For our November Readers' Review: “Dinner at the Homesick Restaurant” by Anne Tyler. As we prepare for holiday gatherings, join Diane and her guests to discuss this master work from the author who has made an art of exploring family love and dysfunction.
What’s behind the jump in health insurance premiums and how it’s affecting employers and workers.
- Julie Rovner health policy correspondent for NPR, author of "Health Care Policy and Politics A-Z," and contributing editor for National Journal Daily.
- Larry Leavitt senior vice president, Kaiser Family Foundation.
- Joseph Antos Wilson H. Taylor Scholar in Health Care and Retirement Policy at the American Enterprise Institute.
- Ron Pollack executive director of Families USA, a national non-profit organization for health care consumers.
MS. DIANE REHMThanks for joining us. I'm Diane Rehm. Health care is in the news again this week. A new study showed a spike in health insurance premiums. And yesterday, the Obama administration asked the Supreme Court to rule on a key element of the Affordable Care Act. Joining me in the studio to talk about these developments, Ron Pollack of Families USA, Julie Rovner of NPR and Joseph Antos of American Enterprise Institute.
MS. DIANE REHMBefore we begin our conversation here in the studio, joining us by phone from Menlo Park, Calif., is Larry Levitt. He's senior vice president of the Kaiser Family Foundation. Good morning to you, sir.
MR. LARRY LEVITTGood morning.
REHMOutline for us, if you would, what your 2011 Employer Benefits Survey actually found.
LEVITTWell, I mean, I think probably the most significant thing it found is that the premium -- health insurance premium for a family is now over $15,000 a year, which is at 9 percent over last year. And that comes at a time when workers and families are struggling with the economic downturn. In fact, AT the same time that premiums were at 9 percent, workers wages were up just 2 percent.
LEVITTSo premiums have continued to rise much faster than workers' ability to afford them.
REHMSo what is driving the sharp price?
LEVITTWell, you know, what typically drives increases in health insurance premiums is the underlying cost of health care, and, certainly, the cost of health care is up. But something slightly different, looks like it was going on this year as well, which is that insurers expected us to come -- in fact, many of us did -- expected us to come out of the economic downturn more quickly than we actually did.
LEVITTAnd during the recession, people cut back on health care just like they cut back on lots of other things in their family budgets. And insurers expected people to start using more health care services, going to the doctor more, filling more prescriptions as the economy improved. The economy hasn't mostly improved, so they kind of overshot this year.
LEVITTSo premiums actually increased a little bit faster than the actual cost of health care and, you know, to some extent that's leading to higher profits for the insurers.
REHMBut, really, how do the companies justify those increases?
LEVITTWell, you know, in many ways, again, you know, a big part of the premium dollar goes towards actual health care services. And, in fact, there are some new rules in the health care reform law, that passed a couple years ago, that guarantee that. I mean, the law requires that for individuals and for small businesses, at least 80 percent of the health care dollar, that premium dollar goes towards actual health care services.
LEVITTAnd going forward, that should help, you know, keep premium increases down a bit and ensure that not too much of the premium goes to overhead and profits.
REHMOkay. But, Larry, tell me this. If the companies did raise those premiums in anticipation of coming out of the recession, what happened to the profits that they took from those premiums?
LEVITTWell, those -- they show up as profits. I mean, they, you know, many -- most of the insurance industry is now dominated by for-profit insurance companies that, you know, have stock out there. So, you know, in many cases, this has boosted their stock prices. You know, I think, the question is -- big question is, going forward, what happens?
LEVITTI mean, do the premiums continue to go up next year? Or, you know, is there some competitive pressure that is brought to bear that, you know, helps moderate these increases?
REHMDid the survey, Larry, give you any sense of what effect, if any, the Obama administration's Affordable Care Act had on these insurers' decisions to raise premiums?
LEVITTYeah, well, you know, for better or worse, the -- most of the Affordable Care Act, the health reform law, doesn't go into effect till 2014.
LEVITTSo, you know, really, it's having a modest effect right now. One thing we did find is there are a couple provisions that did go into effect this year that increased benefits for people and had a very modest effect on premiums. So, for example, kids up to age 26 can now stay on their parents' insurance policies.
