The Way We Were —
Prior to 1990, most health insurance plans involved a deductible – and coinsurance after the deductible was reached. It was affordable and uncomplicated.
The early ’90s brought higher insurance rates, co-pays and the “in-network/out-of-network” system. Co-pays were associated with the “in-network” providers. Deductibles and coinsurance would apply if the patient went to an out-of-network provider.
In 2001, Oxford Insurance introduced a new policy, called the “Metro Plan,” which offered out-of-network coverage and few options, somewhat forcing participants to remain in the network. The minimum out-of-network deductible was $1,000 and the cost was $262 a month per employee on an individual basis.
Over the next several years, rates continued to rise. Insurance companies began offering plans that did not require referrals, but they continued to raise the deductibles and limit the participant’s options.
Next, some carriers started offering in-network deductible plans which enabled participants to see their regular physician and pay standard co-pays, but placed deductibles on hospitalization. For employers, a lower-quality budget plan began to hover in the $500-600 range per month per employee, with a good plan costing $800-900 per month per employee.
However, if an individual wanted to get coverage, it was expensive and only HMO-type policies were available. In addition, if you had not had coverage for 63 consecutive days, a pre-existing exclusion was added to your policy. Under the Affordable Care Act (ACA), insurance carriers are no longer permitted to attach those exclusions.
The Affordable Care Act was enacted in part to attenuate the rising costs of health insurance premiums.
Since the public policy goal of the ACA was to reduce the deficit by saving money, Congress built in provisions to penalize or fine individuals who do not participate. This was also urged by insurance companies, whose model is to enroll both healthy and sick people in order to stay solvent.
New Yorkers, however, must grapple with a state marketplace (also called an “exchange”) that does not offer any plans with out-of-network coverage. Additionally, most plans have deductibles, which can range as high as $6,000. On some plans, the deductible even applies for a sick visit.
Subsidies included in the ACA, which pay for all or part of the premiums for qualified individuals and families, have definitely helped some people. The problem is that, in New York, where the cost of living is one of the highest in the nation, a person making $50,000 a year is not eligible for subsidies – even though they are probably just scraping by.
Under the ACA, more people have health insurance, and that is a good thing. However, improvements to the Act are needed, including:
- lower deductibles;
- lower sick visit co-pays for individuals; and
- help for small businesses that are struggling to provide coverage to their employees.
While President Obama’s health care initiative has undoubtedly helped millions, more options should be created to address some of its unintended effects, like accounting for the different costs of living across the country.
To learn more about the new health insurance landscape, contact me here.
Seth Jonas
S Jonas Associates LLC
450 Seventh Avenue #2208
New York, NY 10123
Telephone: (212) 736-9490
Email: seth.jonas@sjonasinsurance.com
Website: sjonasinsurance.com
The Insurance Pro 