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Should you be prepared for health care sticker shock?

Under the Affordable Care Act, the expected health care price spikes for coming year range from 20 to 85 percent. Those who are covered by their employers are also paying more out of pocket. What’s behind the increases? Gwen Ifill talks to Dr. David Blumenthal, president of the Commonwealth Fund, and Larry Levitt, Senior Vice President of Kaiser Family Foundation.

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  • GWEN IFILL:

    If it feels like you are spending more for health care through higher deductibles or premiums, you may be right. Under the Affordable Care Act, insurers are required to post rate increases if they exceed 10 percent, and, in many cases, the price spikes for the coming year range from 20 percent to 85 percent.

    And another study shows people who are covered by their employers are also paying more through higher out-of-pocket costs that leave as many as 31 million people underinsured.

    Larry Levitt studies this for the Kaiser Family Foundation. and Dr. David Blumenthal is the president of the Commonwealth Fund, which released a second survey on out-of-pocket costs.

    Larry Levitt, could you explain to me why these price hikes are going up all of a sudden? Or is it not all of a sudden?

  • LARRY LEVITT, Senior Vice President, Kaiser Family Foundation:

    Well, first, I would say that it's hard to generalize from what we have seen so far.

    I mean, as you said, insurers are only required to report right now increases of 10 percent or more. So, not surprisingly, those are all in double digits. But that said, reading the tea leaves, it does look like premiums are heading upwards.

    And it's for a combination of factors. I mean, first of all, health care costs, which have been growing very slowly recently, are increasing faster, particularly for prescription drugs. And insurers are for the first time under Obamacare setting premiums based on actual experience with enrollees.

    Up until now, they were guessing at how much health care people were using. Now they have actually some experience under their belts and in many cases people are — look to be sicker than insurers expected.

  • GWEN IFILL:

    Well, are sicker people now drawn more to this because of Obamacare? Is that part of the connection?

  • LARRY LEVITT:

    Yes, one of the things that the Affordable Care Act did was eliminated discrimination against people with preexisting conditions.

    So, for the first time, someone who was sick and wanted insurance can get it. So, the first people in the door tended to be those people who knew they needed insurance and they had pretty high health care needs. The key now is to try and get more healthy people in the door. And the big wild card is, will more people enroll and will those be healthier than the enrollees we have now?

  • GWEN IFILL:

    Now, as you pointed out, these numbers are only for increases over 10 percent. What about state regulators? Do they have a say in whether these numbers can go up or not?

  • LARRY LEVITT:

    They do. In most states, the insurance commissioner has the power to disapprove these increase if he or she feels they're unjustified.

    So, the actuaries and insurance departments are sharpening their pencils and reviewing these rates. And if history is a judge, many of them will come down, at least somewhat, and in some cases by a lot.

  • GWEN IFILL:

    And which states are right now the most affected by this? And is it because of medical costs or because of the region or because of whether people have been insured at all before?

  • LARRY LEVITT:

    Well, medical costs, you know, affect all states. I don't think that's a big factor in the variation across states.

    Probably, one of the biggest factors is how enrollment is doing. Enrollment has varied tremendously across the country. Florida signed up a lot of people, a very high percentage of the eligible population there. Other states like Iowa, for example, have signed up very few people.

  • GWEN IFILL:

    OK.

    Dr. David Blumenthal, I want to turn to you now about your report, which says that 31 million people are underinsured because of this increase in deductibles. What does underinsured mean, first of all?

  • DR. DAVID BLUMENTHAL, President, The Commonwealth Fund:

    Well, our definition of underinsurance is that you're underinsured if you spend more than 10 percent of your income, excluding premiums, on health care, and you're insured, or if your deductible exceeds 5 percent of your income.

    Now, if you are poor, that is, if you have an income of less than 200 percent of the federal poverty level, we define underinsurance as spending more than 5 percent of your income on out-of-pocket expenditures.

  • GWEN IFILL:

    Are these out-of-pocket expenditures, these deductibles, are they a tradeoff for getting premiums lower? We were just talking about premiums?

  • DR. DAVID BLUMENTHAL:

    They can be. One reason why premiums can be kept lower is by asking people who are insured to pay more of the cost of care. That takes the insurance company off the hook for that part of the cost of care.

  • GWEN IFILL:

    Well, what happens? Do people just seek less care? Are they less likely to go to the doctor?

  • DR. DAVID BLUMENTHAL:

    Yes. About half of people who are underinsured report that they are having trouble paying medical bills or getting less medical care than they think they need.

  • GWEN IFILL:

    So, what's the connection then to the Affordable Care Act here? Some would look at this and say, this was one of the problems that the Affordable Care Act was supposed to solve.

  • DR. DAVID BLUMENTHAL:

    We have been tracking this since 2003.

    Most of the increase that we have observed in underinsurance occurred before the Affordable Care Act became law, between 2003 and 2010.

  • GWEN IFILL:

    So the trend had kicked in already?

  • DR. DAVID BLUMENTHAL:

    The trend had kicked in. Since 2010, there really hasn't been much of a change.

    And another thing to keep in mind is that for us to consider you underinsured, you had to have insurance for a full year. Many of the people who responded to our survey had no insurance prior to 2014 or, if they had had insurance through Obama — through the Affordable Care Act, they only had it for six months. So we don't feel that this survey captures the effect of the Affordable Care Act.

  • GWEN IFILL:

    OK. Well, I want to ask you both now to answer a very basic question, which is, either way, no matter what the cause of this is, health care has grown more expensive for people for whatever reason. What do consumers do? Do they shop for a better deal? Do they just go without?

    I will start with you, Dr. Blumenthal.

  • DR. DAVID BLUMENTHAL:

    Well, one of the things that the Affordable Care Act has done, which is advantageous to consumers, is created these marketplaces, where people can go online and comparison-shop.

    That was very hard to do before the Affordable Care Act, especially for people who had individual insurance policies. So, the opportunity to see what a given insurance company charges for a given type of coverage is new and available to people. And one of the reasons why these announced premium increases may not be as serious as they are regarded is that people will have choice.

    They will have a chance to move out of a high-price insurance into a lower-price insurance.

  • GWEN IFILL:

    Will they have a choice on out-of-pocket costs?

  • DR. DAVID BLUMENTHAL:

    Well, they will, yes.

    They — the way the Affordable Care Act works is, it creates bands of insurance with — according to generosity, and the level of deductibles and co-pays is part of the choice.

  • GWEN IFILL:

    Let me ask you Larry Levitt, what is your prescription for what consumers should do when faced with these new — this sticker shock?

  • LARRY LEVITT:

    Well, I would agree with David.

    The — what we have seen in the first two years of Obamacare is that insurers are jockeying for position in these new marketplaces. So, while there are some insurers that are increasing premiums substantially, there are others that are actually decreasing premiums. So there are good deals to be had.

    But consumers really have to look around. Many consumers did shop after the first year of the ACA going into this year, but many just let momentum take hold and stuck with their old plan, potentially paying much more. So, shopping around is really the key here.

  • GWEN IFILL:

    Well, the Supreme Court may have a lot to say about what happens to all of this by the end of this month.

    Larry Levitt of the Kaiser Family Foundation, and David Blumenthal of the Commonwealth Fund, thank you both very much.

  • DR. DAVID BLUMENTHAL:

    Thank you.

  • LARRY LEVITT:

    Thank you.

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