Obamacare – The Affordable Care Act  :  A Broker’s Perspective

Guest Post By Mack Diltz, CLU

I have been an insurance broker for 40 years and I have a few thoughts on the Affordable Care Act (aka Obamacare or ACA), especially as it relates to individual health insurance plans, where most of my current activity is centered.  There are many things to like about the new law, and of course several aspects that are not so good.

First, the good things:

  1. Guarantee issue.  This is huge.  I cannot tell you how many people I have tried to get individual health insurance and small group insurance for over the years who could not qualify because of what seemed like a fairly innocuous condition.  Before the states created their high risk pool health insurance plans, these folks were out of luck.  The pool plans were expensive but at least they could buy insurance.  With ACA the only health question is do you use tobacco or not.
  2. Unlimited lifetime maximum benefits. This feature means you can never run out of insurance.  Most pre-ACA plans had a one to five million dollar maximum benefit.  Although the odds of exceeding that amount are low, it is nice to have plans where you don’t have to worry about it.
  3. Unlimited lifetime maximum benefits for mental and nervous conditions. This is also huge, as most pre-ACA plans had little if any coverage for such conditions.
  4. Maternity benefits. Benefits to pay for pregnancies were just not available in individual plans before ACA.  Even small group carriers would not take a group if an insured was pregnant.
  5. 100% preventive care benefits. Even on plans with $6,000 deductibles, all preventive care is covered in full.  This includes wellness exams, flu shots, mammograms and pap smears, colonoscopies, etc.
  6. Inclusive maximum out of pocket limits. In pre-ACA policies, you never really knew what your total financial exposure was because out of pocket limits did not include copayments for office visits and drugs.  Now, all deductibles, copays and coinsurance count towards the out of pocket limit.  You just have to be careful and stay in network, because plans typically double the out of pocket limit if you see out of network providers.
  7. Subsidies for lower income people. Although the red tape you have to go through can be daunting, this is a great benefit for folks with lower income.  Not only is their premium reduced, in some cases the deductibles and maximum out of pocket limits are also reduced.

Now, the bad things:

  1. The new law did not really do anything to control costs of medical goods and services.  Hospitals and big Pharma got a free pass on the amounts that they charge.  Although the insurance companies negotiate discounts for providers in their networks, the starting prices for these discounts are totally up to the discretion of the providers.  The insurance companies don’t really have much incentive to control costs, because they just pass them on in their rates.
  2. The law adds more costs in terms of fees, taxes and reporting. Especially daunting for employers with more than 50 employees, the law adds new reporting requirements that will cost money, and those costs will be passed on to – guess who? – the consumer.
  3. Part of the way that ACA was funded was to make cuts in the funding of Medicare Advantage plans. These cuts amount to about a 13% reduction in benefits compared to pre-ACA plans.
  4. This bad thing is personal to me as a broker. ACA requires that health insurance companies spend a minimum percentage of their premiums on claims (80% for individual and small group plans).  If they don’t, they have to rebate part of the premium to get to that percentage.  One of the ways that health insurance companies get to this percentage is by reducing their administrative costs, mainly by reducing the commissions paid to brokers.  Some companies have gone to a flat $8 – $10 per month per person.  Given the amount of time required to help people get subsidies and understand and select the best plan for their needs, this 50 -75% reduction in compensation makes it difficult to make a living as a health insurance broker.

It remains to be seen how the ACA fares with the political struggle ongoing between the two political parties.  It appears that the obvious no-brainer best option, namely a single payer system (“Medicare for all”), is a non-starter due to the many entities (including brokers like me!) who have a vested interest in the current way of doing things.  In the meantime, at least now you can get health insurance regardless of any prior medical conditions.  It may not be “affordable”, but it is available.

Mack Diltz is an Insurance Broker specializing in Obamacare. He can be reached at  505-820-0222.


PS This is the first in a series of invited blogs. These will not necessarily reflect the primary authors’ opinions, however we hope they provide useful perspectives on non-scientific aspects of healthcare.

  1 comment for “Obamacare – The Affordable Care Act  :  A Broker’s Perspective

  1. April 9, 2015 at 12:15 pm

    Very well written! I have known Mack for 15+ years and he is a highly regarded professional that always places his
    clients best interests ahead of everything else!

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