LEVITTAnd we asked employers, how many kids enrolled as a result of this provision, and found that this year, 2.3 million kids up to age 26 were able to get insurance by staying on their parents' policies. Also, this year, insurance companies and employers, most of them are required to provide preventive services, things like vaccinations, immunizations, cancer screenings, cholesterol screenings.
LEVITTThey're required to provide those services at no cost to patients, and that's also something that millions of people have benefited from.
REHMSo are you able to tell what effect, if any, these two provisions had on premium hikes?
LEVITTYeah, our estimate is that, of the 9 percent increase in the premium this year, no more than 1 to 2 percent -- percentage points of that are due to the provisions of the health reform law.
REHMOkay. So, Larry, are we to conclude that 7 to 8 percent of those premium hikes went straight to profit?
LEVITTNot straight to profits 'cause -- because, you know, the actual cost of health care went up as well. So in terms of...
LEVITTVarying estimates, but it looked -- looks like the actual cost of health care was -- is probably going up in the 5 to, you know, 6, 7 percent range.
REHMSo you're saying then that the 2 percent that went to these two changes -- preventive services and having kids on their parents' insurance -- that went up -- that accounted for about 2 percent and then cost hikes in provision of medicine accounted for another 5 to 6 percent? So you're saying the insurance companies took only 1 percent?
LEVITTNo question that profits did go up this year. And, you know, and it's also important to keep in mind that a fairly small percentage of the premium ends up going to profits. You know, it's in the range of usually 2, 3, 4 percent. So even if, you know, an extra 1 percent of the premium went to higher profits, it's a big increase in profits.
REHMYeah, but, I mean, isn't it tough to justify those kind of profits when the economy is in such a terrible place and when individuals are struggling to keep health insurance?
LEVITTNo question that this increase in premiums is coming at, you know, just about the worst time for families and employers. And, you know, the hope is that there are some things going into effect in the health reform law that will help this kind of minimum, what's called, medical loss ratio. So a requirement that a certain -- at least 80 percent of the premium dollar go towards actual health care services, not overhead and profits.
LEVITTAlso, states are starting -- in fact, just this month, they're starting to review any premium increase above 10 percent. And that should help moderate increases a little bit as well.
LEVITTAnd then, you know, starting in 2014, the really big pieces, assuming the Supreme Court allows it to happen -- the really big pieces of the health reform law go into effect, which will help people pay their premiums. It'll create these purchasing exchanges, which will increase the buying power of small businesses and individuals. And, you know, the hope is that that will help bring premium increases down as well.
REHMLarry Levitt, he is senior vice president of the Kaiser Family Foundation. Thank you so much for joining us.
LEVITTOh, my pleasure.
REHMAnd turning now to you, Julie Rovner, let's put aside the premium increase for a moment. Talk about what the Justice Department did yesterday.
MS. JULIE ROVNERWell, it wasn't just the Justice Department. There was a flurry of petitions to the Supreme Court. The Justice Department and the 26 states and the National Federation of Independent Business and the people that they -- that they're representing all petitioned the Supreme Court to take up the case out of the 11th Circuit.
MS. JULIE ROVNERThis was the case -- the appeals court case that found the individual mandate, the requirement that most people either have health insurance or pay a penalty, to be unconstitutional. Now, to go back a step, there have been so far three decisions out of appeals courts, and they disagree. And this is one reason that the Supreme Court would likely take up a case because you have disagreement among the circuits.
MS. JULIE ROVNERWe had the 6th Circuit that found the individual mandate to be constitutional. We had the 11th Circuit found it to be unconstitutional, and then we had the 4th Circuit in Virginia that found it to be basically not right for decision yet. So we definitely have a disagreement among the circuits. Now, we have...
REHMSo what about the timing now?
ROVNERNow that we have -- well, then, I'm getting to that. Now that we have all the parties in the 11th Circuit saying, okay, Supreme Court, we think you should take it up, that's yet another reason for them to go ahead and do it this year. So if they were to do -- take it up this year, that means that they would have arguments probably some time later this year and decide it.
ROVNERAt the end -- presumably, a big case like this, they would come out at the very end of the session. That would be the very end of June, very first few days of July, right in the middle of the presidential election.
REHMAnd when we come back, we're going to talk with Ron Pollack and Joe Antos about why Ron is optimistic there's going to be a favorable outcome, and Joe Antos may have another thought in mind. Do join us, 800-433-8850. Send us your email to email@example.com. Join us on Facebook or send us a tweet.
