p. I’m following an online discussion about health plans before and after here. one person (a 35-year-old non-smoker with no dependents from missouri) says that before aca was implemented, his plan was $150 a month and he only had a $50 deductible “for everything”. that seems surprisingly cheap. were individual plans so cheap before obamacare went into effect?
a. It is very unlikely that this person had a real major health plan. $50 deductibles disappeared in the individual market long before the aca. Without seeing more details about this person’s plan, it’s hard to say exactly what he had. it could have been a fixed indemnity plan with a $50 deductible, or something similar to this pre-aca plan we described several years ago.
You may also have employer-sponsored coverage. (Deductibles tend to be lower in the employer-sponsored market, and employers pay most of their employees’ premiums, but costs have increasingly been passed on to employees over the years, in a trend before the here).
the missouri market was pretty standard before here. this ehealthinsurance data is a good approximation of what people were buying in the individual market and how much it cost. Nationwide, as of 2013, for true major medical plans, the average premium for a single person was $197/month and the average deductible was $3,319.
so it’s quite possible that your premium was $150; men had lower rates and he was on the younger end of the spectrum. but he didn’t have a $50 deductible if it was an actual major medical plan.
most affiliates receive subsidies and pay much less than pre-aca rates
Although this particular plan may not have been worth remembering, there are some people whose premium costs increased as a result of the ACA (we’ll get to that in a moment). however, that is not the case for most people. Most members who buy their own health insurance on the marketplace/exchange are eligible for premium subsidies that cover most of the cost of their coverage.
During the first few years that ACA-compliant plans were available, members with family incomes above 400% of the federal poverty level were not eligible for premium subsidies. That upper income limit was removed for 2021 and 2022 by the US bailout, and consumer advocates are encouraging Congress to make that provision permanent, to ensure coverage remains affordable for households earning more. 400% of the poverty level (without subsidy). at all, coverage was often totally unaffordable for households just above that threshold).
In early 2021, before the US bailout was implemented, 86% of all marketplace affiliates nationwide were receiving premium subsidies. and those subsidies covered most of the average premiums: the average premium amount was $575/month, while the average subsidy amount was $486/month.
Since then, the US bailout has increased the number of people eligible for subsidies and has also increased the size of the subsidies. hhs reports that more than a third of people who have used the marketplace since arp subsidies went live in april 2021 have gotten coverage for less than $10 a month. This is much less than what people were paying for major health coverage in the days before here.
full price premiums are higher (but would have grown even without aca, and medical underwriting can’t be ignored)
Among people who shopped on the ehealthinsurance platform during the open enrollment period for 2020 coverage, the average individual premium was $456/month. and among people who shopped on healthcare.gov, the average premium was $576/month before subsidies were applied. (Both platforms were selling ACA-compliant plans, but people buying off-exchange are more likely to select lower-cost options, since they have to pay the full cost themselves, with no subsidies.) Compared to the average premium of $197/month in 2013, that’s a pretty drastic increase. (Again, full price only applies to people who don’t receive premium subsidies.)
But it’s worth noting that premiums also rose substantially in the years leading up to here, and would already have been much higher even if health care reform hadn’t been implemented and coverage in the individual market hadn’t been improved. . . the $197/month premium would be gone by now.
The rate increases in the individual market since the aca was implemented are due to a combination of medical cost inflation (already a factor before the aca), stronger benefits, and the elimination of medical underwriting. (It should be noted that in new york, which had eliminated medical underwriting many years before the aca, but had no premium subsidy or individual mandate before the aca, inflation-adjusted premiums are still lower than they were in 2013 ).
People with pre-existing medical conditions likely recognize how beneficial the ACA has been, as their access to individual market coverage would have been limited, expensive, or non-existent prior to 2014, depending on where they lived. Previously, more than half of people who needed coverage in the individual market were turned down entirely, advised not to apply because of their medical history, or offered coverage that came with pre-existing condition exclusions or a higher premium. based on pre-aca. existing conditions.
but people who are in good health and also not eligible for subsidies have been understandably frustrated by the sharply higher premiums (despite the fact that their premiums would have continued to rise sharply every year, even without the aca) . And it’s also important to remember that pre-existing conditions can develop overnight.
don’t you get a subsidy? double check your eligibility!
It’s also worth double-checking subsidy eligibility on the exchange, especially now that the US bailout has eliminated the “subsidy gap” for 2021 and 2022. Applicants with incomes above 400% of the poverty level may qualify for a subsidy if the cost of the benchmark plan is more than 8.5% of their household income. people who were previously ineligible for a subsidy may now qualify for one, but this is only available if you buy from your state’s marketplace (i.e. you can’t claim the subsidy on your tax return if you buy your coverage outside of the exchange) ).
You can use our subsidy calculator to get an estimate of how much your subsidy would be if you enroll in a plan through your state’s marketplace.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinion pieces and educational articles on the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by the media covering health reform and by other health insurance experts.