The color of money

Michelle Singletary: Separating Obamacare fact from fiction

 

Washington Post Service

So much of the news the last few months has been dominated by the foibles of the Affordable Care Act.

Yet the truth of how good or bad various parts of this major piece of health reform are won’t be known for a long time.

But I like the way the nonpartisan Kaiser Family Foundation has been looking at the provisions of the ACA and providing straightforward evaluations. During a webinar for journalists Tuesday, two of the foundation’s experts laid out their concerns for what we are likely to see going forward, especially as it relates to young adults.

You’ve probably heard that if not enough young folks sign up in the healthcare exchanges run by the federal government and the states, insurance premiums will rise catastrophically. The lack of participation might result in a “death spiral.”

And what does that mean, you might ask?

We’ve been told that to make the risk pool less risky you need a significant number of healthy young people to sign up for insurance. That’s why there has been a lot of focus on the group called the “young invincibles.” If they don’t enroll, the sicker people in the risk pool, who people expect will enroll in significant numbers, will drive up costs, and premiums. If that happens, healthy people in the pool may bail, driving up costs even more — the spiral effect.

You need to also realize that things have changed in the way that insurance is priced because of the ACA. Premiums can no longer vary based on someone’s health status or gender. Kaiser points out that under the ACA, premium variations based on age are limited to a ratio of 3-to-1. That means the premiums for a 64-year-old can only be three times the premium for a 21-year-old, Kaiser says. The pricing difference based on age was previously far greater — typically five to one.

But even if the exchanges don’t get a sufficient number of young adults, it’s not going to be as bad as you have heard, said Larry Levitt, co-director of Kaiser’s Program for the Study of Health Reform and Private Insurance. Levitt is the co-author of a new report “The Numbers Behind ‘Young Invincibles’ and the Affordable Care Act.” He talked about his findings during the webinar.

“Because premiums are still allowed to vary substantially based on age, the financial consequences of lower enrollment among young adults are not as great as conventional wisdom might suggest,” the report said.

Even under some worst-case scenarios run by Kaiser, insurers’ premiums wouldn’t likely rise more than 1.1 percent to 2.4 percent, well below increases that would trigger a “death spiral,” Levitt said.

What the exchanges need are healthy people of all ages, Levitt said: “Getting old invincibles in the market is just as important as getting young invincibles.”

So what additionally should you expect from the implementation of the ACA in the coming year?

If you manage to get through the exchanges and sign up for insurance, before you visit a doctor in the new year be sure you’re covered. Things are running pretty tight to deadlines, and errors are being found. So call the insurance provider you signed up with to be sure they’ve got you in the system. “People who think they are enrolled may not be,” Levitt said.

Additionally, if you’ve signed up, please pay, and pay on time. Just signing up doesn’t mean you are covered. You’ve got to pay your premium.

If you were thinking that open enrollment might be extended because of all the malfunctions and delays, think again. The point of having an open-enrollment period is to encourage people to sign up during the window and not wait until they have a health crisis. A delay would also make it difficult for insurance companies to figure out premiums for 2015.

“My suspicion is, as long as people continue to enroll, an extension is unlikely,” Levitt said.

Jennifer Tolbert, Kaiser’s director of state health reform, said she’s concerned that people enrolling in the exchanges run by the government may not get the same level of help as those going through state-run exchanges.

“There will be a group of people with little experience with private health insurance,” she said during the webinar.

Now that HealthCare.gov is running better, it’s important that there be enough people available to help enrollees evaluate their options and take advantage of any tax credits they are eligible for, she said.

I’m grateful to Kaiser for clearheaded explanations. What I wish for in the new year is that, as far as the ACA is concerned, we see more factually-based information and less hyperbole.

Hear Michelle Singletary’s personal finance reports on www.npr.org. Readers may write to her c/o The Washington Post, 1150 15th St., NW, Washington DC 20081.

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