What You Need to Know about the Healthcare Exchange Policies

We have a major new concern, and it isn’t about the website.



When President Obama’s Affordable Care Act passed, our main worry was whether high deductible medical insurance plans would be allowed. Section 1302(e)2(A) seemed to limit high-deductible insurance plans to those under 30 years old.



Patients relying on natural health physicians need high deductible plans—because many natural health physicians are not able to accept insurance payments. Paying cash to such doctors, but backing it up with a catastrophic policy, makes sense for natural health patients.



Fortunately, the Department of Health and Human Services listened to all the messages pouring in to keep high deductible policies. The regulations appear to allow them for everyone. Indeed, in some cases, the deductibles are now too high, so that for example a couple planning to have a baby might have to pay for all the delivery services out of pocket.



The survival of high deductible policies as an option is the good news. But we now have a new concern about the exchange policies, one unrelated to deductibles or website functionality.



The new exchange policies are being marketed as private insurance policies, but they are very different from the private policies of the past.



Private policies in the past paid doctors more than Medicare, and much more than Medicaid. Insurance companies don’t reveal to customers what they pay doctors, but word is leaking out that in some cases the new exchange policies pay doctors barely more than Medicaid.



They also severely restrict the network of doctors and hospitals available to you. Leading healthcare analyst John Goodman has referred to the new policies as “Medicaid Lite.”



Why are the new exchange policies constructed in this way? Not surprisingly, it has to do with insurance company economics.



The Affordable Care Act mandates that all policies broaden treatment coverage. This raises costs. In a normal market, the insurance companies would charge customers more if they are old and sick (thus using more of these services) and less if they are young and healthy. But the Affordable Care Act restricts their ability to do so.



In actuarial terms, insurance companies are legally required to overcharge the young and healthy and undercharge the old and sick. Ordinarily this would lead old and sick people to sign up and young and healthy people to avoid doing so, even if they have to pay a tax as a consequence. If this happened, insurance company profits would collapse.



So how to attract young and healthy customers? They are known to buy mainly on price. The goal thus becomes to get the price of the new policies as low as possible by raising deductibles, restricting doctor networks, and underpaying doctors.



Young people won’t know how little doctors are being paid, at least until they try to find a doctor who will take them. Then, like many Medicaid patients, they may find themselves looking in vain, and in the end have to go to the hospital emergency room to be treated.



Old and sick customers will fare even worse. In every legal way possible, the insurance company may try to avoid them and, failing that, to get rid of them.



Let’s hope it isn’t this bad. We will know more about the new policies in the next few months, and we will keep you posted about what we learn. In the meantime, while these concerns get sorted out, it may be wise to look for traditional private insurance policies sold directly by the insurance company if you possibly can.