OBAMACARE NOVEMBER 3, 2013
If you’ve followed the stories of insurance cancellations related to Obamacare, you may have heard about Dianne Barrette. She’s the 57-year-old Florida realtor who was paying $54 a month for a Blue Cross insurance plan. The plan won’t be available after December. And while FloridaBlue offered her a new plan, the company told her the premium would be $591 a month. Barrette, who makes $30,000 a year and could not pay for such a plan, was flabbergasted. Jan Crawford of CBS News made her the key source for a story about plan cancellations. An appearance on Fox News followed, as did multiple cameos in press releases from Obamacare critics. For at least a few days, she was the poster child for the Obamacare cancellation story.
But Barrette’s situation defies quick and easy description. It’s true that she can’t keep her current policy—and that most policies available to her for next year have higher premiums. But those plans also offer real coverage, and her current plan does not. Some people might resent government effectively prohibiting her current plan. Barrette doesn’t appear to be one of them. Based on conversations we’ve had over the past few days, she wants more comprehensive insurance and, within reason, she's willing to pay more for it.
I’m not the first person to examine her situation. Erik Wemple of the Washington Post called her shortly after the CBS article appeared. Nancy Metcalf of Consumer Reports examined her case and provided a detailed breakdown of what insurance she has today versus what she could buy for next year. What follows builds on their work—and that of other writers, like Tommy Christopher of Mediaite, Michael Hiltzik of the Los Angeles Times and Paul Waldman of the American Prospect, who have examined similar stories.
Barrette's story isn't a stand-in for everybody losing existing coverage—a group that represents a tiny proportion of the population, yet still numbers in the millions. Even so, Barrette's tale provides a good window into some of the primary changes taking place as a result of Obamacare. Those changes are way more complicated than the initial media coverage suggested.
The policy Barrette has today is called the Go Blue Plan 91. It is not what most people would consider real insurance. Its coverage of doctor visits and tests, such as MRI scans, consists of paying $50 and then letting Barrette pay the remaining balance. Drug coverage works more or less in the same way, only the plan pays $15 per prescription—which is enough to cover generics, but not many name-brands. And hospitalization? The plan pays nothing at all. As Wemple put it, "it’s a pray-that-you-don’t-really-get-sick 'plan.'" Barrette doesn't really disagree—but this plan, she says, was all she could afford. "Most everyone I talked to said they were paying thousands more to get hospital coverage," she told me, "so I took my chances with what I have now."
OK, but what can she get from Obamacare? Using plan data provided to me by the Kaiser Family Foundation, residents of Polk County, Florida have dozens of insurance options from which to choose. The cheapest option for somebody of Barrette's age has premiums of $440 a month, the most expensive goes for $914 a month. But Barrette wouldn’t pay those prices. Obamacare offers tax credits to people with incomes of up to four times the poverty line, or about $45,000 for an individual. Given Barrette’s income, she’ll be getting a tax credit worth nearly $331 a month, according to the Kaiser Foundation’s subsidy calculator. And that tax credit works like a discount, upfront. To figure out what she’d pay, you subtract the value of the tax credit from the price of the plan.
Accounting for that discount, it looks like the cheapest plan available her would cost about $100 a month—in other words, about $50 a month more than Barrette pays now. Obamacare divides plans into categories based on generosity—with platinum the most generous, bronze the least generous. This is a bronze plan and you can tell by reading the benefit summary. It covers periodic wellness visits for free, like all plans must under the new law. But it doesn’t pay for virtually anything else until the beneficiary has paid $6,250 of his or her own money, the maximum out-of-pocket allowed under Obamacare. The plan might protect Barrette from bankruptcy, something her current plan doesn't do, but it would do almost nothing to insulate her from less extreme medical expenses.
But Barrette would have other options. There are bronze plans that provide a little more coverage and there are silver plans that provide substantially more. Metcalf, in her Consumer Reports article, found one such policy: A silver plan from Humana that would cost Barrette about $150 a month (i.e, $100 a month more than Barrette pays now). Here's a summary:
It's not the most generous plan in the world. The deductible is $4,600 and the only things the plan pays for outside the deductible are preventive services, the first $500 of diagnostic lab tests and x-rays in the year, and "diagnostic" office visits, meaning going to the doctor because you're feeling awful and need to know what's wrong. Visits for treatment are subject to the deductible. There's a separate $1,500 deductible for prescription drugs, after which there's a copay of $10 for generics and $50 for brand-name drugs. Once you've run up $6,300 in out-of-pocket expenses, the plan picks up 100 percent of your costs for the rest of the year.
For an additional $50 or so, Barrette could apparently get the second-cheapest silver plan. It’s from FloridaBlue, the same company that provides Barrette with what she has now. Included in that policy: the usual free checkup, free vision care (one exam plus one pair of corrective lenses), free clinical lab work, and a drug plan with prices ranging from free for some generic, mail-order drugs to $250 for some high-end specialty drugs. It would cover primary care physician visits, though with a $75 co-pay per visit. Other coverage—for hospitalizations, specialist office visits, and so on—would kick in after her out-of-pocket expenses reached an annual deductible of $5,750. Her total out of pocket expenses could be no more than $6,250, in accordance with the law’s maximum.
I’ve used the term “seems” and “apparently” a lot, because it’s hard to know whether there’s some quirk to Barrette’s situation—or if I’m misreading the plan data. Keep in mind, too, that the policies all come with restrictions: Among other things, coverage would be limited to a network of physicians that is probably pretty narrow. And none of these policies would spare Barrette from financial pressures: If she got sick enough to end up in the hospital, even with these plans she’d likely be out several thousand dollars. Still, she wouldn’t owe tens or even hundreds of thousands of dollars, which is what a serous illness costs to treat—and what her current plan wouldn't cover. These are the kinds of expenses that can ruin somebody financially.
For some, this will seem like a good deal. For others, it will not. As Larry Levitt, senior vice president at the Kaiser Foundation, puts it:
Not everyone buying their own insurance today will perceive themselves as better off under the Affordable Care Act, but many will, once they come to understand what’s available to them and what kind of tax credit they may be eligible for. Of course, this is not really easy to explain in a soundbite.
It's particularly difficult becuase the face trade-offs some people face are very different than the ones Barrette is weighing. Some of the insured paying more money next year won’t be getting better benefits, for example. They will simply owe more because the rules for insurance pricing are changing and the available federal subsidies don’t make up for the higher prices. Some of these people will actually be paying more and getting less coverage for it. (I hope to write about one such case in the next few days.)
Even so, Barrette’s take is a reminder that people can have a longer-view perspective about medical bills than pundits frequently assume. When I gave her a broad description of the plans available, she seemed interested. I noted that she’d be paying $100 or $150 extra a month for policies that still had high cost-sharing, so that she would still be a lot of money out of her own pocket. (I also made very clear that I’m not an insurance agent or broker—that, when she finally goes shopping for insurance, she should talk to a real expert for advice.) Here was her response: "I would jump at it," she said. "With my age, things can happen. I don’t want to have bills that could make me bankrupt. I don’t want to lose my house."
Barrette can't be sure until she sees the numbers for herself. And so far she hasn't been able to do so, thanks to the technological problems at healthcare.gov. But as she’s become more aware of her options, she said, she’s no longer aghast at losing her plan—and curious to see what alternatives are available. "Maybe," she told me, "it’s a blessing in disguise."