A lot has already been written about the impact the Patient Protection and Affordable Care Act (PPACA) / Obamacare will have upon health insurance premiums. More recently, with the release of exchange insurance plan rates by the states of California and Ohio, a number of people have begun comparing the prices of before and after ACA plans. These comparisons have for the most part focused on average premiums as well as premium changes among lower-tiered plans, which has introduced some problems.
In order to eliminate some of the problems other studies have had, ValuePenguin took a number of steps to refine our comparisons:
- We narrowed our comparisons to GOLD plans offered under the PPACA. We wanted to reduce the likelihood that any existing plans would have insufficient coverage in terms of benefits versus the required essential health benefits outlined in a State Exchanges, which also skews premium comparisons. By narrowing our study to higher value plans we examined plans that would face the least changes in benefits for a cleaner comparison.
- We compared specific plans with similar characteristics from the same companies. With only a select number of companies offering plans on the state exchanges, ValuePenguin chose insurers that currently offer policies and have submitted policies for the 2014 exchanges as case studies
- We chose specific demographic case studies. Averages can be misleading and are functionally useless for the purposes of helping someone understand how the ACA will impact them. In our study we priced plans for men and women at ages 27, 40, 55 (all non smokers)
Comparison 1: Aetna (Washington DC)
In our first study, we compared two PPO plans from Aetna in the District of Columbia, the existing plan Aetna PPO 2500 and Aetna Premier 2000 PD, a proposed gold tier plan. First, in examining the premiums for the two plans, we see that at all levels the new plans are much more expensive. For our youngest demographic, the new ACA plan will cost $1,442 more a year, while for our oldest group it would be $4,624 more.
While the proposed ACA plan does have lower deductibles and out of pocket maximums at current rates, a policyholder could simply set aside the difference in premiums and compensate for these higher out of pocket expenses. The Aetna PPO 2500's out of pocket maximum includes the deductible in its calculation; assuming this carries over to the Aetna Premier and our sample insureds reach their out of pocket maximums, a 27-year old individual would save $442 under the current plan. For someone aged 55, he/she could simply take the added $4,624 and nearly pay off their entire out of pocket responsibilities under the current plan.
|Aetna PPO 2500 (Now)||Aetna Premier 2000 PD (ACA)||% Change|
|Aetna PPO 2500 (Now)||Aetna Premier 2000 PD (ACA)|
|Individual Out of Pocket Maximum||$5,000||$4,000|
|Generic Drug||$15 (Deductible Waived)||$4 (Deductible Waived)|
|Brand Drug||$35 Copay||$50 Copay|
Comparison 2: CareFirst (Washington DC)
CareFirst is the largest single insurance provider in the Maryland Area. Here ValuePenguin conducted a comparison of the HealthyBlue 2.0 - 1500 currently offered on eHealthInsurance.com and the proposed PPACA HealthyBlue 1500.
Interestingly in this study, we see the rate increases are the same across all demographic age groups. While the total dollar amounts may have a larger impact upon older individuals the percentage increases in rates are largely the same: 49% to 50%, and marginally less for younger adults.
|HealthyBlue 2.0 - 1500||HealthyBlue Gold 1500||%Change|
|HealthyBlue 2.0 - 1500||HealthBlue Gold 1500|
|Individual Out of Pocket Maximum||$4,500||$3,250|
|Inpatient Hospital||$450/day Copay||$450/day Copay|
|Emergency Room||$200 Copay||$200 Copay|
|Generic Drug||$0 (Deductible does not apply)||$0 (Deductible does not apply)|
|Brand Drug||$45 Copay||$45 Copay|
Comparison 3: Aetna (Ohio)
In the third case study, ValuePenguin looked at another group of Aetna plans, this time in the state of Ohio. Here we compared the existing Aetna PPO 1500 with the proposed OH Aetna Premier 2000 PD. Unlike the Washington DC case study, the current Aetna plans in Ohio charge different premiums for men and women. Under the ACA, insurance companies will no longer be able to use gender as a rating factor, so in the proposed plans, the premiums are the same for men and women (as you'll see in the impact on premiums in this case study).
In this comparison the existing PPO 1500 plan actually has better deductibles, coinsurance, and out of pocket maximums. Yet for all age demographic groups the new proposed plans will come at a significantly higher cost. More interestingly, the differences between male and female rate increases in the post ACA insurance market are shown here. Younger men will face higher rate increases given the changes in gender rating restrictions since they had cheaper premiums to start with: a 90% increase in the most comparable plans compared to a 16% increase for women.
|Aetna PPO 1500||OH Aetna Premier 2000 PD||% Change|
|Aetna PPO 1500||OH Aetna Premier 2000 PD|
|Out of Pocket Maximum||$4,000||$4,500|
Comparison 4: Kaiser Permanente (Oregon)
In our last case study, we took two plans from Kaiser Permanente in the state of Oregon. We compared the existing KP 1000/25/Rx plan classified by Kaiser under their "Gold Deductible Plans" and the proposed Gold 1000/20 plan filed with Oregon's Insurance Department.
A few observations: while the health insurance premiums increased by a third for young adults, monthly payments stayed flat for 40-year olds, and even decreased for 55-year olds. A closer look at the out of pocket maximums, however, reveals that they've jumped $1,400 to $6,400.
|KP 1000/25/Rx||Gold 1000/20||% Change|
|KP 1000/25/Rx||Gold 1000/20|
|Out of Pocket Maximum||5,000||6,400|