Obamacare Downside: Reports of Premiums Going Up

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Luke Donavan reviews information from Kaiser, detailing how his health insurance coverage will change on Jan. 1. His family’s premiums are going up. (Lisa Aliferis/KQED)

The notice from Kaiser came in the mail about ten days ago.

Luke Donavan’s health insurance premiums were going up. A lot.

Donavan, 41 of San Francisco, is self-employed and buys his own health insurance. Currently he pays $841 per month for insurance for himself, his wife and three young children. But, Kaiser is canceling that policy and offering him a new one that fully complies with the Affordable Care Act. Effective Jan. 1, his family’s premium is going up to $1,000, with a higher deductible.

Donavan says he voted for Obama in both elections and calls himself a “big proponent” of the health law. He has a pretty calm demeanor and says he was “surprised” by this news from Kaiser.

“I just keep coming back to the name ‘Affordable Care Act,’” he said. “I thought I’d pay the same or less for better coverage.”

Subsidies are available for people to buy insurance, but they are dependent on income. Donavan says he earns too much to qualify.

Indeed, nationally, a recent study from the non-partisan Kaiser Family Foundation (not affiliated with Kaiser Permanente) found that just over half of people currently buying insurance on the individual market will see their premiums go down.

Larry Levitt, senior vice president with the foundation, says that Donavan’s situation “encapsulates the diversity of experiences” that people are likely to have with Obamacare.

Some people may pay higher premiums, he said, “and the reason those premiums are going up is because people with pre-existing conditions will now be able to get insurance, and those people often have very high medical bills. That money has to come from somewhere.”

Meanwhile, Kaiser Permanente said in a statement that any individual’s premiums depends on the coverage they currently have:

Some provisions of the Affordable Care Act may contribute to premium increases, while others may contribute to reductions in premiums for the coverage that will be available starting in 2014. …

The law mandates more comprehensive coverage starting in 2014. This means more services will be covered by insurance. … As a result of these improvements, the cost of coverage – in the form of the monthly premium – will increase for some members, simply to pay for the expanded coverage.

It’s important to note that individuals with some of the more expensive coverage plans – high-benefit plans, and others such as COBRA continuation plans – may see lower premiums next year.

But all this background is little comfort for Donavan. He acknowledges that his out-of-pocket maximum is less, and his new policy “definitely protects from catastrophic bankruptcy situations, but most people, the first thing you think about is what’s my monthly and what’s my deductible.” Those are both more expensive under his new policy.

This post has been updated to clarify that Donavan buys his own insurance and that he received notice his policy was canceled. 

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  • jean-luc

    Unfortunately, Luke Donovan isn’t the only person whose premium has gone up as a result of the “Affordable” Care Act. I’ve just received a notice from Blue Shield informing me that my premium for a family of four would increase from $750 to $1190. To add insult to injury, this 60% increase will also translate into a higher deductible and fewer benefits. It’s obvious that for middle class families who need to buy individual insurance, the “affordable” in the “Affordable Care Act” is pure fiction. It will not only be paying higher taxes to fund Obamacare but will also be paying higher premiums to further line the pockets of the healthcare industry i.e,
    Wellpoint Inc’s (the company that manages Blue Shield in California) share price has increased by 80% since the passage of Obamacare .

    • Still_In_Shock

      I buy individual health coverage from Kaiser Northern California. My current plan provides: $0 deductible, $50 co-pay for medical visits, $10 labs/x-rays, no prescription.

      I received notice from Kaiser that the comparable plan under ACA is “KP CA Bronze 5000/60″, with an 8% premium increase over my current rates. But how is a $5000 deductible comparable to a $0 deductible? It isn’t. KP CA Bronze 5000/60 is really only “catastrophic” coverage. Kaiser lacks integrity in suggesting that this plan is a match for my current one.

      So I looked at the Kaiser plans for 2014, and the closest match to my current coverage is “KP CA Gold 500/30″, with a premium increase of 74% over my current rate. My income exceeds the $46,000 threshold for assistance, but annual premiums of over $12,000/year are a shock, and are going to be a challenge.

      I am clearly a big loser under the (Un)Affordable Healthcare Act.

      • ACA loser

        Still in shock, too. Our family’s plan was canceled by blue cross. To match it with a similar ACA “bronze” plan adds $50/ month in premium, $8,500 in additional deductible (went from $2500 to $11,00) plus $10,700 in additional co-insurance payment (went from $2000 to $12,700). This is a very expensive “affordable” plan. Just don’t get it.

    • An observer

      If you are fairly healthy, you should seriously consider self-insuring yourself and not contributing to lining Wellpoint’s pockets.

