When I started freelancing five years ago, my family’s health insurance premiums were approximately $19,200 per year. Starting in November, they will be $36,000 a year, thanks to two straight years where we saw increases of $600 a month. It’s truly scary.
Of course, things may change in 2014, if the health reform is enacted. But how? I was curious about what it will mean for freelancers and other folks, such as laid-off professionals, who have to buy insurance on the open market. Will the changes usher in a way out of these crushing increases?
Recently, I spoke with Mark Colwell, marketing manager of GoHealth, an online marketplace for health plans, about his company’s take on what will happen to health insurance rates for independent professionals who buy healthcare on the open market. His company is anticipating an uptick in business, once Americans are forced to buy health coverage under the reform or pay penalties. We’re aware there are many perspectives on health reform and will be interviewing other experts to flesh out the picture for readers of $200KFreelancer.
Here are some key takeaways.
If you’re ill and have been denied coverage: You’ll finally be able to buy a plan. “Nobody can deny you coverage any more in 2014,” he says. And if you’re buying a plan on the open market and are now paying an exorbitant rate, you’ll find your costs go down. “People who are unhealthy will pay a lot less,” he says. How much less is a big unknown.
If you’re healthy and qualify for subsidies: If you earn $88,200 or less for a family of four or $43,320 of less as an individual, you will qualify for subsidized rates. You may have more choice than you do now in the level of coverage you can buy. The exchanges will sell four levels of plans: bronze, silver, gold and platinum, with bronze being the least robust. It’s unclear how those levels of coverage will be defined.
Will you pay less for similar coverage to what you have now, assuming you’re buying insurance? It depends on how much of a subsidy you get, but cheaper rates are not guaranteed. “On average, rates are going to go up for most people,” says Colwell. The Kaiser Family Foundation offers a set of tables that estimate what you will likely pay, depending on your income. (You have to use the calculator first to get to the page where the tables appear).
If you don’t qualify for the subsidies. You will probably pay more for your health insurance, as insurance companies try to offset the increased costs of treating more unhealthy people, says Colwell. He says it’s impossible to predict what the increase in rates will be but “it could be as much as 50%.” (Contemplating my rates going up to as much as $4,500 a month makes me almost physically ill, so I’m going to have to force myself to stop thinking about it! But, since we keep getting $600 a month increases, that number doesn’t seem wildly out of whack).
I used a calculator from the Kaiser Family Foundation to predict rates for a “silver” family plan in several states. Since this site is the $200KFreelancer, I calculated the rate for a married 45-year-old plan holder with two children and a family income of $200,000 in a high-cost state, where many of our readers live. The premium: $17,094. (But, based on my premiums, that number seemed unrealistically low–unless the silver plan is truly bare bones) For the lowest cost of living states, the calculator said annual premiums would likely total $11,396 for the same family. For single people, the cost was $6,730 in a high cost of living state and $4,487 in one with the lowest healthcare costs.
The bite of higher health rates may not be as painful if you live outside of high-cost states like New York, New Jersey and Massachusetts. For instance, in lower cost states, “right now, if you’re a healthy individual, you can purchase a plan from $80 to $200 a month,” Colwell says. Post-health reform, a plan may cost $300 a month, he said.
Colwell brought up another key point that will affect everyone: It may take longer to get a doctor’s appointment, as millions of people enter the market in 2014. “There’s going to be a massive shortage of doctors and healthcare providers,” he says. That might not affect folks who live in areas that are chock full of doctors, but it could be a big factor for those in underserved communities.
My guess after covering health care for a long time is that the cost of health care in low cost states will rise to be roughly the same as the costs in high-cost states; and high-cost states won’t necessarily see much of an increase. New York, New Jersey and Massachusetts are states where health care insurance is heavily regulated. The greater regulation results in more people being covered with richer plans — but the regulations also drive costs up.