After our health insurance premiums went up by more than 30 percent a few months back for no reason other than that the current provisions of the Affordable Care Act were having a big impact on the bottom line of Blue Cross/Blue Shield (it was all explained to me by a nice gentleman there – mostly the annual wellness benefits and adding 20-somethings to existing family policies), I started paying close attention to what’s coming this fall.
As detailed in the Wall Street Journal story($) below and this Marketwatch report last week, it turns out Obamacare is going to be a pretty sweet deal for people like my wife and I who don’t have (or need) a big traditional income in order to service big piles of crushing debt.
Robert Wengrow, a laid-off frozen-food packaging salesman, will be one of the biggest beneficiaries of the U.S. health-insurance overhaul when it fully kicks in next year.
Because of his age, 62, and his low family income, he and his wife will be able to buy a midlevel policy for $21 a month, according to a Wall Street Journal analysis of Ohio’s soon-to-launch insurance marketplace.
But the federal subsidies that make this possible for older people are causing headaches that insurers are struggling to understand. The programs reverse a long-standing tenet of the insurance business: That riskier customers pay more.
The subsidies can be far more generous to older people than younger ones, the analysis of Ohio’s marketplace shows. In some cases, older and sicker customers will pay lower prices than younger, healthier people with similar incomes—even though older people are generally costlier to cover.
As shown in the graphic above, the lower your income, the bigger your tax credit if you purchase health insurance through the new exchanges and, for us, our bill goes down dramatically after having gone up dramatically (almost 75 percent) over the last three years.
We’re in excellent health, so, we won’t be a drain on the system or a problem for insurers, but a lot of other people in their 50s and 60s who aren’t in such good shape will see a similar reduction in health care premiums, raising all sorts of questions as to how the health insurance industry is going to deal with this.