  • skipper12345

    He’ll break even with the tax write off.

    • An observer

      What tax write off?

    • Lee

      Break even? Not even! You have to make a whole lot of money to come out ahead by losing money. Seems to me that’s for the 1%, & that doesnt sound like Luke.

  • Tom

    I am assuming that Donavan’s family makes over $100K a year at this moment and that he and his family have assets. If he or his wife lost their income or wanted to leave the job market then he and his family would have access to subsidized health insurance and any assets owned by their family would not be at risk. This benefit seems worth the extra outlay of cash monthly initially. I think that b would bring
    enormous peace of mind knowing that you can protect your family.

    • An observer

      If I read the article correctly, Mr. Donovan’s monthly premium is going from $841 to $1,000 a month. That is $12,000 a year. Mr. Donovan would have to have an annual income of $150,000 for the insurance to be considered affordable under Obamacare. If he earns less than that amount he will not have to pay a penalty if he chooses not to buy health insurance. Mr. Donovan can buy quite a routine medical care for $12,000. If he forgoes buying health insurance for ten years he can save $120,000 to pay for pretty serious medical care, and if no one gets terribly sick, which is most likely, he will have $120,000 to pay for his children’s college education.

    • Lee

      Your assumption is incorrect. Our adjusted income for 2012 was $65K, but our insurance is going from $550 per month to more than double that amount. Under the ACA we dont have to worry that we’ll lose our house if we get sick, but we may have to rent it out to pay for insurance.

      • CPO_C_Ryback

        Lee, OweBama cares about Teamster Hoffa and could give an F about you.

        You got screwed by OweBama, IMHO. I voted against him, and am proud of it. I knew he was going to screw small firms, and he has.

  • DV

    The 40/4000 individual plan with Kaiser will become Bronze 4500/40% at midnight on Dec 31, 2013 and the new monthly rate is set to be 117.6% higher. Using the opportunity to double the rate? How can Kaiser justify this?

    • http://blogs.kqed.org/stateofhealth Lisa Aliferis, KQED

      Please email me — I’d like to hear more about your situation. laliferis-at-kqed-dot-org.

  • An observer

    Health insurance is a voluntary tax the healthy pay to take care of the sick. Most people are healthy so they do not directly benefit from buying health insurance. The sick do benefit in that their medical bills are in part paid for by others. Sick means really sick in the sense of having annual medical bills in excess of a $6,000 deductible.

    Everyone should evaluate their personal and family history of disease and determine if they are payers or receivers in the health insurance system. About 2/3 of the insured have little to no medical expenses and come out financial behind by buying insurance. About 5% have large medical expenses and come out significantly ahead. The remaining 25% come out about even.

    Now that pre-existing conditions no longer matter, for the 2/3 of the population that incur minor to no medical expenses, it is financially better to put the amount that would be spent on insurance in a savings account and accumulate that money to pay for medical care should their health degrade. For most people, health does not degrade until after age 65 when they are eligible for Medicare.

    • Lee

      That’s a great idea until something goes wrong. Even better if you own nothing. But for most people it’s extremely risky. $6000 gets spent real fast when you need medical care. (Of course, part of the problem is that our care costs way too much.)

      • An observer

        Everyone has to assess their medical risks and their level of fear. Insurance companies make money by playing up people’s fears. If you are in fear use your money to buy insurance instead of using it for some other purpose. Remember, the great majority of people are healthy, not sick.

        • Lee

          Sprained ankle? Grin & bear it!

          • An observer

            No, go to a doctor to make sure nothing is broken, but it is cheaper to pay a doctor directly than it is to pay thousands of dollars for insurance that in turn will pick up a a few hundred dollars of the cost.

          • Lee

            Not in this world.

      • Churchlady320

        For a nation that ponies up hundreds for a piece of crap technology, the casual dismissal – oh, health care costs too much – is based on what? Costing out personnel, equipment, maintenance, etc. to bring bells and whistles to your care – things YOU WANT if they make you whole – simply is expensive. You want to revert to days when you paid doctors with eggs and butter, then do without the tech, the training, the supports. Yes there are better ways to bill and less expensive ways to provide some care – not ever hospital needs a CAT scan – but overall you pay for what you get.

    • Nurse Sharon

      Things happen. A skiing accident, a fall, cancer, a heart attack. I had outpatient ankle surgery last month–outpatient–and the hospital bill was $91,980.00. I already requested an itemized bill. I was only there a few hours! I’m still awaiting bills from the surgeon and anesthesiologist. I’m healthy! The bill is $91,980. We all need insurance. This one little ankle mishap will cost well over $100,000. That’s crazy.

