Will Obamacare Really Give You Better Health Insurance?

The Affordable Care Act has promised that everyone will have individual health insurance. Even with universal coverage, however, millions of Americans are worried about what their insurance policies will look like after Obamacare fully takes effect and whether the coverage those policies will provide will be better than what many of them already have.

Right now, it's not entirely clear what Obamacare-provided policies will look like. But early signs point to a few likely conclusions about how health insurance will change.

1. If you get your insurance outside of work, Obamacare policies are likely to include more benefits.
One likely outcome of the Affordable Care Act is that health insurance plans will have to provide more comprehensive coverage than they do currently. A 2012 study from researchers at the University of Chicago found that among the roughly 14 million Americans who have individual health coverage rather than group coverage through an employer or other organization, more than half of those plans didn't provide enough benefits to qualify under Obamacare's standards. The fact that health insurance companies won't be able to offer such plans was part of why shares of UnitedHealth (NYSE: UNH  ) , WellPoint (NYSE: ANTM  ) , and Aetna (NYSE: AET  ) -- all of which offer individual health plans as part of their overall product lines -- initially fell when Obamacare became law and was later upheld.

Source: White House.

Under Obamacare, those substandard plans will be replaced by newer coverage. They're likely to come with higher premiums, especially for those plans that provided much more limited benefits than will be required under the new law. Whether better benefits will provide enough of an offset to result in lower overall costs will vary from person to person and across different policies. People who have minimal health expenses will likely end up paying more overall, while those who use their health benefits more often could see cost savings under Obamacare plans.

2. Those covered under employer-provided plans already have generally strong coverage.
The same study also examined people covered under group plans, typically through their employer. The differences in quality were staggering. The study authors divided different insurance policies into tiers based on how much of a patient's medical bills each policy would cover. In group plans, almost two-thirds of members had policies that covered 80% or more of their costs, compared to just 2% of those who had to get their coverage individually. Moreover, thanks to employer contributions, those in group plans paid less than half what individual-plan members paid in out-of-pocket costs.

3. Whether employers will continue providing coverage will depend greatly on how health insurance exchanges look.
Despite fears of widespread employer abandonment of group health-insurance coverage, the 2012 National Survey of Employer-Sponsored Health Plans from HR consulting firm Mercer found that very few employers plan to cancel their health-insurance benefits after Obamacare takes full effect. But smaller employers were much more likely to say they would cut coverage, with 16% of employers with fewer than 500 employees planning health-plan cuts compared to just 6% of employers with 500 or more workers.

For many, the decision may well hinge on what the individual and small-business health-insurance exchanges under Obamacare end up looking like. States have the choice to run their own exchanges, but if they don't, the federal government will have exchanges to cover their residents. With an anticipated timeline for open enrollment in the exchanges of Oct. 1, 2013, it should be much clearer in the near future whether it will make sense for employers to drop coverage even in the face of penalties for some businesses that drop their plans, as well as the loss of tax credits that some eligible businesses will get for providing coverage.

Waiting for the details
Unfortunately, there's still a lot up in the air about how Obamacare will work, especially as different states go through different processes for figuring out what they will offer their citizens under the law. Clearly, some people will get far better health insurance coverage under Obamacare than they do now. That's one reason that share prices of hospital operators Health Management Associates (UNKNOWN: HMA.DL  ) and HCA Holdings (NYSE: HCA  ) have done so well, as costs for the previously uninsured are moved off their books and added to the burden that health insurers and their customers bear. But it's extremely likely that some people will end up paying more than they do now for coverage they'd be just as happy to keep if they could.

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Read/Post Comments (13) | Recommend This Article (9)

Comments from our Foolish Readers

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  • Report this Comment On April 05, 2013, at 6:19 PM, woiwoo wrote:

    Has anyone contacted their insurance company to see what their rates are going to do?

  • Report this Comment On April 05, 2013, at 6:20 PM, peapers wrote:

    What Obama gave me is way too offensive to say in polite company.

  • Report this Comment On April 05, 2013, at 6:23 PM, alrotundo wrote:

    Government health care SAVED MY LIFE after my insurance company SENT ME HOME TO DIE. You can espouse your opinions and theories all you like but I speak from cold hard experience and those arguments are unlikely to convince me that I'd be better off dead. Thanks to President Obama's Affordable Care Act, I am insurable.

  • Report this Comment On April 05, 2013, at 7:30 PM, zkayz wrote:

    Alrotundo is absolutely right and not the leach you imagine in your hateful ignorance, Obamacaresux.

    You have the luxury of ignorance only because you or someone you loved never suffered from a condition that priced private health insurance beyond your reach.