REHMAnd now, having heard from the Kaiser Family Foundation that insurance premiums have risen about 9 percent, and having heard as to reasons why, we turn to our experts here in the studio. Julie Rovner, health correspondent for NPR and author of "Health Care Policy and Politics A-Z," she's also contributing editor for National Journal Daily. Ron Pollack is executive director of Families USA.
REHMThat's a national nonprofit organization for health care consumers. Joseph Antos is a specialist in retirement policy at the American Enterprise Institute. So, Ron Pollack, you are optimistic about what the Supreme Court will do with the Affordable Health Care Act?
MR. RON POLLACKWell, Diane, as someone who's argued cases in the Supreme Court -- and I used to be a law school dean -- I know it's always hazardous to predict what the Supreme Court, particularly this Supreme Court, is going to do. But I sat in on all of the Court of Appeals' arguments. And I'm optimistic for a variety of reasons.
MR. RON POLLACKIn the 6th Circuit, which is based in Cincinnati, Judge Jeffrey Sutton, who is a very conservative judge, reputed by a lot of people to be the next Republican appointee if there's a Republican president to the Supreme Court, he wrote a lengthy opinion as to why this individual responsibility provision is constitutional.
MR. RON POLLACKLast week, I sat in the courtroom listening to the argument in the Court of Appeals here in the District of Columbia, and you had two of the most conservative judges: Judge Brett Kavanaugh, a George W. Bush appointee, clerk for Scalia, and Judge Laurence Silberman, a close friend of Clarence Thomas.
MR. RON POLLACKAnd it was clear they had problems with the arguments attacking this individual responsibility provision on a number of grounds, one, that it's probably -- could very well be constitutional based on the so-called commerce clause. But, actually, there was yet another ground that these two judges actually had difficulty with the challenge. And that is they thought, since this is all enforced through the internal revenue code, this is a tax.
POLLACKAnd -- now, I think one thing that's really important to understand, there is not a single Court of Appeals that has ruled that wherever they come out on this individual responsibility provision, that the rest of the Affordable Care Act should be invalidated. And, clearly, the opponents of the Affordable Care Act want to invalidate the entire statute. That is not going to happen.
REHMAnd, Joe Antos, your thoughts on the Obama administration's chances for having the mandate provision upheld?
MR. JOSEPH ANTOSWell, I tend to agree with Ron, although maybe I'm not as confident as he is that the Supreme Court would go that way. But I'm not sure that it really matters. As you said, the Internal Revenue Service will enforce this, but not very well. In fact, they've basically said that only if someone who doesn't have insurance has over-withheld on their income taxes will they take any money at all. And that's assuming they can find that person.
MR. JOSEPH ANTOSSo I think this is really more a case of moral suasion. I think that's the real effect of the mandate. It's basically your mother telling you what to do when it's the right thing to do -- and it probably is the right thing to do -- to get insurance. But enforcement -- ain't going to happen.
POLLACKAnd, Diane, one other point I think is important to make, for those people who can afford health care coverage but choose not to get it, guess who winds up paying? It's all of us who buy insurance because, when somebody has an accident or a major illness and they wind up in an emergency room, somebody's got to pay the bill.
POLLACKAnd this adds more than $1,000 to the insurance premiums for family coverage, for those of us who purchase insurance.
REHMAll right. Now, going back to the Kaiser Family Foundation survey, Joe, how do you read that 9 percent increase?
ANTOSWell, I think the only thing you could say for sure is what we've known for decades, maybe since the invention of health insurance, which is, every year, health care costs rise. The 9 percent is a little hard to understand in the sense that there are a bunch of other surveys. This is a survey. There are a bunch of other surveys, and you get all sorts of different numbers.
ANTOSThe Federal Employees Health Benefits Program, in sharp contrast, the very same day that the Kaiser Family Foundation report came out, announced a 3.8 percent increase for next year. Now, we have to be careful. That's looking forward, Kaiser Family looking backward, hard to know what all that means.
REHMWhoa. Julie, what do you think it means?
ROVNERYeah, well, that's -- I mean, what Larry was saying -- and I think this is important -- is that a lot of these insurance companies -- and, remember, it's not just insurance companies. Sixty percent of people now are in what are called self-funded plans. So these are companies that are basically paying their own costs. So it's not just insurance company profits.