      • An observer

        So do you believe the hospital bill is valid and representative and you should pay the billed amount, either directly or through your insurance company?

        • Churchlady320

          The insurance companies negotiate lower rates, so she’d have no luck at all doing that on HER own – that IS the lower rate.

    • CPO_C_Ryback

      How do you know this? What makes you an expert, versus those actually hit with OweBama’s mess?

      >> “Health insurance is a voluntary tax the healthy pay to take care of the sick.”

      Says who? Insurance is voluntary. Taxes are MANDATORY.

      >> “The sick do benefit in that their medical bills are in part paid for by others.”

      My aunt is a lifelong diabetic. She needs a special high-risk pool, not lifelong WELFARE from us.

      >> “Now that pre-existing conditions no longer matter ..”

      What are talking about? You just stated, the latter cost more. You think OweBama’s yapping makes the issue go away? You and OweBama need to think. Really.

      The stupidest, most-ignorant law ever passed. Screwing up everything. What a FUBAR.

      • An observer

        Man, you need to calm down and think. What are you trying to say?

        • CPO_C_Ryback

          The stupidest, most-ignorant law ever passed. Screwing up everything. What a FUBAR.

          Duh.

  • Bryan Rosner

    Add me to the list of losers. Blue cross letter: my insurance is cancelled. The new plan they recommend is 40% more expensive with double the deductible. Really? I mean, really? I won’t pay it. They better come up with something else.

    • Churchlady320

      Go to the Exchange. They cannot cancel, the rates are MUCH lower, and BC is in almost every area’s Exchange, federal or state. Check it out. You are a victim of the PRIVATE market, not ACA.

      • Lee

        We’ve been to the exchange. Premiums for bronze level are from 18% to 22% of our income. Our income is $1700 above the threshold for assistance, but we can opt out without paying a penalty. Not working for us. Any suggestions would be appreciated.

        • jskdn

          Try to figure out a way to lower your countable income (modified adjusted gross income) to get under the threshold for subsidies and you will be much better off. Be very careful not to go above 400% of the federal poverty level or you will be on the hook for paying back all the subsidies you have received.

        • guest

          Our income is also slightly above the threshold for subsidies. Our current Anthem Blue Cross rate for a high-deductible HSA is $632 for a family of 3. Blue Cross sent a letter saying if we did nothing the new rate would be $1497. The exchange gave us a lowest premium of $1313/month, a whopping increase of $681/month. We will also lose about $300/month in tax deductions from not having the use of an HSA (although no one seems able to answer questions about where HSA’s fit in the ACA). Why isn’t there a cap on how much insurance companies can increase premiums for people? We are flabbergasted and unable to afford the new premiums of $1313/month on top of losing a $300/month in tax savings.

          • Lee

            Wait – what? By HSA do you mean the before-tax dollars you can put into savings for medical expenses? That’s going away?

          • guest

            I don’t know if it’s going away and haven’t found anyone who can answer that.

      • Guest

        I can’t get on to the Exchange. It’s always “Temporarily Unavailable.”

  • Lee

    Luke – I feel your pain. Our Kaiser plan has gone from $550 monthly to $1183, and our out-of-pocket costs are increasing as well. The deals at the CoveredCA exchange are all about the same price (bronze). Our adjusted income for 2012 was $65,000, well under $100K, hardly affluent. We’re above the income threshold for assistance, but the cost is more than 8% of our income, so we can opt out and we dont have to pay the penalty. So our choices are: 1. Pay $14K per year, or; 2. Pay nothing and hope. We’re Obama & ACA partisans, worked the phone banks for Obama last year, still donating to Organizing for America (cant afford it now though), and believe in the ACA. It’s nice to know we wont have to choose between our health & our home. We believe that this is a glitch, and hope that it’s fixed soon. I hope we’re not mistaken.

    • jskdn

      One can deduce from your ineligibility for subsidies that you are a family of two. $65,000 would put you just over the threshold for subsidies. At $62,040, your premium share would be limited to $5894 a year. Even though you only make $3000 more than the limit, you are on the hook for an additional $8000 in premiums. The smartest thing you can do is to reduce your income to 400% of the FPL and be very careful not to go over. That would make you better off.

      By the way, it was no glitch, being pretty obvious to anyone who takes policy serious, which I assume the people writing the law do. It is, however, bad policy in my mind. Earning more shouldn’t make people poorer.

      • Lee

        Good points, thank you. That strategy makes sense – but are we dealing with 2013 income, or 2012? I thought they used our 2012 income to determine eligibility for assistance. I hope I was mistaken!

