Pre-ACA Health Insurance Costs vs. Post-ACA Health Insurance Costs

Several years ago, back in 2006, I bought the book, The New Health Insurance Revolution, by Paul Zane Pilzer, and I’m so glad I did, because I wanted to look back and see what health insurance costs were back then, vs. what they are today. It serves as a good reminder that high risk pools did work, and helped keep insurance costs low for the masses of healthy insurance buyers. It also reminds us that high risk pools, while more expensive than insurance plans offered to the healthy, can be offered on a sliding scale of income and still be affordable, even for those with pre-existing conditions.  (Note: Pre-ACA, Cover Colorado, for example, was offered on a sliding scale of income. Rates shown in picture below do not display sliding scale discounts). What the ACA did was essentially turn Health insurance into a costly high risk pool for everyone. This is evident by comparing historical insurance costs to the cost of insurance today.

See the following pictures. Rates are based on a 33 year old person with similar individual deductibles.

2006-From The New Health Insurance Revolution 


Direct primary care is the free market applied to health care

When I share information about Direct Primary Care with others, I’m often met with fierce resistance and disbelief. I’ve even been told that I’m full of, well, you know what!  So today, when I saw this interview with Dr. Josh Umbehr of Atlas M.D. I couldn’t wait to share it!  Dr. Umbehr shares with us the highlights of Direct Primary Care and how the revolutionary healthcare model is changing the way Americans receive their primary care.

Dr. Josh Umbehr on the Rapid Growth of Direct Primary Care

“Direct primary care is the free market applied to health care. It’s medicine finally taking the best elements of other business models such as Amazon Prime, Netflix, and Hulu and applying them to an industry that’s ten or fifteen years behind the rest of the world in terms of business structure. It brings a very high-value, low-cost model to the masses.”

Here are some of the highlights of Direct Primary Care and how it saves money for the masses and fixes access to care, by far the most agregious problem in the healthcare systems of “every other developed country”, as well as in America. (Quotes below from Dr. Josh Umbehr in his interview by Tim White of the Objective Standard)

  1. Direct Primary Care brings a membership model to healthcare: “We charge $10 per month for kids, or $50 to $100 per month for adults, based on age.”
  2. Direct Primary Care lowers the cost of health insurance, because it removes the cost of basic care from insurance, saving insurance for the catastrophic claims it should be used for: “Direct primary care makes insuring the routine 80 percent of your health care unnecessary.”
  3. Direct Primary Care lowers the cost of procedures, prescriptions, labs and x-ray: “My best example is an EKG—it costs thirty-six cents, so we do it for free. The coffee in the waiting room costs more than that.” “Just as Amazon can use its size, technology, and resources to find the best prices for me, we can do the same for patients when it comes to medications and labs. We can get those things wholesale at giant savings, sometimes up to 95 percent off.”
  4. Direct Primary Care saves money for the chronically ill and those who might need high tech imaging such as CAT, PET or MRI: “A diabetic patient may have trouble getting his A1c testing covered because it’s expensive. We can do that test for $2.25. It’s $150 at most other places. A diabetic can get a thousand pills of Metformin—more than a year’s supply—for $11.” “We may not have in-house the orthopedic surgeon who does the surgery, but we can certainly do the MRI that the surgeon will need. Instead of $3,000, we do it for $300.”
  5. Direct Primary Care provides quality healthcare: “There’s “cost-effective” health care, which would say, “Don’t do mammograms until you’re forty-five or fifty,” depending on what guideline you use. Well, if you have a family history of breast cancer and you’re worried about it, you might start doing mammograms at forty. Some people will say you’re not cost effective, but I say, “That’s what the patient wanted, and it’s $75 for a mammogram through a direct primary care provider. She can comfortably afford it, and it buys her peace of mind—that’s quality care.”
  6. Direct Primary Care provides value to its patients: “The nausea medicine Zofran, prescribed to pregnant women for morning sickness, is around $120 for thirty pills. We get it wholesale for $2.65.” “Doctors can order brand-name newborn diapers wholesale for $0.02 per diaper. We can get a case of 240 diapers for even less at $3.77—it sells for $38 on Amazon.” DPCs resell wholesale items like diapers and prescriptions to their patients at cost; they do not mark them up.
  7. Direct Primary Care routinely saves patients thousands on emergency or urgent care.  Consider this tweet from a Dr Janice M Hudson, MD.

In conclusion, we as Americans can do better than “other developed countries”, and what makes us different is freedom.  If the government would allow us to buy wraparound insurance to protect us from unforeseen catastrophes, healthcare in America would once again become affordable for the masses, freeing us from waste so that we could use money saved to protect those who are truly in need.




A Closer Look at President Trump’s Executive Order on Healthcare Reform

Being that I’m a health insurance broker, I feel like I need to clarify the consequences of Trump’s executive order on health care reform, because I think there’s a lot of misinformation circulating around in social media, and of course, the mainstream media does a terrible job of explaining what may happen as a result of the order. I’m going to try to break it down here.

