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Debunking the Debunkers: Yes, Obamacare Rate Shock is Real

On October 26, The Los Angeles Times ran a story by Chad Terhune, documenting how many Californians feel lied as they are being forced out of their current health care plans due to Obamacare.

"All we've been hearing the last three years is if you like your policy you can keep it," Deborah Cavallaro, a real estate agent in Westchester, told the LAT. "I'm infuriated because I was lied to."

But now, The Los Angeles Times' Michael Hiltzik is trying to "debunk" his own paper's reporting. Cavallaro, Hiltzik now says, is wrong about her options under Obamacare and "is the product of her own misunderstandings, abetted by a passel of uninformed and incurious news reporters."

Hiltzik writes:

Her current plan, from Anthem Blue Cross, is a catastrophic coverage plan for which she pays $293 a month as an individual policyholder. It requires her to pay a deductible of $5,000 a year and limits her out-of-pocket costs to $8,500 a year. Her plan also limits her to two doctor visits a year, for which she shoulders a copay of $40 each. After that, she pays the whole cost of subsequent visits.

This fits the very definition of a nonconforming plan under Obamacare. The deductible and out-of-pocket maximums are too high, the provisions for doctor visits too skimpy.

As for a replacement plan, she says she was quoted $478 a month by her insurance broker, but that's a lot more than she'll really be paying. Cavallaro told me she hasn't checked the website of Covered California, the state's health plan exchange, herself. I did so while we talked.

Here's what I found. I won't divulge her current income, which is personal, but this year it qualifies her for a hefty federal premium subsidy.

At her age, she's eligible for a good "silver" plan for $333 a month after the subsidy -- $40 a month more than she's paying now. But the plan is much better than her current plan -- the deductible is $2,000, not $5,000. The maximum out-of-pocket expense is $6,350, not $8,500. Her co-pays would be $45 for a primary care visit and $65 for a specialty visit -- but all visits would be covered, not just two.

Is that better than her current plan? Yes, by a mile.

If she wanted to pay less, Cavallaro could opt for lesser coverage in a "bronze" plan. She could buy one from the California exchange for as little as $194 a month. From Anthem, it's $256, or $444 a year less than she's paying now. That buys her a $5,000 deductible (the same as she's paying today) but the out-of-pocket limit is lower, $6,350. Office visits would be $60 for primary care and $70 for specialties, but again with no limit on the number of visits. Factor in the premium savings, and it's hard to deny that she's still ahead.

But is Cavallaro really "ahead" under Obamacare as Hiltzik claims?

First of all, the subsidized plans under Obamacare are not that much better than the supposedly "bad apple" Cavallaro has now. The deductible, after subsidies, is still $40 more a month, so right off the bat she is already a guaranteed $480 in the hole. Yes, she now has unlimited doctor visits, but the co-pay is higher on the first two visits, and maybe Cavallaro only sees the doctor once a year.

The deductible and out-of-pocket limits are both lower under Obamacare, but not wildly so. Choosing to pay $480 less a year for a deductible is not an irrational choice. In fact, as Hiltzik notes, Cavallaro can choose an Obama-approved bronze plan with the same exact deductible as she has now! If a $5,000 deductible is such a huge denial of "access" to health care, then why is there a plan that has exactly that on the Obamacare exchange?

Second, as Hiltzik does dismissively note later, the new Obamacare plan might not allow Cavallaro to keep the doctor she has now. As Hiltzik's colleague, Terhune, reported in September, "To hold down premiums, major insurers in California have sharply limited the number of doctors and hospitals available to patients in the state's new health insurance market opening Oct. 1."

Does the Anthem plan sold through the Obamacare exchange allow Cavallaro to keep the doctor she sees today? We don't know!!! The feature on the California Obamacare exchange site that lets you see if the doctor you like is included in the plan you are about to buy is BROKEN!!! As Nancy Pelosi might say, "You have to buy an Obamacare exchange plan to find out what is in it!"

Third, as Hiltzik does dismissively note later, all of his calculations on the subsidies Cavallaro is eligible for, is based on her income from last year. But Cavallaro also says her income fluctuates. And if an American uses Obamacare subsidies, but then makes more than the eligibility limits allow, the IRS can claw back the subsidies. Why would any American want to buy a product that significantly increases the chance of an IRS audit!

To recap: with her old plan, Cavarallo paid $480 less in premiums every year (even with subsidies included), got to keep the doctor she sees now, and had no fear that the IRS would come after her if she earned more money next year.

Under Obamacare, her premiums are higher, she probably will not be able to keep her doctor, she can't even find out which doctors will see her, and if she underestimates her income, she gets to fight with the IRS.

Michael Hiltzik, President Obama, and liberal health care wonks everywhere may believe Cavarallo is better off under Obamcare, but Cavarallo clearly does not.

I wonder if she, and the millions of Americans like her, will appreciate being lectured to about why their new health care plan is so much better than the one they were forced to give up.

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