Saturday, October 31, 2015

'You Better Shop Around' for ObamaCare ... Whether Signing Up or Renewing

The 1960 song 'Shop Around' by Smokey Robinson and The Miracles was one of the great hits. It was then and remains now one of my all time favorites.

In addition to the great music of the 60s, the song contained a huge amount of common sense wisdom delivered by a mother to her young son. She simply told him "You better shop around" before settling down and getting married.

But the song applies to more than marriage. In fact, the mother's timeless advice should be heeded today when we are making informed marketplace driven decisions about college, debt, credit cards, auto loans, 401(k) savings and investments, home mortgages, health care coverage and numerous other matters.

We'll focus on health care herein as most of us are still relatively unfamiliar with the numerous quite confusing details and workings of ObamaCare. But regardless of that lack of familiarity, we're being faced right now with important choices about renewing our health care coverage under the law.

Obamacare Shopping Is More Important Than Ever has this timely summary for the otherwise perhaps too trusting and unwary among us:

"When some premiums increased last year, a lot of Obamacare customers were able to find good deals by switching to a new health plan. New calculations from the federal government suggest that many consumers will need to do the same to find the best price in 2016.
That means, once again, that the marketplace will offer customers a tough choice: stick with the plan you have and pay more, or switch to a new one to pay a lower premium. The savings may be substantial. Instead of simply renewing, the average returning customer who chooses the best deal in the same category as an old plan could find one costing $610 a year less, say analysts for the Department of Health and Human Services. About eight in 10 returning customers on can find a cheaper premium by switching.

Customers will be able to start signing up for new plans on Sunday. And people interested in window shopping can already do so in many states. Early information about premiums suggests that the total prices of plans in many states are going up by a lot, though the structure of government subsidies will insulate most customers from the changes.
Obamacare uses a market instead of a single government provider to offer health insurance to middle-income people. For that reason, the main mechanism it uses to keep insurance affordable is market competition: Customers can pick a new plan every year, and, the thinking goes, insurers will have an incentive to keep their prices as low as possible or risk losing customers.

This year . . . about half of all returning customers shopped around before settling on a health plan — and a full quarter switched. Those numbers were much higher than many experts expected. A government report on Wednesday confirmed that those switchers were looking for a better deal. The people who picked different health plans this year chose those costing an average of $490 less a year. For people switching within the same category — a more common occurrence — the savings were about $400.
The numbers strongly suggest that price-sensitive customers in many markets may need to switch plans for a third time this year. . . . But the change is sure to be inconvenient and may disrupt people’s health care. Many of the lowest-cost plans in the marketplace limit the doctors and hospitals they cover.
That means that patients may have to change not just their insurer but also their doctor if they want to find a cheaper plan. Many customers in these markets are healthy and haven’t used the medical system much, so they may be able to easily weather those changes. But for people with complex needs and established relationships with doctors, the switching can be more difficult.
Over time, the need for annual switching may diminish as the market becomes more stable. Insurers have been jostling around to get customers in the last few years, and many made pricing mistakes — charging less than it cost to provide care, or charging too much to attract customers. As the insurers get a better idea of what it costs to provide care to marketplace customers and how much money they wish to earn from them, the swings in prices between one plan and another may become less substantial."
Summing Up
When government subsidies and grants are a major part of the marketplace pricing equation, the charges to both consumers and taxpayers invariably are very high.
That high price government controlled equation is equally applicable to both the cost of health care and college.
And that's because ObamaCare and college costs are heavily taxpayer subsidized. Accordingly, government is heavily involved and calling most of the shots at every step in the process.
Thus, the mother's warning to her free-to-choose son to 'Shop Around' applies to both ObamaCare and college selection.
And taking sufficient time to become properly informed and 'Shop Around' before buying applies to every other important life altering decision as well.
That's my take.
Thanks. Bob.

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