A 35-year-old says that before the ACA, his health insurance premiums were $150 a month with a $50 deductible. But did he have a true major medical plan?
Q: I’m following an online debate about health plans before and since ACA. One person (a non-smoking male, age 35, with no dependents, from Missouri) is saying that before the ACA was implemented, his plan cost $150 a month and he only had a $50 deductible “for everything.” That seems surprisingly inexpensive. Were individual plans that inexpensive before Obamacare took effect?
A: It’s extremely unlikely that this person had a true major medical 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 might have been a fixed indemnity plan with a $50 deductible, or something along the lines of this pre-ACA plan we profiled several years ago. It’s also possible that he had employer-sponsored coverage. (Deductibles tend to be lower in the employer-sponsored market, and employers pay the bulk of their employees’ premiums, but costs have increasingly been shifted to employees over the years, in a trend that pre-dates the ACA.)
Missouri’s market was pretty standard pre-ACA. This data from ehealthinsurance 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 individual was $197/month, and the average deductible was $3,319.
So it’s very possible that his premium was $150 – men had lower rates and he was on the younger end of the spectrum. But it didn’t have a $50 deductible if it was a real major medical plan.
Although this particular plan may not have been worth reminiscing over, it fairly common for people who earn more than 400% of the federal poverty level (and are thus not eligible for premium subsidies) to be paying a lot more in premiums now than they used to pay for pre-ACA major medical coverage. That’s especially likely to be true if they’re healthy and never had to contend with any medical underwriting hurdles.
Among people who shopped on the ehealthinsurance platform during the open enrollment period for 2019 coverage, the average individual premium was $448/month. And among people who shopped on HealthCare.gov, the average premium was $612/month before any subsidies were applied. (Both platforms were selling ACA-compliant plans, but people shopping outside the exchange are more likely to select lower-cost options, as they have to pay the full cost themselves, with no subsidies.) Compared with the $197/month average premium in 2013, that’s a pretty drastic increase. (Again, the full price only applies to people who don’t get premium subsidies.)
But it’s worth noting that premiums were increasing substantially in the pre-ACA years as well, and would have been much higher by now even if health care reform hadn’t been implemented and coverage in the individual market hadn’t been improved. The $197/month premium would have been long gone by now.
The rate increases in the individual market since the ACA was implemented are due to a combination of medical cost inflation (which was already a factor pre-ACA), more robust benefits, and the elimination of medical underwriting. (It’s noteworthy that in New York, which had eliminated medical underwriting many years before the ACA – but which did not have any premium subsidies or individual mandate pre-ACA –inflation-adjusted premiums are still much lower than they were in 2013.)
People who have 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. Pre-ACA, more than half of the people who needed individual market coverage were either rejected altogether, advised to not apply due to their medical history, or offered coverage that either came with pre-existing condition exclusions or a higher premium based on pre-existing conditions.
But people who are healthy and also ineligible for subsidies are understandably frustrated by the sharply higher premiums (despite the fact that their premiums would have continued to climb sharply each year even without the ACA). And it’s also important to remember that pre-existing conditions can develop overnight.
It’s also worth double checking subsidy-eligibility in the exchange, keeping in mind that subsidies are available for a family of four earning $103,000 in 2020, and that contributions to retirement accounts and/or a health savings account will reduce your income that’s used to determine your subsidy eligibility. For people who qualify for premium subsidies, the average after-subsidy premium in 2019 was just $87/month — well below the average premium that people paid in 2013 for much less robust coverage.
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 opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.