ROVNERIn fact, now we have a majority that aren't insurance company profits. I think a lot of this really was people thinking, we know that during the recession, certainly during the height of the recession, people were not using a lot of medical care. We know that from the surveys that the government does about how much health spending went up, and it didn't go up very much.
ROVNERSo there was every reason to believe there was this pent-up demand and that at some point people were going to start to use, to go back and use the care at sort of a regular clip. And people assumed that if the economy was recovering, and it looked like -- remember, last year, when they set these premiums, it looked like this was going to happen, so some of this was not really nefarious.
ROVNERIt was the idea that, okay, if the economy is recovering, people are going to probably return to their regular use of medical care. So it wasn't just the insurance companies doing it. It was companies who self-fund their own plan doing it, setting their premiums because, remember, they are collecting premiums -- part of the premiums from their...
REHMWell, what about the recession and how it really did affect the premiums? Did...
ROVNERPremiums went up much more slowly the last couple of years…
ROVNER...in fact. So this was a big spike from last year.
ROVNERAnd -- but what we're seeing and what Joe is talking about is that, because the economy did not recover, what we're seeing is that, next year, we're already seeing much smaller premium increases, hence the 3.8 increase for the federal employees plan. In fact, the most popular federal employees plan, the Blue Cross, Blue Shield plan, which, by far, a majority of federal employees take, is only going up 1.6 percent.
ROVNERThere's a Mercer study that's out, again, looking at next year -- much smaller increases. I think the average is about 5 percent. So it looks like this year was a spike. And as Larry said, it was a spike that was sort of an over-anticipation. Now, there's also -- there are also provisions of the Affordable Care Act that basically require insurance companies not to overestimate.
ROVNERAnd, basically, they can't keep the money in extra profits because there's something called this medical loss ratio if they don't spend a certain percent, depending on whether it's group or individual, 80 or 85 percent. Then they have to give back that extra money in rebates.
REHMRon, what about the criticism of the Affordable Care Act, that it didn't do enough to hold down costs?
POLLACKWell, I think we're going to see that the Affordable Care Act provides significant relief for people. But before I just go over how it provides relief, I think it's important to understand, as important as the Kaiser survey is, it's not an extraordinary finding because if you look at what happened over the past decade, you'll see that employer-sponsored health coverage has really diminished.
POLLACKAnd, you know, just to give you a few numbers from the latest Census Bureau, the Census Bureau says that between 2000 and 2010, we had an increase in the overall population of almost 27 million people. And yet, at the same time, we had a reduction of almost 13 million people with job-based health care coverage.
POLLACKAnd the reason for that, of course, is that health premiums have gone up. In that same time period, premiums for family coverage rose from $6,772 in the year 2000 to almost $14,000 in 2010 and, as the Kaiser folks are telling us, over $15,000 in 2011. So, first, it's really important to understand that this has been a long-term problem.
POLLACKThat said, the Affordable Care Act does a variety of things that, I think, are going to be helpful. First, as you've already heard, it will hold insurance companies more accountable. If they want to increase premiums really significantly, now, states have a greater capacity to review those proposed increases.
POLLACKThe federal government has provided states, particularly the insurance commissions, with more money so that they can hold the insurance companies accountable. You've seen rejections of premiums. I just picked a few. In North Dakota, one company wanted to go up to 23.7 percent in the year, in California, 16.4 percent, in Connecticut, 19.9 percent, in Oregon, 22.1 percent. Every one of those proposed increases were rejected.
POLLACKAnd so we now have new tools to try to make sure that these steep premiums do not increase. But one of the things that Larry said, and very much agree, is that there is an underlying cost of health care that is a factor. It's a significant factor. And there are a number of things that the Affordable Care Act does that should be helpful. We don't know yet what the magnitude will be in terms of what it will do to cost. But let me give you three things.
POLLACKFirst, we're going to have greater care coordination, so that the people who have the greatest expenses are people who have chronic health conditions. And they often have multiple health conditions, and they often go to numerous different specialists. Now, there's going to be improved care coordination.
POLLACKSecondly, we're going to have more research and dissemination of research about what are the different kinds of treatments that are most effective 'cause a lot of the treatments that people get are ineffective. They're wasteful. We're going to know much more about that. We will have greater access to electronic medical records so that we won't have to spend as much time with paperwork.
