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Tag: Benefit shock

Will Obamacare Survive? Nine Key Questions

How did it go? Unavoidably, that will be the big question come Tuesday.

But there will be much more to it than that.

A 180-Day Open Enrollment––Not a One-Day Open Enrollment

What happens on the first day, for good or bad, will constitute only a tiny percentage of the open enrollment period. Consumers will likely visit the new websites many times before they make any decisions, and that is exactly as it should be.

Many of the health plans touted as being low-cost plans are going to be very limited access plans. It won’t be easy for consumers to compare one plan’s provider network to the other. In the best of circumstances, consumers will be confused by what is being offered for some time and will have to make a major effort to make sense of it for themselves.

Let’s not forget, they will be buying something that will cost thousands of dollars––their money or the government’s––and that kind of purchase will never be as simple as going to Amazon and buying a book.

I will suggest that if the local press wants to be helpful they will waste less time asking how things went the first day and more time doing stories on the quality of the various health plans in their local communities––particularly over provider access, which will be the only major product differentiator between health insurance companies.

Will There Be Administrative Problems With the Exchanges?

There already are. And, there will be lots more.

During the last 24-hours I have been told that the information technology testing between insurance companies and the federal government, particularly around the government telling insurance companies who they will be covering, continues to be a real mess.

But whatever obvious problems there are at launch, there will likely be more problems and more serious problems behind the scenes in the lead-up to January 1, the initial problems will be worked out in a few days or a few weeks. Operational expectations are now so low for Obamacare’s health insurance exchanges a small disaster will be considered a political victory.

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Rate Shock vs. Benefit Shock

Will we have rate shock?

It looks to me like consumers will have a choice when they get to look at the health plans available on the new “Obamacare” health insurance exchanges––rate shock or benefit shock. While there has been lots of focus on the issue of rate shock, I will suggest that just as big an issue may well be benefit shock—that consumers will look at what they will be getting for their premium payments and that they will be surprised at what their out-of-pocket costs will be and before they get anything.

The chart above was prepared by Covered California, the state-run California exchange. This chart does not include specific California plan premiums. What it does show is the net of subsidy cost a single person would pay at the various income points for the second lowest cost Silver plan, as well as the deductibles and co-pays they can expect to see from the standard Silver plan.

While the benefit plan structures may vary a bit from state to state, this gives us a pretty good idea of what consumers can expect in all of the states (click on chart to enlarge).  A single person making $22,980 per year would face a premium, net of subsidies, of $121 per month. That’s pretty good.

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