Find a plan.

Were individual-market health plans less expensive before Obamacare?

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?

Reviewed by our health policy panel.

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?

Obamacare subsidy calculator

Use our calculator to estimate how much you could save on your ACA-compliant health insurance premiums.

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. These data from ehealthinsurance are 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.

Most enrollees receive subsidies and pay far less than pre-ACA rates

Although this particular plan may not have been worth reminiscing over, there are some people whose premium costs increased as a result of the ACA (we’ll get to this in a moment). That’s not the case for most people, however. Most enrollees who buy their own health insurance in the marketplace/exchange are eligible for premium subsidies that cover the majority of the cost of their coverage.

For the first several years that ACA-compliant plans were available, enrollees with household income above 400% of the federal poverty level were ineligible for premium subsidies. That upper income limit was eliminated for 2021 and 2022 by the American Rescue Plan, and consumer advocates are encouraging Congress to make that provision permanent, to ensure that coverage remains affordable for households that earn more than 400% of the poverty level (with no subsidy at all, coverage was often entirely unaffordable for households a little above that threshold).

In early 2021, before the American Rescue Plan was implemented, 86% of all marketplace enrollees nationwide were receiving premium subsidies. And those subsidies covered the majority of the average premiums: The average premium amount was $575/month, while the average subsidy amount was $486/month.

The American Rescue Plan has since increased the number of people who are eligible for subsidies, and has also increased the size of the subsidies. HHS reports that more than a third of the people who have used the marketplace since the ARP subsidies went live in April 2021 have obtained coverage for less than $10/month. This is far less than people were paying for major medical coverage in the pre-ACA days.

Full-price premiums are higher (but they would have grown even without the 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 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 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 have been 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.

Not receiving a subsidy? Double-check your eligibility!

It’s also worth double-checking subsidy-eligibility in the exchange, especially now that the American Rescue Plan has eliminated the “subsidy cliff” for 2021 and 2022. Applicants with income above 400% of the poverty level can qualify for a subsidy if the cost of the benchmark plan would otherwise be more than 8.5% of their household income. People who were previously ineligible for a subsidy might now qualify for one, but this is only available if you shop in your state’s marketplace (ie, you can’t claim the subsidy on your tax return if you buy your coverage outside 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 the marketplace in your state.


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.

Find affordable health plans.

Helping millions of Americans since 1994.

(Step 1 of 2)

Related articles

0 0 votes
Article Rating
Subscribe
Notify of
guest
12 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments
Neil McLeod
Neil McLeod
1 year ago

That really clears things up! What a joke our medical insurance has become!

John Galt
John Galt
1 year ago

Before Obamacare, my copay was only $20, no matter the reason for the visit. I now have a $1500 deductible. I rarely ever use that much in medical costs so basically, I pay for my own health expenses in addition to paying for insurance. The cost for insurance also increased enough that my (admittedly small) raise in 2014 was essentially wiped out. Cost of insurance for middle class families has gone up since Obamacare was implemented; what the answer above doesn’t discuss very well is that not everyone gets all the supposed subsidies…and if you get the subsidy, taxes are paying for them anyway. In addition, health insurance company profits have nearly doubled since Obamacare was implemented.

Jonathan
Jonathan
1 year ago

I too am sure I paid 375 a month for family thru bc/but. Now it’s 650 that’s a huge difference

Kimberly
Kimberly
1 year ago

I paid out-of-pocket with no employer subsidy pre-obama care and I was able to get an EXCELLENT PPO for $150/mo with a $15 copay (specialists included) and a $500 deductible. I’d pay about $600-$700/mo out-of-pocket for that plan now. Obamacare is a very expensive JOKE.