POLLACKI can't tell you that any one, or the combination of things, are going to result in X percent reduction from what it otherwise would be, but they hold the potential for significant help. One last thing, Diane, I'd say -- we can go into this later in the program -- the Affordable Care Act provides some real subsidy help for people who are going to need it, both for small businesses and to individuals and families. That's going to be helpful.
REHMHow do you respond, Joe?
ANTOSWell, Ron is right that -- and Larry is, too, that it's the underlying cost of health care that's the big issue. There are a bunch of other factors going on. There's tremendous consolidation in the markets around hospitals. Hospitals are the big cost centers, and they're becoming more and more powerful. So when people like Ron say that we're going to hold insurers accountable -- insurers are just agents, not in the sense of insurance agents, but...
REHMBut how about the health care cost makers?
ANTOSExactly right. We've -- and so Ron is optimistic -- I wish I were as optimistic -- that we're going to see big improvements in coordination of care and more efficient delivery, but whether that happens or not, the problem lies with the medical establishment.
REHMJoseph Antos of the American Enterprise Institute. Time to open the phones. You're listening to "The Diane Rehm Show." Let's go to Lena, Ill. and to Sheila. Good morning to you. You're on the air.
SHEILAGood morning. I was intrigued when you mentioned about putting off routine health care at the beginning of your show because my deductible is a $5,000 deductible in network, $16,000 out of network, and I had a routine test come back abnormal.
SHEILAAnd, yes, I am putting off going to get that retested because now that it's not considered wellness, now, I need to pay for the whole thing myself, which is a risk I have to take because we choose not to take insurance through my husband's company, again, because it was a large deductible, and many of the doctors were not in our -- within easy driving distance for us.
SHEILASo that was just the comment I had. I wanted to thank you for pointing that out, bringing that on to the public's awareness.
REHMAll right, Sheila. I hope you stay well. Julie.
ROVNERYou know, that was one of the other major findings of this survey is the number of people who are now in these high-deductible plans. That's a particularly high deductible.
ROVNERBut there are now as many people in what are known as high-deductible plans, and that's really defined now as over $1,000 deductible, not this kind of $5,000 deductible. But there's many people now in high-deductible plans with some sort of -- usually, there's some sort of savings account attached to them. Sometimes the employer makes a contribution to that savings account.
ROVNERSometimes it's up to the individual to make the contribution to that savings account, and that's usually a tax-preferred savings account. There's many people in those high-deductible plans as there are in HMOs as of this year. So it's really -- and in small businesses, it's more than half.
ROVNERBut it's really becoming the norm for -- and a lot of these people are now what are really defined by statisticians as being underinsured, which means they're at risk of spending more than 10 percent of their income on health care, out-of-pocket.
ROVNERSo they have insurance, but in some cases, it's -- what kind of insurance do they have?
REHMWell, but, even beyond that, Sheila has said she's putting off going in for that second test. Now, could that turn into even more serious illness for which, as you pointed out, Ron, without her husband's company's insurance, who is going to pay for it? Joe.
ANTOSWell, that's -- you know, that's a really big question. And it's hard to know in her case, obviously. Will she be, you know, uncompensated care -- what we call uncompensated care? It's hard to know. One of the facts, though, that we know about health care, anybody who's ever looked at their explanation of benefits from their insurance company, is that the charge is very high.
ANTOSWhat the insurance company pays is much lower. What you end up paying is much lower than that. And so I'm a little surprised that she doesn't have insurance for the negotiating rates, but...
REHMSheila, do you have that kind of insurance?
SHEILANo, I get it on my own privately.
REHMOh, I see.
POLLACKSo one of the things that Julie pointed out before, under the Affordable Care Act, people will be getting preventive care services, and they will not be charged for those preventive care services. So the kind of test that Sheila will need, she will be able to receive them without having to go out-of-pocket for those costs.
POLLACKYou know, for folks who are uninsured, who are priced out of the market, whether they're priced out of the market 'cause they can't pay the premiums or the deductibles are so high that they don't feel they can pay those first dollars, you know, what do they do? Like Sheila, they defer care.
POLLACKAnd when they defer care, it means at the onset of a pain, at the onset of an illness, they delay getting care, and the situation can get worse and...
REHMRon Pollack, he's executive director of Families USA. And we'll take a short break here. Sheila, I wish you well.
