Posts Tagged ‘Affordable Care Act’

PostHeaderIcon Is PPACA really affordable? Part 1…

The PPACA (Patients Protection and Affordable Care Act) a.k.a. Obamacare did address some of the issues with the current healthcare and health insurance problems. The good part of the act is a relatively short list:

  1. No preexisting condition denials in getting health insurance
  2. Removed lifetime cap for health insurance coverage
  3. Extended health insurance coverage for children up to age 26 under their parents insurance
  4. Required the creation of health insurance Exchanges for both individuals and small businesses
  5. Mandated health insurance coverage for everyone
  6. 100% coverage of preventive care

One of the major problem with the US healthcare is its cost. However, the PPACA did not actually address cost. In another word, there’s nothing in the PPACA that would prevent the cost of healthcare to continue spiraling out of control.

Establishing  health insurance Exchanges is left up to the states.  States that elected not to establish their own Exchanges are  operated by the federal government. The health insurance premiums rates are “loosely” controlled by the PPACA and impacted by four factors; no other factors are permitted by the PPACA:

  1. Geographic region (generally, counties within states)
  2. Whether such plan or coverage covers an individual or family
  3. Age, except that such rate shall not vary by more than 3 to 1 for adults (1 being the youngest and carries the lowest rates and conversely, 3 the oldest group that carries the highest rates);
  4. Tobacco use, except that such rate shall not vary by more than 1.5 to 1

In addition, the PPACA also mandates the coverage of health care for insurance companies participating in the exchange, through the establishment of metal named levels. These levels’ actuarial value is the proportion of medical expenses an insurance plan is expected to cover in the form of insurance/member payment percentage; deductibles must be paid prior to medical expenses:

  1. Bronze: 60/40
  2. Silver: 70/30
  3. Gold: 80/20
  4. Platinum: 90/10

The participating insurance company is required to offer, at the minimum, silver and gold coverage. In addition, there’s a catastrophic coverage that has no metal name or rating. One could call it “rusty”, since this plan really does not cover “standard” illnesses, only catastrophic/chronic illnesses, after the high deductible had been met.

In the Is PPACA really affordable” Part 2… blog, we’ll look at the estimated premium rates for the State of Connecticut…