        • jskdn

          Regardless of what year they use to determine the level of subsidies, what they end up being and any corrections to those subsidy amounts will be based on income in 2014. So if you earn less than the income used to estimate your subsidies, you’ll get money back on your tax return. If you earn more that the income used to estimate your subsidies, you’ll have to pay that back on your tax return. Again, being careful is critically important at the subsidy cliff. The $8000 in subsidies you are entitled to at $62,040 disappears at $62,041.

        • http://blogs.kqed.org/stateofhealth Lisa Aliferis, KQED

          Please email me — I’d like to hear more about your situation. laliferis-at-kqed-dot-org.

  • Mad as a hornet

    He’s an absolute Loser!! He voted for this I don’t feel one it sorry for him, mines going up and I didn’t vote for that pathetic man! I feel sorry for all the people that are being punished for having a job and paying for insurance. How did this guy think was paying for all this “wonderful free insurance”we are !!

  • Churchlady320

    These rates are on grandfathered policies that lie outside ACA’s ability to influence costs of premiums or conditions. Why? Because in most states the idea of regulating insurance has been rejected, and everyone who screamed they loved their insurance (really? Is it not your DOCTOR whom you should love?) GOT what they demanded.

    And now they are griping. This is the free market at work. Either get into the Exchanges or be quiet – complaining about getting what you demanded is ridiculous.

  • jskdn

    “Indeed, nationally, a recent study from the non-partisan Kaiser Family Foundation (not affiliated with Kaiser Permanente) found that just over half of people currently buying insurance on the individual market will see their premiums go down.”

    It seems like the way to properly report this is to distinguish between “their” premiums and the premiums insurance companies will charge for covering them. Anything can be affordable if other people pay for it in order to make it so. People eligible for tax credit subsidies have their insurance defined by the law as affordable by having their responsibility for paying for that insurance limited to a designated percentage of their income, which tops out at 9.5%. But those above 400% of the FPL pay for whatever insurance companies charge. That has to be the case with this family given that 400% of the FPL for a family of 5 is $110,280, limiting the premiums paid by a family at that income to $873.05.

    Luke Donavan is only 41. Add twenty years to the parents and make the kids above 18 if you want to see some really shocking rates facing people above 400% of the FPL.

  • ron

    dummy or may I say uninformed voters put Obama in office ,now we all are going to pay thru our rears because of it. Obama zombies take your medicine and lick it up you voted for this socialist president and democrat. a real change you can believe in. no change left hes getting that too.

  • ron

    people in California must all be rich as can be. all of the taxes, rules,socialist style far left living. pull out all of that money an give it to king Obama and the democrats,lackys,goobers running your lifes there. from your state government to the federal government shell it all out and be happy. far left looney time is here. latch on to Obamacare,and take a ride . listen to Obama,nancy, harry reid, Hillary,ect,whisper their sweet nothings in your ear ,believe all they say, let them lead you down the path they choose for you and your family. do as they say,never question anything and suck it up if you don’t like it . take like man ,for they are giving you the change you can believe in.

  • Frank

    I got a letter from Kaiser congratulating me on already having coverage that meets the requirements under the affordable care act. And….now my premium will more than double starting in 2014! Congratulations!! Hopefully my plan will cover all the Vaseline I am gonna need so this doesn’t hurt so bad.

  • M_Young

    It’s amazing to me that people are surprised that their premiums are going up. I am surprised at the magnitude — mine are going up 40% — but not that they would go up more than is usual.

    By making insurance companies take anyone regardless of health history, Obamacare dramatically changed the actuarial game. The companies now have to swallow a lot more risk, and accordingly we have to pay. Given that in California much of the health insurance was underwritten by non-profits, there just wasn’t a lot of ‘corporate greed’ to cut in order to get those sick/poor people insured.

    Of course, the Democrats didn’t explain any of this to the voters — they lied through their teeth as a matter of fact.

  • Tab

    CT Anthem Blue Cross notified me that my premium is going from $278 to $500 a month and a higher deductible. Plus I’m currently unemployed and my unemployment benefits ran out. Now I’m living on my savings, and cannot use any deductions because I don’t qualify. Yep Obama screwed me!!!! I thought this new law was suppose to make it affordable?

  • PissedOff

    Mine premiums have gone from $600/mo at the beginning of this year to $1132/mo starting in 2014. They really should have named this the Unaffordable Careless Act.

  • bluh

    yeah wake up dipshit. you voted for him, so now take your medicine. moron. send me $20 and I’ll tell you how to get rich quick. mine went up 25.4% – funny, I’ve seen that number in some other news articles. and oh yeah, the insurance companies wanted to jack premiums up higher than that.