Louise Norris
Editor
1 year ago
Reply to  Kimberly

Keep in mind that Obamacare was enacted 11 years ago. Employer-sponsored health coverage had far fewer changes as a result of the law, and yet premiums for a single employee have increased by nearly 50% from 2010 to 2020 (here’s the 2010 info: https://www.kff.org/wp-content/uploads/2013/04/8085.pdf and here’s the 2020 info: http://files.kff.org/attachment/Report-Employer-Health-Benefits-2020-Annual-Survey.pdf)
As noted in the article, it’s also important to keep in mind that people with pre-existing conditions found it expensive or impossible to purchase individual/family (non-employer-sponsored) health coverage pre-ACA, whereas pre-existing conditions no longer affect an applicant’s eligibility or premium.
It’s also important to understand how robust the premium subsidies are for individual/family plans under the ACA. And the American Rescue Plan, which appears likely to be enacted this week, would boost those subsidies considerably and extend them to a lot more people: https://www.healthinsurance.org/blog/2021/03/05/how-the-american-rescue-plan-act-would-boost-marketplace-premium-subsidies/

D Moreno
D Moreno
11 months ago
Reply to  Louise Norris

Accept premiums WEREN’T increasing prior to the enactment of the ACA. In fact there are multiple studies that contradict your assertions.

“ACA advocates have been able to respond that those are cherry-picked cases, or that premiums were increasing before the ACA and would have increased anyway.”

“It turns out that across the board, for all ages and family sizes, for HMO, PPO, and POS plans, premium increases averaged about 60 percent from 2013, the last year before ACA reforms took effect, to 2017. ”

“Overall, Health Maintenance Organization (HMO) premiums actually decreased 4.6% in the four years before the ACA reforms came into effect (that is, from 2009 to 2013), but increased 46.4% in the first four years under the ACA. Point-of-Service (POS) premiums decreased 14.9% before the ACA, and increased a whopping 66.2% afterwards”

https://www.forbes.com/sites/theapothecary/2017/03/22/yes-it-was-the-affordable-care-act-that-increased-premiums/amp/

Now start tossing around the LARGE discrepancy between PRIVATE insurer reimbursement vs Medicare or medicaid reimbursements. Then wonder how unachievable M4A would be in a diverse population of over 331 MILLION people.

It’s a LEAP trying to find the overall positive outcome of the ACA act. How do they UNRING that bell ? Healthcare costs were rising as a percentage of GDP long before C-19.

Louise Norris
Editor
11 months ago
Reply to  D Moreno

I’ve worked in the individual insurance market since 2003, and premiums were certainly increasing in the decade prior to the ACA. That Forbes article indicates that the data were pulled from eHealth, but eHealth’s 2008-2017 report shows that premiums were indeed increasing in the years before the ACA: https://news.ehealthinsurance.com/news/average-individual-health-insurance-premiums-increased-99-since-2013-the-year-before-obamacare-family-premiums-increased-140-according-to-ehealth-com-shopping-data From 2008 to 2013, average premiums in the individual market grew by 24%, and there was never a year when they decreased.

If you weren’t familiar with the individual market pre-ACA, it might seem like “a leap trying to find the overall positive outcome of the ACA.” But in nearly every state, people with serious health conditions simply could not enroll in individual market health coverage pre-ACA. They were stuck with a high-risk pool (not available in every state) or had to maintain employer-sponsored health coverage.

And the benefits that were provided by individual market plans were rarely comparable to the benefits people could get on employer-sponsored plans. As an example, it was rare to find an individual market plan that covered any maternity care at all pre-ACA, unless you were in a state that mandated it. And in the years leading up to the ACA, it was becoming increasingly common to see individual market health plans with prescription coverage that only included generic medications (not particularly helpful if you’re diagnosed with a condition that requires expensive brand-name or specialty drugs).

Simply put, the reason premiums were so low in the individual market pre-ACA (dramatically lower than employer-sponsored health insurance premiums) was because the plans did not accept people with serious pre-existing conditions, often excluded less-serious pre-existing conditions, and often provided limited (or zero) coverage for things like maternity care, mental health care, and prescription drugs.

