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Obamacare Will Leave Some ‘Underinsured’

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Posted on Jan 4, 2014
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The out-of-pocket costs for people with diseases requiring ongoing treatment “could still be so high they’ll have trouble staying out of debt,” The Associated Press reports.

Such costs include a health plan’s annual deductible—the amount of money a person must shell out before the insurance company begins to pay a claim—as well as co-payments and “cost-sharing.”

The AP lays out the costs for a typical service worker:

A few numbers tell the story. Take someone under 65 with no access to health insurance on the job and making $24,000 a year—about what many service jobs pay.

Under the health care law, that person’s premiums would be capped below 7 percent of his income, about $130 a month. A stretch on a tight budget, yet doable.

But if he gets really sick or has an accident, his out-of-pocket expenses could go as high as $5,200 a year in a worst-case scenario. That’s even with additional financial subsidies that the law provides people with modest incomes and high out-of-pocket costs.

The $5,200 would be more than 20 percent of the person’s income, well above a common threshold for being underinsured.

Under the Affordable Care Act, insurers competing in the new marketplace offer four levels of coverage. All plans cover the same benefits but differ in financial protection. Bronze plans cover 60 percent of costs; silver, 70 percent; gold, 80 percent; and platinum, 90 percent.

Bronze plans have the lowest premiums but provide the least coverage. The annual deductible for silver plans—the standard for most people—is $2,567, more than twice what workers in employer plans currently pay. Many silver plans also have high cost-sharing requirements for prescriptions.

The AP continues:

Platinum or gold coverage may be the better option for people with serious health problems. They’ll pay more in premiums, but reduce exposure to out-of-pocket costs.

Obama administration spokeswoman Joanne Peters said the new system is still “night and day” from what patients faced for years, because insurers can no longer turn away those with pre-existing medical conditions, and because the new plans cap out-of-pocket costs. While that limits medical debt, it doesn’t eliminate it.

—Posted by Alexander Reed Kelly.

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