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Posted: 6:00 a.m. Thursday, Dec. 12, 2013

Obamacare facts: How to use the health care exchanges

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By Clark Howard

ClarkHoward.com


Now that glitches in the rollout of Obamacare have been fixed, it's safe to get back in the water and shop for health coverage again.

The health care exchanges are now, for the most part, working fine. I just filled out 3 screens and got rate quotes in about a minute. That was *not* the case a month ago.

The rollout of the Affordable Care Act was humiliating for the president. It undermined confidence in his competence. And then the whole thing with "if you like your health plan, you can keep it," well, that just undermined things further for President Obama -- even among those who thought he was a decent guy if they didn't exactly like his policies.

If you are an individual looking for health care coverage, you have until Dec. 23 to buy on the exchanges for coverage that goes into effect Jan. 1, 2014. If you don't get around to it, you still have through the end of March to buy into the exchanges.

Of course, you don't have to buy on the exchanges. You could buy off-exchange too. But in general, those who would qualify for a subsidy will do best buying through the exchanges.

So that's the mechanics of the system. They are now working. On the side of insurance, it's a color-coded system. There are bronze, silver, gold, and platinum policies. If you buy the cheapest policy, a bronze, you will have big out-of-pocket when you seek medical care.

Here's a little-known Obamacare fact: If you are in a midsized metro area, some insurers are actually pricing silver plans (with better coverage) below bronze plans (with lesser coverage).  That's happening because one insurer may want larger margins on the sale of a plan vs. another that's taking a smaller profit. Another factor is that a cheaper silver plan may limit which health care providers you can use vs. a bronze. You just have to look around and see what's available to you.

On a larger issue, I'm worried about the economics of this system working. The real test for the Affordable Care Act comes a year or so out: Do the published health exchange rates hold, or do we go into a death spiral with higher premiums because of what's called adverse selection?

Adverse selection means, in this case, a situation where only the really sick buy insurance -- and the healthy don't buy into the system. If that were to happen, the actuarial math would not support the premium structure and it will fall apart.

Nobody knows how it will work when you can't charge a 65-year-old person any more than 3 times what you charge a 21 year old. The math requires a lot of subsidy to make it work. And what that all adds up to is unknown at this point. Younger people may choose to go uninsured. If they do, the whole actuarial math thing collapses and the system could fail. That's the danger. But we'll see what happens...

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