My husband and I are one of the two million unfortunate Californians who have to buy health insurance on their own. What we pay per month doubled once Obamacare started. We had paid $430 per month for a $10,000 deductible; now we pay $900 for a $6,500 deductible. We didn’t qualify for any subsidies. Yes, the deductible went down and some co-pays are lower. But we are healthy and don’t use our plan, so it doesn’t help us. I think the insurance companies are just raking in the money. After all, the government is paying the bill for anyone who needs help, so why not jack up the rates? Is there anything stopping them from charging whatever they want to?
Yes, there is something holding insurers back from overcharging or over-profiting. It’s an obscure part of the health reform called the Medical Loss Ratio rules. Under these rules, the insurer has to spend 80 percent of the money it collects from members on medical services and quality improvement efforts. This applies to individual (exchange and off-exchange) plans and small group plans. For large group plans, they have to spend 85 percent. If they spend less than that, they have to give the money back to the members.
In the first year of these rules, insurers did give money back.
On the other hand, if they spend more than 80 or 85 percent, they cannot go back to the members for more money. So, it’s not a guaranteed profit for them.
Your situation is a common one. The plan you had before January 1, 2014 was less than the minimum set by health reform. The flexibility to buy less or leaner coverage is not there as it was in the past. The maximum deductibles will go up each year, based upon a formula that takes into account medical care inflation. It will take many years, however, for a $10,000 deductible to be a health reform “approved” plan. And by then, $10,000 will buy a lot less medical care.
This is the kind of thing that may get changed, as the years go by and the law gets adjusted to better meet people’s needs.