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It is no wonder the Obama administration branded its signature health-care legislation the Affordable Care Act. For many Americans the basic problem with medicine — health insurance and health care — is that it has become too expensive, especially in a sluggish economy.

As Americans begin signing up this week to buy insurance, they will begin to test the legislation’s tantalizing promise to make health care financially viable. Will the policies deliver care at manageable prices, or will “affordable” seem like a hollow promotion?

That probably depends a lot on patients’ needs, where they live and — importantly — their preconceptions of what health insurance is supposed to do, experts say.

The insurance marketplaces, or exchanges, will sell four levels of plan — bronze, silver, gold and platinum — with the more expensive plans offering the most extensive benefits. And while premiums for the low-end plans may be relatively cheap, they still require significant out-of-pocket payments, in the form of co-payments and deductibles that could add up to more than $6,000 a year.

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“The perception of cost will vary a lot,” said Dan Mendelson, chief executive of the consulting firm Avalere Health and a former associate director for health at the federal Office of Management and Budget.

Mendelson predicted the plans would be welcomed by people who had wanted to be insured but couldn’t obtain or afford insurance because of pre-existing conditions, for example, and for low-income earners who would qualify for heavy subsidies for premiums. “For some people it will be free, and that is a pretty good value,” he said.

Shocking outlays?

But the required outlays may seem like a lot of cash to healthy families that previously did without insurance. The outlays could be downright shocking to patients who last had insurance a decade ago, when health plans tended to require little if any patient payments.

“More of the cost responsibility is being shifted to patients, and more to patients with serious chronic illness,” Mendelson said, noting that the silver plans, the second-cheapest, are intended to cover only about 70 percent of a patient’s medical costs. “This is different from the concept of insurance we’ve been carrying around for a long time. So people who sign up for insurance thinking all will be covered are in for some surprises.”

Elisabeth Benjamin, vice president for health initiatives at the Community Service Society of New York, says that — perceptions aside — the exchange plans she has vetted in New York state provide consumers a good deal. For a number of years, the group has operated a hotline to help patients troubleshoot their medical bills; 45 percent of callers are uninsured.

“The premium prices are reasonable — for some people we’re talking about as much as my cable bill,” she said. “Yes, there are high co-pays, but there’s also a cap,” she added. “We now have people come to us owing $50,000 or $150,000. So if the worst-case scenario is you pay $5,500, you won’t go bankrupt over that.”

Health experts also point out that the larger patient payments required under policies developed for the Affordable Care Act are increasingly a feature of private health-care insurance.

“We are going through a period of revolution in what health insurance is,
from more comprehensive to less comprehensive,” said Drew Altman, president of the Henry J. Kaiser Family Foundation. In 2006, he said, about half of employer-provided insurance plans had any deductibles; now 78 percent do.

Insurers impose co-payments and deductibles as an alternative to raising premiums, which are often more tightly regulated. But many health economists approve of the practice because even a small co-pay can push patients to price shop for cheaper care, studies show.

The goal of the new legislation is to make sure everyone has decent health insurance, but that ideal will come at a cost for many Americans. Even though the Obama administration celebrated that premiums released last week by the exchanges in 36 states proved lower than anticipated, those premiums vary tremendously depending on where you live, your age and which plan you choose.

Variable premiums

For example, the monthly premium for a low-end silver plan for a 40-year-old runs about $300 in many places, but as high as nearly $700 in parts of New York. And monthly premiums are more than $600 for 60-year-olds in some states, although a few states charge the same rate regardless of age.

Perhaps more important, all of the plans have significant deductibles and co-payments. Silver plans often do not kick in until the patient has spent $2,000; many states require patients to cover 20 percent of hospital costs and some drugs — although that cost-sharing is capped at $6,350 per individual, or $12,700 per family, and effectively less for low-income patients.

The Affordable Care Act also includes tens of millions of dollars in spending for patient navigators, who will help patients choose the plan that best suits their needs, and their pocketbooks.

Still, a $2,000 deductible is high compared with plans provided by employers, where the average annual deductible is $1,135, Altman said.

For those who balk at the new bills, it is useful to remember that those high co-payments are largely a function of the uniquely high price of medical services in the United States, everything from drugs to scans to operating-room time.

Cost-sharing burden

In a country where even minor medical procedures cost two or three times more than elsewhere in the developed world, cost-sharing is far more likely to be a burden.

A healthy 60-year-old in California with a chronic condition such as asthma who needs little more than asthma medicine and an outpatient hernia operation could easily pay $7,000 in premiums plus a $2,250 deductible plus $3,000 for the 20 percent hospital co-pay.

When my husband recently developed a blood clot in his leg after a bicycling injury, the generic heparin shots to treat the condition cost $1,400 at the pharmacy. Although the medicine is nothing new, our insurer considered it a specialty drug because of its price. Under some states’ silver plans, that would require a 50 percent, or $700, co-pay before getting this potentially lifesaving treatment.

Does that seem affordable, or not?

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