Is your health insurance OK ... unless you get sick? Worry about going bankrupt if you get really sick? You're among the 25 million to 37 million American adults younger than 65 who are under-insured. You're at risk of spending more than 10 percent of your income on medical care. Because costs are going up and coverage is eroding, your numbers are growing. "If you are sick and earn a modest income, then you are probably under-insured, even if you have employer-sponsored coverage," says Jon Gabel of the National Opinion Research Center.
How Overhaul Could Affect You
New Coverage Standards
The proposed requirements for the new system go to the heart of your problem. Many of the insurance horror stories in recent years stem from insurers' attempts to avoid covering people at high risk of getting sick. Most in Congress would agree that it's imperative to make the system equitable. Insurers would no longer be able to refuse coverage to people with pre-existing conditions. Also, there would be strict limits on how much premiums could vary based on age, place of residence and other individual characteristics.
Drawbacks: These new requirements may appear simple, but they won't work without some others — such as a mandate that virtually everyone buy coverage. Otherwise, they would drive up premiums for people who buy insurance on their own to pay the costs of the newly enrolled older and sicker people.
You might see the most relief through a government-sponsored health plan similar to Medicare but without age restrictions. The government would administer the plan, but the care would be provided by nongovernment hospitals, doctors and others. Coverage would be comprehensive, and subscribers generally would have low deductibles and copays. The price should be reasonable because of low administrative costs — no big marketing budgets, no profit margins.
Drawbacks: Opponents fear that a public plan would have an unfair advantage. Lower premiums and good benefits might lure people out of private health insurance plans, making them financially unviable. Others say Medicare, the model for public insurance, does not have a good record on controlling health care costs.
If you have Swiss-cheese insurance that doesn't cover your needs, an exchange could help you shop for a better deal. It is a way of bringing buyers and sellers together, providing one-stop shopping among an array of competing health plans. To be listed, all would have to meet minimum coverage standards and explain themselves in clear language. Exchanges would also allow employers to offer a wider range of choices, instead of negotiating with insurers one at a time. That would increase competition and lower prices.
Drawbacks: Exchanges only work in areas that have enough insurance plans to choose from. Some critics say exchanges work only if people are required to buy insurance and are provided subsidies to make insurance affordable — two proposals under active consideration. Unless access to exchanges is restricted, some critics say they'll drain younger, healthier workers from job-based plans, making the plans more expensive for those who remain. Some say exchanges have no record of reducing premiums.
All the major congressional proposals include expansion of Medicaid, the federal-state program for the poor. The idea is to allow people with higher incomes to qualify — some propose up to 150 percent of the federal poverty level ($16,245 for an individual; $33,075 for a family of four). One proposal is to use Medicaid expansion to get more people adequate coverage, then, after five years, require them to sign up for coverage through one of the new private insurance exchanges.
Drawbacks: State Medicaid programs are all over the map in the benefits they provide. States are in no position to pay their share of expanded eligibility or nationally standardized benefits. As the program for the poor, Medicaid carries a stigma, and programs have not always done a good job of enrolling those who are already eligible.
By lowering the eligibility age from 65 to 55, Medicare buy-in would give a new alternative to 24 million "pre-Medicare" people, 5 million of whom are uninsured. Many are finding that job-based health insurance is eroding. If they have it, it comes with increasingly more exclusions. And what's covered requires more and more out-of-pocket payments. Within a few years, 20 percent of all Americans will be in this age group.
Drawbacks: Many people couldn't afford to buy Medicare at full cost. Health care providers complain that Medicare payment rates are too low, so expanding the program jeopardizes their bottom line.
Under the leading proposals, the government would come to the rescue if you can't afford insurance that meets your needs. Details vary, but in general you'd get varying degrees of subsidy if your income is up to five times the poverty level ($54,150 for an individual; $110,250 for a family of four). Small employers would also get subsidy to encourage them to cover workers.
Drawbacks: It's expensive, at $723 billion over 10 years by one estimate. Government subsidies might prompt employers of lower-income workers to drop coverage — or not to start offering it.