Health insurance shoppers suffer sticker shock

Shelly Ross, a small-business owner in S.F. who buys her own insurance, says she will have to pay more under the new law. Shelly Ross, a small-business owner in S.F. who buys her own insurance, says she will have to pay more under the new law. Photo: Beck Diefenbach, Special To The Chronicle Photo: Beck Diefenbach, Special To The Chronicle Image 1 of / 4 Caption Close Health insurance shoppers suffer sticker shock 1 / 4 Back to Gallery

Shelly Ross of San Francisco was looking forward to the opening of the new health insurance marketplaces under the Affordable Care Act because she was hoping to get a better deal.

But now that she's seen her options, Ross is disappointed. Turns out she earns slightly too much money to qualify for federal financial aid to help her buy coverage in the state's exchange, called Covered California. And because policies have to be upgraded to comply with the new law, her rates are going up nearly 10 percent.

"Every plan is going to cost more than what I pay now. And what I pay now is ridiculous," said Ross, 47, who owns a cat-sitting business called Tales of the Kitty and pays more than $400 a month for her insurance. "It's a great thing for some people, but it's certainly not helping me."

Ross is among the millions of Americans who buy coverage on their own, but must find new coverage because the health law has rendered their current policies outdated. But Ross, like many others, is not finding the plans sold through the Affordable Care Act to be particularly affordable.

Covered California, which opened Tuesday, was set up to help more than 5 million Californians who are eligible for the exchange because they are uninsured or they buy health insurance on their own.

Federal tax credits are available to help offset the cost of coverage purchased in the new marketplace, but more than half of the consumers it serves won't qualify.

"It's a horribly complex and ill-designed system that's going to be good for some people - mostly people with lower incomes - but for a lot of people, it's not going to be good for them," said Jeff Sher, a San Francisco health insurance agent who supports universal coverage but believes the law doesn't go far enough to help consumers and curb costs.

Aside from a prohibition on denying coverage to people with pre-existing medical conditions beginning Jan. 1, the health law also requires policies sold next year to cover a minimum number of benefits. And that can add to the cost of premiums.

These include such mandated benefits as maternity and newborn care, substance abuse treatment, and dental and vision coverage for children.

For John Lonergan, of San Francisco, those changes mean his current Kaiser individual plan will no longer be available to him. And if he wants a similar Kaiser policy, those added benefits will bump his costs 39 percent higher, from $625 a month to $931 in 2014.

Lonergan, 63, managing director of a venture capital firm for medical devices, is considerably outside the income range for subsidies, so his options include paying the increase or finding a policy with higher out-of-pocket costs in exchange for lower monthly premiums.

"I'm not complaining and I understand, but every mandate you put in place has a cost," he said. "Even if it's prenatal coverage, which I do support."

Health insurance experts anticipated the rate jump.

"People who had plans before Obamacare will certainly see some increases in those rates because of those essential benefits that are now required," said Brian Mast, spokesman for eHealth in Mountain View, the largest online health insurance broker in the country.

But Mast said the changes will allow many people who have been locked out of coverage because of their health backgrounds the chance to finally get insurance.

"It's definitely going to be beneficial for all those people who have been waiting, and these are going to be the people who enroll first," he said.