The Campaign Spot

Who’s Excited About Starting 2014 With a $5,000 Deductible?

Welcome back! Christmas was a welcome respite, but the news about Obamacare continues, and the new year is nearly here. Today’s Morning Jolt examines the new taxes and fees that kick in for 2014, as well as just what Obamacare’s new insurance purchasers will experience when they go to a doctor’s office or hospital this winter:

Some folks are going to head into an emergency room in 2014, thinking they have insurance, only to find their 834 packet didn’t transfer successfully from to the insurer.

Or perhaps they’ll find they do have insurance . . . but that the cost of that first visit to the emergency room hasn’t reached their deductible yet. Surprise! You’re on the hook for the entire $5,000 cost of the emergency room visit. No, I’m not kidding:

Sixty-four percent of bronze plans offered in Dallas, for example, require policyholders to meet the full deductible before insurance coverage kicks in, according to the eHealth/KHN analysis, which included all insurers except one, Molina Healthcare. The average deductible in those plans was $5,400, according to the data provided to eHealth by insurers.

How many of the newly insured will go to a doctor’s office this winter? Better hope it’s a mild flu season:

All new plans must cover some defined preventive services with no copayment by the consumer and without having to meet the deductible first. Those include some vaccinations, mammograms and other cancer screenings, contraception, including birth control pills, and periodic physicals. But prevention services do not include treatment for an illness, such as the flu. Charges could also apply if, during a preventive care visit, the patient is also treated for a medical condition or a minor injury.

How many of the newly insured think that insurance is covering most of the costs, for everything starting from day one? How many think their premium means their insurance company covers all of the costs? David Nather, writing in Politico:

The point of the Affordable Care Act is to cover people who haven’t had health insurance before, and it may have already reached some of those people. But because they’re new to health insurance, they may be in for a rude shock: It doesn’t cover everything.

There are deductibles, for example — the amount of money you have to spend out of pocket before coverage kicks in — which can be very high with “bronze” Obamacare plans, the cheapest kind. There are also co-payments for office visits, as well as co-insurance, the percentage of medical expenses you have to pay even if most are covered by your insurance.

There’s no way to know how big an issue this could be before January arrives — but if newly insured people think they’re getting free health care, or just think the deductibles are too high, they could be disappointed with their first experiences with Obamacare.

Back in June 2013, Megan McArdle shared a pastor/reader’s portrait of the decision-making of some Americans who, for all of their other wonderful qualities, aren’t so great at considering long-term consequences, deferred gratification, cost-benefit analysis, and other hard financial realities:

I work with what I’d call median Americans. Incomes right around the median. Family structure and dysfunction right around the median. You get the picture. And to work on spiritual issues often requires dealing with financial ones at the same time. (Often they are the same problem.)

Everything that I’ve seen about the ACA and its implementation seems completely divorced from how say 35%+ of these median Americans function on a daily basis. The ACA and every wonk assumes rational people who can make good financial decisions. Instead what you have is people with $100K of school debt because it compounded when they stopped paying it, who are leasing a new car, who have an interest only mortgage (or a HELOC to help them pay the original mortgage), who have at least 3 credit cards maxed, maintain a pay-day loan they got scammed into, and yet find cable with HBO and an iPhone 5 with all you can eat plan necessities. It is not that on a median salary it is not possible to live a good and prudent life; it just requires some restraint and a minimum amount of simple rules. (Rules like Dave Ramsey talks about, or Benjamin Franklin divorced from the Christian content). But this is what the ACA mandate and cost is going to mean to many of these people: do I keep HBO & Cable, my iPhone, or buy medical insurance? Which bill that I already have must be done without? They will refuse to even think about that. 

On top of that, if they recognize Obamacare at all what they think it means is “universal free health care” with emphasis on the free. When you try and say that it will cost them at least 4% of their income, they go directly into denial.

What I’m saying is that for a large minority of people opting out of the ACA probably won’t even be a conscious choice. It will just happen because of the complexity, the upfront sticker cost and the lack of ability to make good financial decisions. They will deal with it later when they file taxes which won’t be until September, because when their tax guy tells them they won’t get the refund they were expecting, they will file the automatic deferral to “put it off” for a little while.