GLENWOOD SPRINGS — The new federal health care law could cause a shift from lower income groups to the middle class in those who choose not to have health insurance because of high premium costs, according to one local insurance agent.
“Right now, the people who can’t buy individual health insurance either can’t afford it, or they have been declined,” said Scott Bolitho, head of the Life, Health and Financial Services division at Glenwood Insurance Agency.
The Affordable Care Act (ACA) stipulates that everyone will be covered, regardless of pre-existing conditions and other health-related factors.
“The bill also said, ‘if you still can’t afford it, don’t worry, there will be subsidies to take care of that,” Bolitho said.
But that’s not true for individuals who are not part of employer group plans and who earn just above the 400 percent of the national poverty level income threshold triggering those subsidies.
Especially in areas such as Garfield and Pitkin counties, where already high health care costs will mean higher premiums than in other parts of Colorado and the country, the “uninsured” is likely to be a much different demographic than it is now.
While individual health insurance rates have already been going up by an average of 12 percent per year prior to the implementation of ACA, between new rating rules, coverage mandates and fees, costs could more than double for individual coverage, Bolitho said.
“I think we are going to see a shift in who does and who doesn’t have health insurance,” Bolitho predicted during a presentation to the Carbondale Rotary Club on Wednesday. “We will see more middle class people who say, ‘I can’t afford health insurance.’”
What they may choose to do instead is accept the monetary penalty for not purchasing health insurance through the federal insurance exchange laid out by the ACA, which is expected to be a lot less than health insurance premiums. It’s also largely unenforceable the way the law is written, so those penalties may never be collected, Bolitho said.
The penalty for lack of health insurance for a family or individual earning $100,000 per year is 1 percent, or $1,000.
High local premiums
Under the insurance pricing scheme unveiled recently by Colorado’s health insurance exchange, Connect for Health Colorado, Garfield County will see some of the highest insurance premiums in the state, especially for individuals buying insurance on their own.
Bolitho said he quoted a premium for one Glenwood Springs family of four looking to buy through the state exchange of $1,500 a month.
“A lot of people are going to look at that, decide to pay the $1,000 (fine) and just be done with it,” he said.
The same health insurance pricing structure will impact locally based businesses that have 50 or more full-time employees, which are now required to provide health insurance for their workers.
ACA requires that employer-sponsored health plans limit the employee’s share to 9.5 percent of their W-2 income. While that keeps it affordable for the employee, the burden is on employers to make up the difference, Bolitho said.
Again, some businesses could decide to pay the rather modest penalty of $166.67 per full-time employee, excluding the first 30 employees .
Or, some businesses could decide to maintain their employee base below 50 to avoid the mandate to provide health insurance, Bolitho said.
“Yes, definitely, I have heard from a couple of businesses who said this will really make them think about what to do, and whether they should expand,” he said.
Bolitho said his firm represents between 150 and 175 small and large health insurance group clients, and more than 600 individuals with health insurance.
“A lot of the individuals we work with are asking, ‘Can I keep my current insurance plan?’” he said.
That depends on whether a particular health insurance provider is choosing to stay in the Colorado exchange pool, or not.
“It depends on the company, some are staying and some are terminating their health plans on the individual side,” Bolitho said.