REHMAnd we're back. Time to go back to the phones. To Green Cove Springs, Fla. Good morning, Ernie.
ERNIEHow are you doing, Diane Rehm?
REHMI'm fine. Thank you, sir.
ERNIEI've had three heart attacks since October of last year. Before that, I lost my insurance because of the economy failing completely along with my business. When I had my first heart attack, I was crying over my spreadsheets, okay? Now, I'm only making $675 a month disability, which I had to fight tooth and nail six months for, okay? My bills, no matter how I look at it, are $1,000. I've already lost everything. I've lost house -- everything.
ERNIEI've lost everything I do to have a car. However, I'm going to be -- I mean, the insurance premiums I'm looking at are between $10- and $15,000 for my preexisting conditions. If I make less than $10,000 a year, how can the IRS find me, and not only that, find me, but garnishee my disability to pay a fine for not being able to buy insurance?
REHMThat's not going to happen.
ROVNERNo, no, absolutely not. You have to be at a certain level of income in order for the mandate to be required. And, first of all, if you're at that low a income, you'll get free health insurance through Medicaid. That's one of the...
ERNIEI wish you all had said that sooner because there's a whole lot of people out there under those impressions because they're not said. Remember, nothing is known until it's said.
REHMExactly. And that's why we're here today, Ernie. Ron.
ERNIEOkay. You have a good day.
POLLACKSo I'd say a number of things. First of all, preexisting conditions will be a thing of the past, come 2014. You will not be denied health care coverage due to a...
REHMPoor guy. Is he going to be able to hold on that long?
POLLACKWell, you know, just interesting, the average cost of a hospital stay for somebody with a heart attack, like Ernie's experience, today is $63,000. So, of course, Ernie is in deep trouble, but there is help coming.
REHMYeah, but here is what I want to know, and it is focused in this email from John in Cleveland, who says, "I give up. The biggest problem is what the hospitals charge. I'd like to see doctors and hospitals justify their fees and costs. Cost analysis must be done to bring down these over-inflated fees. I work for an insurance company, and these doctors that bill $100 and get paid from insurance companies $55, as an example, which the doctors accept.
REHM"So why aren't the doctors billing closer to $55?" Joe.
ANTOSWell, I think there are a couple of factors. One is everybody wants a discount. So if people actually read those pieces of paper from the insurance company, they say, oh, gee, somebody saved me a lot of money, not really true. The other factor, though, is that it's an insurance-driven system. It's a cost-driven system. It's not a value-driven system.
REHMBut is the Obama plan going to cover this, Julie?
ROVNERWell, certainly, there is an effort. Obviously, you know, Medicare pays hospitals what it, you know, has this -- has a pay-per-diagnosis system for hospitals. They -- Medicare pays hospitals a set amount, and that's all they get, which is, you know -- so hospitals don't get to decide what they pay. It's the other way around.
ROVNERNow, as Joe was saying earlier, part of the problem with insurance companies and hospitals is that in some places, hospitals do have the upper hand because if you're a particularly, you know, well-known, you know, highly -- a hospital with a reputation, you need to be every -- you need to be in every insurance plan's network because employers will say, well, my -- you know, my workers want to be able to go to hospital X.
ROVNERSo the insurance company basically has to contract with that hospital, and then the hospital has -- can say, well, that's what we're going to charge. And the insurance company is kind of over a barrel. So there are times when the hospital can basically set its prices, and that's where you get into the problem.
POLLACKSo, Diane, I want to make sure we get back to Ernie, who is really worried about will he be able to afford health coverage. And Julie said if he doesn't have significant income, he can qualify for Medicaid, and that will provide significant coverage. But there are a lot of middle class people and families that can't afford health coverage. And the Affordable Care Act will help them.
POLLACKAnd the way it will help them is that, starting in 2014, anyone with incomes below 400 percent of the federal poverty level -- so what does that mean?
POLLACKFor a family of four, if you have income below $90,000 a year -- this really reaches people in the middle class -- you will get tax credit subsidies so that you will better be able to afford health insurance premiums. So that's number one. Number two, there is a limit in out-of-pocket costs that anyone should have to bear, and the Affordable Care Act says that, and for individuals, it would not be more than $5,950 a year.
