Shopping for health insurance: not all it’s cracked up to be

The Affordable Care Act exchanges will allow people to automatically renew the policy they selected last year but the complexity of how affordability tax credits are calculated means that could cause new problems for people. From the AP:

Insurance exchange customers who opt for convenience by automatically renewing their coverage for 2015 are likely to receive dated and inaccurate financial aid amounts from the government, say industry officials, advocates and other experts.

If those amounts are too low, consumers could get sticker shock over their new premiums. Too high, and they’ll owe the tax man later.

At issue is the inability of the government to update everyone’s information so people who automatically renew policies will assume to qualify for the same tax credits they got last year. For a lot of people though that won’t be right.

Any change in income or family structure completely changes what they qualify for. In addition because tax credits are based on the price of the second cheapest silver plan, any change in what is offered in the market could noticeably change everyone’s subsidies. The cheap plan you had could quickly become a relatively expensive one.

Effectively, if people want to be sure they won’t be hit with an unexpected bill they should go through the entire open enrollment process again each year. This is more of an inconvenience than a fatal problem, but it is another example of how the complicated design of the system makes it a bigger hassle than it needs to be.

My hope is at least this whole experience convinces regular people there is nothing desirable about shopping for health insurance so maintaining an expensive third party system purely to give people this “privilege” is idiotic.

Photo by Polycart under Creative Commons license