NEW YORK — There are many assumptions about what the effects of Obamacare will be. This series aims to separate myths from realities and answer questions surrounding the Affordable Care Act.
Myth: Young people will pay a lot more for insurance under Obamacare.
Reality: It’s true that premiums will likely rise for some young adults, particularly men. But that doesn’t take two important considerations into account: federal subsidies and more comprehensive coverage.
The Obama administration Wednesday released a first look at how much consumers will pay for premiums in 36 insurance exchanges partly or fully run by the federal government. The exchanges open for enrollment on October 1, while coverage begins in January.
The new data showed that in Indianapolis, for instance, the sticker price for the cheapest bronze plan for a 27-year-old will be $204. Right now, he can get a policy for as little as $52.50, according to eHealthInsurance, an online marketplace.
In Fort Lauderdale, Fla., the least expensive bronze plan will cost $128, compared to $66 today.
But those comparisons are very misleading because they do not take out-of-pocket costs and coverage limits into account, said Linda Blumberg, senior fellow at The Urban Institute. The cheap insurance policies today have very high deductibles — $10,000 each for the Indianapolis and Fort Lauderdale plans — and don’t cover mental health, brand-name drugs or pre-natal care. The out-of-pocket limit in each of these plans is $12,500.
“Part of the problem with these plans is that people think they are insured until something bad happens and then they find out they aren’t covered,” she said. The Obamacare plans are “real insurance.”
Under Obamacare, the plans must cover an array of basic health benefits, including prescription drugs, maternity care and mental health. The out-of-pocket max is limited to $6,350 for an individual so the deductible on the bronze plans can’t be higher than that.
And, Blumberg notes, the cheap plans on the market today are only available to healthy young adults with no pre-existing conditions. But insurers must offer the same coverage to everyone — regardless of their health history — under Obamacare.
Also, sticker prices on the Obamacare plans are not what most young adults will actually pay, Blumberg said. Single people earning less than $46,000 will be eligible for federal subsidies to defray premium costs. The size of the subsidy is based on age, income and residence.
So if the Indianapolis resident makes only $25,000, he will pay $70 for the bronze plan, while the young man in Fort Lauderdale would pay only $74, not too much higher than the current rates.
Young adults up to age 30 can also sign up for more bare-bones catastrophic plans under Obamacare, but they won’t be eligible for subsidies. Such plans would cost $170 in Indianapolis and $86 in Fort Lauderdale.
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