More than 80 percent of the people who have signed up for health plans through state or federal Affordable Care Act exchanges qualify for subsidies to help pay premiums and out-of-pocket medical expenses. But what about all the millions who don't have access to employer-sponsored health insurance but also don't qualify for subsidies?
About half of the 12 million Americans buying health insurance on the individual market are subsidy-ineligible, according to the Urban Institute. Are they all fuming and lining up to appear in anti-Obamacare commercials?
Chances are not. As veterans of the individual market, many are accustomed to its shocks and uncertainties. About a quarter of them received cancellation notices last fall, and others face substantial premium hikes. Some will be forced to pay more than in the past, in some cases in part because they are covered for services they don't want, like childbirth or mental healthcare. But many are finding their options much better and their status less precarious than in the pre-ACA market.
I spoke recently to several people whose family income disqualifies them for subsidies and who bought insurance on the individual market for 2014. All had family members with preexisting conditions, which means they benefited from the ACA's prohibition on basing price or eligibility on medical history. All had been paying above-market rates or faced limited choices because of a family member's medical history.
That puts them in a special category: former victims of the harsh pre-ACA market, current beneficiaries of the law's requirement that everyone jump in the risk pool together. Some ACA opponents argue loudly that their newfound fortune comes at the expense of their healthy counterparts in the individual market—at least, the half of them who do not qualify for subsidies. And that’s true to a degree—forbidding insurers from charging some people more based on their medical history raises the cost for those who appear today to be in perfect health.
This special category is huge, though. The percentage of Americans with preexisting conditions is anywhere from 19 to 50 percent, according to an HHS report overviewing various studies. And that's just individuals—in households with more than one person, the chances that someone will have a medical condition that jacked up the price of insurance in the pre-ACA world multiplies.
Among the "satisfied unsubsidized," a few patterns emerged. Most of the people I interviewed saw no reason to buy their plans through Healthcare.gov or the state exchanges. Doing so would only add a layer of bureaucracy, though several used the window-shopping function on the exchanges to scope out the market. All those who bought off-exchange found it much easier than in the past to buy through a broker or directly from an insurer in the post-ACA market, where an insurer cannot ask for information about a buyer's medical history. And all found better coverage for the money than they could get before the ACA went into full effect.
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Karen is an artist who lives in Colorado with her husband. Both are in their mid-forties and have been self-employed for more than a decade. Karen had a rare, benign tumor that required complicated treatment, locking her into one plan for 10 years. Initially, that didn’t keep the couple from acquiring affordable coverage. Working through a broker, they found an Anthem BlueCross BlueShield plan for a few hundred dollars per month. "But the rates went up 20 to 30 percent every year," Karen recalls. "I kept renewing. I was terrified to change anything. I thought even changing to a different policy with the same company might result in rescission." By 2013, the couple was paying $1,200 a month.
"It was uncommon, and arguably illegal, for insurers to raise an individual’s premium because of their health status” before the ACA, says Larry Levitt, a senior vice president at the Kaiser Family Foundation. “What was more common was for insurers to close product lines to new sales"—and then jack up the prices, trapping sick customers.
When ConnectForHealthColorado, the state's ACA exchange, opened last fall, Karen found a Kaiser Permanente plan for 2014 that’s comparable to the family’s previous plan but is saving them $657 per month in premiums. But she didn’t buy the plan on ConnectForHealthColorado. Deterred by news reports about website not working, she called the broker she used 10 years ago, who suggested going directly through the insurer.
"Applying directly to Kaiser saved us time over applying through our state's exchange, because we didn't have to go through the rigmarole of seeing if we qualified for a subsidy when I knew up front that we didn't," Karen explains. The application process was also a lot easier than in the past, because insurers no longer require detailed medical histories. "You just have to give them your credit card, your ages and location, and boom—you're done."
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Brad is an Atlanta-based consultant in his early fifties, married with three children in their late teens and early twenties. His oldest daughter suffers from a painful chronic nerve condition that motivated her to found a nonprofit in her mid-teens, which she still runs. Pre-ACA, the family pieced together a complex mosaic of insurance coverage. Brad had a solo policy from a former employer for whom he now consults; his wife’s policy covered her and the couple's two sons; and their daughter had a small-business plan through her nonprofit. Total premium cost: $1,800 per month.
"I waited patiently for the ACA and tried the first month to navigate the website, but had no luck,” Brad says. “Finally, in December, I was able to get on the site and look for plans in Georgia that included the doctors we used—most especially for my daughter and her preexisting condition. I found one for around $1,100 per month for my family, and being the capitalist I am, went to compare it to the private marketplace.”