Survey: Obamacare insurance too costly, health insurance exchanges too confusing
Despite the looming March 31 deadline to secure health insurance under the Affordable Care Act (ACA), more than a quarter of the uninsured say they probably won't buy coverage through an exchange because most plans are too costly, according to a new study.
That's one of the main findings in a report by LIMRA, a research and consulting group that tracks the life and health insurance industries, which recently surveyed about 2,000 people, age 18 to 75, nationwide. The survey was fielded in October; the exchanges opened Oct.1.
Besides those who feel priced out, the study found that about 20 percent of the uninsured doubt they'll purchase medical care through an exchange because they "don't know enough about the insurance marketplace."
Confusion over what type of coverage is offered and what individuals may need is widespread, both for people without insurance and those shopping for a new plan, according to the study. About 60 percent of survey participants say they didn't feel confident enough to buy on their own and sought assistance while analyzing plans through an exchange.
The report listed the areas where consumers say they need help using exchanges, which are online marketplaces allowing individuals and small businesses employing up to 50 people to shop for health insurance plans:
- Finding the most cost-effective plan -- 59 percent of respondents.
- Better understanding the options -- 56 percent.
- Understanding eligibility -- 54 percent.
- Finding coverage that meets family needs -- 52 percent.
- Knowing how the plan works -- 52 percent.
- Understanding the billing process -- 37 percent.
- Navigating the websites of health exchanges -- 27 percent.
- Filling out forms -- 23 percent.
- Knowing exactly the type of insurance needed -- -14 percent.
Yuliya Babushkina, a senior analyst for LIMRA Group Insurance Research, said that the highly publicized problems plaguing the federal health exchange following its launch in October may have contributed to the insecurity. Technical snafus at the website made it difficult for consumers to gather information and sign up for plans. The Obama administration conceded that the exchange wasn't ready for the heavy traffic but has since fixed problems.
"Obviously, the highly publicized technical challenges influenced some Americans' views on the level of help they will need and deterred others from shopping and purchasing health insurance at all," Babushkina said in a written statement.
Bewildered or not, the ACA requires that the uninsured must have coverage by the March deadline or face a penalty. The fine in 2014 is $95 or 1 percent of an individual's taxable income, whichever is higher. The penalty rises to $325 in 2015 and $695 by 2016.
Feds say picture brightens a bit
Meanwhile, the administration reported on Dec. 29 that health insurance sign-ups through the federal exchange have climbed to 1.1 million, which officials say underscores the site's improvement and that more people are comfortable with the marketplace. The administration notes that nearly 1 million bought plans in December, most just before Christmas, the cutoff for coverage to begin Jan.1.
Only about 27,000 consumers bought insurance in October when the federal exchange, which serves 36 states, was having the most problems. Federal health officials say the ACA's overall goal still remains 7 million Americans enrolled by the end of March.
Tips for using a health insurance exchange
There's a consumer checklist at HealthCare.gov that can help. Here are some tips:
- Consider the cost-to-benefit ratio when shopping for a plan. Typically, higher cost policies have more plan features and more health care provider flexibility. Conversely, plans with lower premiums may have fewer features and fewer choices of health care providers.
- Find out if you qualify for a tax credit. Exchange health plans are sold by private health insurance companies and are standardized to make them easier to compare. You are eligible for a tax credit if you earn up to 400 percent of the federal poverty level -- that's $94,200 for a family of four in 2013. The tax credits are not available for health insurance purchased outside the marketplaces.
- Be aware of price variations. Where you live, your age and whether you use tobacco affects how much you will pay for a health plan. An older person can be charged three times more than a younger person and a smoker can pay 1.5 times more than a non-smoker.
Des Toups is a writer, editor and expert on insurance, cars and personal finance. He has written extensively about all three for national publications such as MSN and major newspapers such as the Seattle Times. He has been quoted about insurance issues in The New York Times, USA Today and Kiplinger's. Follow him on Twitter @destoups.