POLLACKThat includes deductibles, co-pays and the like. For families, it's about $11,900. But for those people who have moderate income, say, for a family of four with income below $56,000 -- these are still middle class people -- they will also get help with subsidies so that they will even be having a lower cap in what they have to pay out-of-pocket.
POLLACKAnd, lastly, people who have major illnesses often hit a lifetime or an annual limit on how much the insurance company is willing to pay out over the course of the year.
REHMAll right. Now...
POLLACKThose annual and lifetime limits are gone. And so that means people who have chronic conditions will not face those limits.
REHMLet me just go back to Ernie for a moment because what he said was, why didn't you say that upfront? It strikes me that the negative press about the Affordable Care Act has reached the public much more clearly than the positive elements. And, Joe Antos, I would ask you why you think that is.
ANTOSWell, I don't think that is true, actually.
ANTOSNo. I think it's very hard to know what the public knows. The public doesn't know things that haven't happened. And none of this has happened.
REHMI recognize that.
ANTOSSo we can't expect the public to know what might happen in 2014. Two years is a long time. Three years is a long time. So, you know, the other fact here is -- that we have to deal with -- Ron is talking about great subsidies, and they sound wonderful. But either somebody's going to pay for it or we've got to find some way to get the cost down. And, in fact, if you go into any hospital in America, virtually any hospital in America, you're going into a palace.
ANTOSIf you go into, virtually, any good hospital in any other part of the developed world, you'll be going to a place that has wards. We phased those out in the '50s. So we've got a lot of amenity value to our health care, in addition to real health care, and sorting that out is going to be very difficult.
REHMBut I still want to understand why the negative parts of this program, some people feeling as though it is going to skyrocket costs, some people feeling, as Ernie did, that his wages, whatever his income is, is going to be garnisheed by the IRS -- I mean, that's negative stuff. And the positive stuff you all talk about has not found its way into the public mind. Let's go back to the phones. To Oklahoma City. Good morning, Robert.
ROBERTGood morning, Diane. I want to thank you for convening this panel and taking the time to get to the bottom of few things beyond the sound bites. I want to say that you've done a good job so far in pointing out the Kaiser numbers are absolutely not new since we've had many, many years of double-digit increases. I just want to say that I really believe that the watchdogs are asleep. We have a lot of medical overuse.
ROBERTAnd the gentleman that called in with a heart attack problem, we should point out that he will be eligible for Medicare disability medical 24 months after he starts receiving that benefit, before he meets the poverty guideline and goes on Medicaid. So that's another benefit for him.
REHMThat's a good point, yeah.
ROBERTBut I think the way this Kaiser business was handled was just an anti-Obama gift to the right-wing radio hawkers. I think it was handled very poorly. The big problem is we now see the average family cost for insurance at $15,000 a year. That's well more than the average family taxes, and it's certainly more than many families pay for their rent or mortgage annually.
ROBERTAnd those of us lucky enough to have an employer-paid plan that's close to $15,000, that's money that will never be in my paycheck. And we've talked about flat wages on some other programs, but we're way overusing medical care. The average person taking medicine under any kind of a plan is getting four-and-a-half prescriptions. This is just unheard of in the world. Nobody else does medical care this way.
REHMAll right, sir. Thank for calling. Ron.
POLLACKWell, Robert's got a very important point. We actually pay per procedure or per service as opposed to pay for good outcomes. And that's something that has to change. The Affordable Care Act moves us in that direction. The faster we move in that direction, the better off we will be. But, Diane, you raised the question, why is it that people like Ernie feel that the Affordable Care Act could potentially be a problem when he's going to benefit enormously from it?
POLLACKI mean, let's face it. This has been a real partisan, political football. You know, I'm surprised so far that we haven't heard attacks that the Affordable Care Act actually caused Hurricane Irene, that it caused the earthquake in Virginia, Obamacare, Obamacare. I think one of the things that scares people who don't like the Affordable Care Act is that when we get to 2014 and it gets implemented and people, as Joe said -- you know, you have to see what actually -- how it impacts in your lives.
POLLACKOnce that is implemented and people actually see the benefits of it, they receive the subsidies and premiums, they get help with respect to out-of-pocket cost, then, I think, we're going to see a very different situation. That does leave the Affordable Care Act vulnerable between now and then, but I think we're going to see Obamacare being a badge of distinction for President Obama at some point.
REHMAll right. Let's go now to Shane. He's in Austin, Texas. Good morning to you. Shane?