    In an all too typical story for the American middle class, my best friend lost his job when the company he worked for sold off assets. He couldn't find another full-time job and worked like a dog to support himself freelancing. But after COBRA ran out, he couldn't get insurance on the open market because he'd had an organ transplant--he was either turned down cold or offered insurance at rates only a millionaire could afford. And even though he was struggling to pay basic bills, he still made too much to qualify for government help or care from free private clinics.

    Eventually, he died of a condition that might have been caught in time if he'd been able to afford insurance.

    You can rant and rave all you want to, but the bottom line is: universal health insurance SAVES LIVES.

    And by the way, as my father likes to say, we already have government-paid insurance. You just have to live long enough to qualify.

    Congratulations, Alrotundo, I'm glad you were able to recover.

  • Report this Comment On April 05, 2013, at 7:32 PM, sdchanman wrote:

    No it won't. Does the post office work? If you want the DMV handling your health care be my guest.

  • Report this Comment On April 05, 2013, at 7:46 PM, indy06 wrote:

    Alrotundo, you've contradicted yourself here. Your first statement is that your insurance company sent you home to die. Your last is that thanks to Obamacare you are now insurable.

    Is this a more accurate summary? You went to a hospital with no insurance and they sent you home. Once it was known that something it was wrong with you. You then decided you wanted insurance and were denied. You now have obamacare coverage and all is good.

    I'm glad you are being taken care of, really. But it's the people who only want to get insurance after they crash the car that have been making our system so expensive.

    zkayz, 70 something percent of the polled country is for finding coverage for people with pre-existing conditions. It's obamacare that sucks. 23,000 and growing page nightmare last I heard. For the underestimated 6 trillion dollars and growing. It seems to me they could have just come up with a program to do so much cheaper. Of course they couldn't have lied and not called it a tax buried in mountains of legaleze to get it passed.

  • Report this Comment On April 05, 2013, at 7:56 PM, madmax999 wrote:

    This reminds me of our local cable company talking about why our rates keep going up. You are getting quality tv shows like; Telemundo,1,2,3,4,5,6,7,8,9, Ballet for beginners, the food network for dummies, book reviews for books no one has ever read, and the all important Commie Central. My rates for cable have multiplied 9X in 15 years. Why the hell do I have to pay $175.00 a month to watch this c rap.

    I know I can go in and get a Pap smear and a testical rub for cancer testing in the same visit. Why are they forcing people to HAVE to buy something they do not want, or can't afford?

    My 2 cents are gone to higher premiums!!! Thanks Obama

  • Report this Comment On April 05, 2013, at 9:43 PM, JerWig wrote:

    Will Obamacare REALLY make the best healthcare in the WORLD better? As Nancy Pelosi said when a reporter asked her if requiring people to buy healthcare was constitutional: "Are you serious?".

  • Report this Comment On April 05, 2013, at 10:09 PM, danhar50 wrote:

    For me it has doubled my rates, tripled my deductable and reduced my coverages. I refuse to pay $6000 a year for $500 worth of care so I cancelled. If obama doesn't want me to use the mess he created, so be it.... I'll go to mexico or Canada to get my care. If he fines me, I'll have to write more off to make it up.

  • Report this Comment On April 05, 2013, at 10:34 PM, ZZZJJ wrote:

    this article is not only out of date but also funny.

    the "exchanges" are already delayed for lyears, there cannot be signups without the exchanges, the pricing has already gone way up (60% in calif, higher other places lower, but still up in others)

    according to most, if not all reports, there will be no doctors available, there will be shortages of medicines, since no profit motive will be left

    who are we trying to kid?

  • Report this Comment On April 06, 2013, at 12:10 AM, proglass wrote:

    obama lied, my ins has gone up 25% since obamacare. This this year it is going up 22%. obama lied! Fact obama said our ins was going to go down, he lied FACT! Now they still do not know what is going to happen. 51% of the dumb asses in this country voted for him, lets see how this works out for them ? LOL

  • Report this Comment On April 06, 2013, at 10:40 AM, DaffodilDream wrote:

    People who have minimal health expenses will likely end up paying more overall, while those who use their health benefits more often could see cost savings under Obamacare plans.

    Great, so I'm paying MORE money to keep healthy..

    Umm, Michelle O - you need to get that man of yours up to speed with your agenda and be on the same page.

  • Report this Comment On May 29, 2013, at 11:49 AM, robncris wrote:

    Better Health Quote is a free, fast and easy way to receive multiple health quote offers starting as low as 1$ a month. Trusted carriers include Humana, UniCare, Assurant Health, AIG American General, Aetna and MORE! Get insurance coverage to take care of medical, dental, prescription, vision, hospitalization, chiropractic and much MORE! Get FREE Health Quotes by starting HERE! Start now!

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