Roughly 85% of all marketplace enrollees have been receiving premium subsidies since 2014, and average subsidies cover the majority of average premiums. But the ACA’s “subsidy cliff” was a significant problem: People with income just a little above 400% of the poverty level could face premiums that amounted to an unworkable percentage of their income. Fortunately, the American Rescue Plan, which was just enacted in March 2021, has eliminated the subsidy cliff for 2021 and 2022: https://www.healthinsurance.org/obamacare/beware-obamacares-subsidy-cliff/

The American Rescue Plan has also made subsidies larger across the board, and made coverage affordable for people receiving unemployment benefits: https://www.healthinsurance.org/glossary/american-rescue-plan/

Bryon
Bryon
2 months ago

This article is bull. Yes that policy did exist. I am a business owner who had a cadillac plan that cost 175 per month with 75 copay. My son had plastic surgery via an accident. 75 through the whole process. Quit trying to change history.

Louise Norris
Editor
2 months ago
Reply to  Bryon

I’m glad you had good coverage prior to the ACA, and that you were healthy enough to qualify for an individual plan despite the medical underwriting that insurers used prior to 2014. But your experience was not shared by people who had pre-existing medical conditions, or by people who needed services such as maternity care, which simply wasn’t covered at all on most individual market plans prior to 2014: https://www.kff.org/health-reform/press-release/analysis-before-aca-benefits-rules-care-for-maternity-mental-health-substance-abuse-most-often-uncovered-by-non-group-health-plans/

Mary
Mary
1 month ago
Reply to  Louise Norris

Well, we can see why your laying some real BS out there and obviously don’t give a dumb at the outrageous costs Obamacare is doing and damage it’s causing. Before Obamacare we had excellent private doctors excellent care. Now, you get no care due to the policy’s of Obamacare. Doctors have now become extremely limited on what their allowed to do….I you’d get better care at a veterinarian! A MRI cost $1500 before Obamacare…now $10,000. Now that obama care changed coding and added more to a basic visit with bloodwork. Before the unaffordable Obamacare …you paid for a doctors appointment and a blood test. Now you pay for the appointment, professional fee, a blood draw fee, the lab test, you pay the lab then to! The ACA has to end and bring back good private doctors and a better system that doctors can do their job!

Louise Norris
Editor
1 month ago
Reply to  Mary

Understanding and explaining health insurance and health care reform has been my job for nearly two decades, so I am very well versed in the nuances. Did *everyone* come out ahead with the ACA? No. A person who had no need for maternity care, mental health care, specialty drugs, etc., who was perfectly healthy, and had a high income (and has continued to have all of those things) may very well be paying more than they used to pay for health coverage, and feel slighted that they’re paying for coverage that they “don’t need.” (although if they’ve kept a grandfathered or grandmothered health plan, they still have the coverage they had back then, without the ACA’s extras). But a key part of this is the fact that health is not static. A person who is 100% healthy today might need extensive medical care tomorrow.

The majority of non-elderly Americans have employer-sponsored health coverage, which was already pretty solid in most cases prior to the ACA. But “job lock” was a very real thing… people with pre-existing conditions didn’t have the same freedom to become self-employed as a person who was healthy, simply because individual/family health plans used medical underwriting in nearly every state prior to the ACA. The ACA made individual/family plans much more like employer-sponsored coverage, and also included premium tax credits to make the coverage affordable. Those premium tax credits weren’t perfect, although the American Rescue Plan has greatly improved them. But the ARP’s subsidy enhancements will need to be extended by Congress; if not, they’ll expire at the end of 2022: https://www.healthinsurance.org/blog/what-will-happen-if-arps-insurance-subsidies-expire/

And one other point: Is it possible for an MRI to cost $10k? Yes. But the average is far lower than that: https://heartlandimagingcenters.com/2021/03/19/why-are-mris-so-expensive-at-hospitals/ (and depending on the type of MRI and facility where it’s done, it can be well under $1,500).

Mary
Mary
1 month ago
Reply to  Bryon

Besides the writer of this BS. Story is a partisan democrat who slams republicans ?

12
0
Would love your thoughts, please comment.x
()
x