REHMWhat's going on in the background?
SHANEOh, that might be my motor. I'm actually -- I pulled off to the side of the road to talk to you guys...
REHMOkay. Go ahead.
SHANE...so I didn't get in an accident.
SHANEI just wanted to kind of put something out there, that I hear this discussion over and over again because it's -- you know, it's big news and everything, but I don't have insurance.
REHMHow old are you, Shane?
SHANEI am 39 years old.
SHANEAnd I just -- I don't feel like it's valuable to me. My children have Medicare because, you know, if there's an emergency that they have to go to the doctor, then they do, but we use preventative care. I mean, I've been going to a chiropractor since I was very young, and, you know, I've been eating good, taking vitamins. I eat vegetables...
REHMGood. I'm glad. Hey, Shane, tell me about your -- pardon me -- your employment situation.
SHANEI'm a massage therapist. I help keep people nice and relaxed so that their stress levels don't rise.
SHANEAnd stress is a major contributor to bad health.
REHMOf course. And you make a decent income.
SHANEActually, the highest I've ever made as a massage therapist is about $30,000 a year.
REHMOkay. Julie, so what happens to Shane, making $30,000 a year, who has no health insurance? His children are covered under Medicaid. Is that...
ROVNERProbably Medicaid, yeah. He would probably -- it depends where he lives. He would certainly be -- he might be one of those people who might be right on the edge of being either eligible for Medicaid himself or not required -- not have enough income to be hit by the mandate, I would think.
POLLACKBut he's -- if he's not eligible for Medicaid, he'll be able to get individual coverage through these new marketplaces. And he is the perfect candidate for getting huge subsidies that will help pay for his premiums. And one of the key things is we've got to get people like Shane enrolled. And, thankfully, there's a big process, a new organization called Enroll America, that's designed to make that happen.
REHMAll right. And you're listening to "The Diane Rehm Show." Let's go to Cincinnati, Ohio. Good morning, John.
JOHNHi. How are you today?
REHMI'm good. Thanks, sir.
JOHNGood. I just want -- you know, I'm not even going to complain too much because a lot of people have more problems than me. But I'm a self-employed person, sole proprietor, and my premiums have gone up basically around 500 percent over the course of the past nine, 10 years. And I think that, you know, solely insured, small pool of people pay a large proportion of premiums vis-à-vis large-pool institutions.
JOHNI understand the numbers behind that, but also on the negotiated prices. I had back surgery a few years ago. It cost $17,000 if I was uninsured. It cost me $5,000 with insurance. So why can't the lay person have the same power of negotiation, the uninsured person have the same power of negotiation as an insured person with a company who pays high premiums?
ROVNERThat's exactly what the new exchanges under the Affordable Care Act are supposed to do. That's what these exchanges are for. They are for the small business person, for the sole proprietor.
REHMHow would he be affected?
ROVNERHe will be able to go into these exchanges and get -- small businesses are already eligible for tax credits. If he employed -- I'm sorry, didn't...
REHMHe said he was self-employed.
ROVNERSelf-employed, okay, so he'll be able to go into the exchange. As a self-employed, we'll be able to pool with other self-employed people to get this much -- to basically have the power of group purchasing and probably be eligible for subsidies as well.
REHMLast quick question from Ceresco, Mich. Good morning, Leroy. Please, quick question.
LEROYGood morning. I just had a notice that -- I'm retired, and it's $96.40 a month for Medicare. And I read it's going to go up to $247 in 2014.
REHMWho -- where did you read that?
LEROYOh, I got it off the Internet. Now, whether it's true or not, the Internet stuff is...
ROVNERI think he's talking about his part B premium. There may be…
ROVNERYou may be talking about an income-related part B premium, and that may be a proposal...
ANTOSNo, I've heard this before. It's -- for the average person who's paying the standard premium, by 2014, it may rise to $140.
REHMSo that's what I'm talking about. I think there is a lot of bad information out there, a lot of myths. Leroy has just brought up one. Where they're coming from, I do not know, but we have to do a better job of getting the right information out there. You all have done great job this morning. Thank you, Ron Pollack, Julie Rovner, Joseph Antos. I'm going to be on vacation for the next two weeks. Yay. I'll be back with you on Oct. 17. I look forward to being with you then. Thanks for listening. I'm Diane Rehm.
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