Health Law Costs, Benefits Can Add Up To A Win For Young And Old

If there are winners under the Affordable Care Act, Martha Olson and Red Coine should probably both be counted on that list. Yet only one of them will actually pay less for health insurance when the law is fully implemented in 2014.

To make insurance more available to people who are older or have pre-existing conditions and can't always find affordable, comprehensive coverage, like Olson, the law pushes younger, healthier people like Coine -- who is currently uninsured -- to buy insurance and offset the system's costs. The individual mandate that nearly all Americans obtain health care coverage or pay a penalty is aimed at people like Coine.

As a result, Olson, who is 56 and has diabetes and high blood pressure, likely will pay less money every month for her health insurance. Coine, 32, may pay more than he would in today's market.

But both Olson and Coine will be able to comparison shop for plans on the health insurance exchanges. Both will be protected against insurer discrimination based on health status or gender, and neither will be booted off a plan if he or she gets sick. The law will ensure that health plans provide comprehensive benefits, something not guaranteed today. Moreover, Olson and Coine, who both earn moderate incomes, will be eligible for tax credits that will defray the cost of their insurance premiums and may qualify for additional assistance for their out-of-pocket expenses. And both will have those out-of-pocket expenses capped.

Coine, a self-employed long-distance truck driver who lives in Dallas, doesn't mind the individual mandate and said the debate over health care reform has aroused in him a sense of "personal responsibility" to be part of the system. "I feel compelled to pay for my own way. I don't want someone else to pick up my tab if something happens," he said. And given the law's promise of richer benefits, Coine said he expects he'll be getting more for his money than he did when he last had health insurance in 2008.

Forcing younger people to help cover the costs of older individuals' health care is "controversial," especially since younger people generally earn less, said Paul Ginsburg, president of the Center for Studying Health System Change in Washington. But while people like Coine may have to pay more when they're young and healthy, the law also guarantees they'll be able to find coverage when they grow older or become sick or injured. What's more, Ginsburg said, even if Coine's premiums are higher, he and Olson are both likely to receive better benefits with the cheapest plan under health care reform than they could today. "They're getting better coverage. That's worth something," he said.

Olson, a rental-property owner in Knoxville, Tenn., will see more of the advantages right away. The Affordable Care Act doesn't allow health insurers to raise prices for those with previous ailments or chronic illnesses, set higher premiums for women than for men, or charge older people more than three times the price for younger people. "With the new plans, you're going to get a certain level of protection," Olson said.

People who don't obtain health benefits at work will be able to buy plans on the exchanges, and those like Olson and Coine who earn between 100 percent and 400 percent of the federal poverty level -- between $11,170 and $44,680 for an individual this year -- will be eligible for tax credits. People who can't find a plan for less than 8 percent of their income are among those exempt from the individual mandate.

The law sets four tiers of health insurance: a bare-bones catastrophic plan, for people who are under 30 or exempt from the individual mandate, and three tiers dubbed "bronze," "silver," and "gold," which get progressively more expensive and more generous. Those who earn up to 133 percent of the poverty level will be eligible for Medicaid in states that opt to expand the program.

A "calculator" created by the Henry J. Kaiser Family Foundation in Menlo Park, Calif., provides estimates on much a silver plan will cost, considering factors such as income and age. A gold plan would cost 15 to 20 percent more and a bronze plan would cost 15 to 20 percent less, said Larry Levitt, executive director of the Kaiser Initiative on Health Reform and Private Insurance, a project run by the foundation.

Olson currently has subsidized health benefits through the law's Pre-Existing Condition Insurance Plan, which cost her $425 a month. She used to shell out $700 a month for a plan she described as "crappy" because it didn't cover health care she needed.

In 2014, she expects to earn about $35,000, based on her current income. Under the new system, her total premiums for a silver health plan will be $9,685, and her share after the tax credit will come to $3,325, or about $277 a month. By comparison, the average annual premium for job-based health insurance is $11,664, of which a worker pays $2,764, according to a recent survey.

Olson is concerned that she could be forced to pay the full cost if her income rises above 400 percent of poverty. At the same time, she noted that her old insurance would cost at least as much without offering guaranteed coverage and a minimum set of benefits.

Coine has been without health insurance for four years. He expects to make about $28,000 in 2014, so a silver plan would cost him $3,382, of which he'd pay $2,189, or about $182 a month.

That's more than the $88 a month he paid for his old health plan and more than the $155 price he found when shopping for health insurance last month. It's also higher than the individual mandate penalty, which will start at $95 or 1 percent of income for a single person in 2014, gradually increase until it reaches $695 or 2.5 percent of income in 2016, and then rise with inflation. But Coine noted that the $182 a month "probably would cover more" than a plan he could buy on the individual market today.

"Since I will be required to buy it, I will instead of paying the penalty," Coine said, "because one way or the other, I'm paying something extra and would rather get something for my money."



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