchanges. For several years, they’ve heard that Obamacare was designed to help them. They soon will find out that young, healthy folks are exactly whom the Obama administration is relying on to enroll in exchanges to make the proposition financially solvent.

Remember “Julia”, the fictitious poster child for the Obama reelection campaign promise that all you need in your life is more government? For old times’ sake, let’s compare how Julia will fare in the new insurance exchange. Assume that Julia is a single female approximately 27-years-old, living in California. Julia has a job and earns $30,000 annually, but her employer does not offer insurance. In California, Julia can get coverage for as little as $91 a month for high-deductible plans. There are higher cost options available as well, but she has a limited income and student loans to pay back, so since she is in good health, she sensibly opts for the high-deductible plan. But now that the exchange has taken effect, Julia’s premium under it will jump to $191 per month, more than double her current premium.

Surf and sun not your speed? Suppose Julia, so inspired by that hope and change stuff, has packed her bags for Washington, DC to become a full-time staffer for Organizing for America. Right now, Julia can obtain insurance for a premium of $99 monthly. But this week, if Julia goes shopping for insurance on the government exchange, her premium will have jumped to $148 per month, a 50 percent increase.

There are a handful states where the average premium cost on the exchange is lower than the current average cost. But even this ignores the fact that while the average cost may be slightly lower, there were still lower cost plans available prior to Obamacare implementation and people who had opted for those lower-cost, high deductible plans will see their costs increase significantly even in these states.

Julia’s story will be played out thousands of times over throughout the country. She could be your friend, your neighbor, or even your daughter. Today, she can go on the internet and immediately get quotes from a variety of sites for health insurance, begging the question of why the federal government needs to spend billions designing an online “marketplace” when several of these privately run marketplaces already exist.

Remembering her president’s repeated promise that his federal health care law would lower the average family’s premium by $2,000, Julia has been excited to find out just how much she will save. Imagine her disappointment when she discovers the cheapest plan on the exchange is $191 a month. Even with a low income tax subsidy, she will still be paying $151 a month for the lowest priced plan available on the exchange – 66 percent more than what she is paying now. To make matters worse, if she likes her current plan, Obamacare denies her the option of keeping it.

Meanwhile, HHS has assured Julia that this plan is much better than those previously available on the individual market. Unfortunately, she is due for more disappointment: Obamacare still has an out-of-pocket maximum cost of $6,350. Before her plan had a lower out-of-pocket maximum as well as lower co-pays to visit her primary care doctor or a specialist.

But won’t this more expensive plan have a better network that will allow Julia to keep her own doctor? Sadly, the answer is probably no. While the details on the provider networks for all states’ exchanges have yet to be provided, insurers across the country appear to be limiting options available for plans purchased on the exchange. In California, for instance, some of the plans offered on the exchange have a provider network a third of the size offered outside of the exchange. In the meantime, Julia is left crossing her fingers, hoping she gets to keep the doctor she knows and trusts.

Under Obamacare, people like Julia who are already struggling to build financial security will have to spend more money on inferior plans with fewer choices. Julia is now learning the lesson that the entire country is starting to understand — the Affordable Care Act is not affordable.

Poor Julia. Poor everyone.