Federal Funding for Cost-Sharing Reductions May Go Away

Many are under the misconception that their health insurance subsidy is going to be taken away.  This is not the case.  Rather, the federal government  is no longer going to fund the cost-sharing reduction (CSR).  The CSR is the reduction in copayments and deductibles available only on Exchange Based Silver Plans for those who earn between 133% and 250% of the Federal Poverty Level.

What are the consequences of no longer funding the CSR?  The way things currently work, insurance companies reduce copayments and deductibles for eligible consumers.  In return, insurance companies receive monthly payments from the federal government to make up the difference.  As a result of taking away the funding for CSR, insurers will be forced to raise premiums.  Those who qualify for the CSR will still get the CSR, but those who don’t qualify will wind up paying higher premiums.  This ” market destabilization” could result in more insurers pulling out of the federal and state based exchanges, resulting in fewer coverage options for those who do qualify for subsidies.  It’s basically a backdoor way of forcing Congress to reform healthcare, because without this funding, the individual health insurance market as we know it today, may eventually collapse on its own.  After all, the middle class cannot continue to bear 20%-30% rate increases every year.  In my opinion, this change is not necessarily a bad thing.  We need healthcare reform, and perhaps the only way to get it is to shake things up a bit , and force Congress to take action.

Association Health Plans Allow the Sale of Insurance Across State Lines

Given that those who won’t qualify for subsidies via the Exchanges will inevitably experience higher premiums, they will need somewhere to go to purchase health insurance.  Association Health Plans may offer a way for middle class individuals to find affordable health insurance outside of the current health insurance system.

Associations allow large groups of people to come together and form a “Group” insurance plan, much like a large employer does.  But there are some differences.  Large employers have a diverse group of stable employees, and insurers are able to predict claims experience based on these populations.  Thus, in the large employer group insurance realm, insurance premiums have some stability.  Also, employers are incentivized to pay a large portion of the premium as a “benefit” to attract high quality labor. This incentive encourages both the healthy and sick to participate in the plan, which keeps the plan viable, and premiums stable.

Associations are different, because members tend to join just for the purpose of obtaining insurance, and their populations tend to be unstable and wrought with heavy healthcare utilizers.  Within the association, there is no employer contributing to the cost of the premium.  As claims experience rises within associations, rates go up.  Heathy members then tend to leave the group for lower cost options elsewhere.  Association Health Plans (AHPs) have a tendency to fall prey to adverse selection, or joining only when sick, which results in cancellation of the plan at some point in time.  This happens because, unlike employer group plans, members come and go frequently.  There is no membership stability, so the sickest members tend to remain enrolled, while the healthy members leave when rates go up.  NAHU, my professional association, is not in favor of AHPs.

One of the greatest advantages of AHPs is that they can design ERISA regulated self-insured plans that offer only catastrophic coverage, something many consumers demand, but are unable to get in the current system.   AHPs would be exempt from penalties associated with non-compliance with the ACA, because they are not employers.  Some express concern that AHPs would not offer the consumer protections offered by the ACA, and that bare bones plans could leave consumers under-insured.

The executive order establishes a time frame for federal agencies to report to the President  on the feasibility of enacting AHPs.  We’ve seen association plans among realtors, lawyers, contractors, and other self-employed people.  My State, CO,  has regulations that discourage the formation of association plans, so the attraction of being able to join an association plan across state lines has merit for self-employed individuals.  The self-employed are often those experiencing the most difficulty with today’s current health insurance system, because coverage truly is unaffordable for them right now.  This demographic does not tend to qualify for subsidies under the ACA.

Short Term Health Insurance Up to 364 Days

Short Term Health Insurance is the epitome of bare bones, catastrophic health insurance.  Short Term Coverage is the kind of coverage you buy when you are in-between jobs, missed an open enrollment,etc.  It is designed to protect one from the cost of a major medical event.  It does not cover pre-existing conditions, maternity or prescriptions.  Short Term Coverage is medically underwritten, and a person can be denied coverage if they are currently sick with a major disease, or if they are a pregnant woman or father-to-be.  Because these plans can deny coverage to pregnant women and fathers-to-be, they are never on the hook for large NICU claims or claims related to complications of pregnancy.  The low risk associated with those insured by Short Term Health Insurance, allows for very low premiums.

The advantage of Short Term Health Insurance is it is extremely inexpensive.  Prior to last year, people could purchase Short Term Coverage for up to six months, and then sign up for another six month term after the first term ended.  But Obama’s administration changed the rules, allowing people to only be able to purchase Short Term Coverage for up to 3 months per term, with no more than two terms in a year. After April, consumers are only allowed to buy one three month term.  The purpose of these rules was to force consumers into the Exchanges, disallowing them to buy less expensive plans as a means to thwart the high cost of ACA compatible plans.

Trump’s executive order allowing people to buy Short Term Coverage for up to 364 days will bring more options back into the market for those who cannot afford ACA Compatible coverage.  Generally, you cannot keep purchasing Short Term Coverage Certificates back to back to back.  At some point Short Term plans typically require a break in coverage before another certificate period can be purchased, so these plans are not viable as a long term way of getting around the high cost of ACA Compatible coverage, however, they can provide some relief in the short run.