Affordable Care Act will offer many options and pricing

WASHINGTON — Most Americans who shop for health insurance on new online marketplaces set up under President Barack Obama's health law will have a wide variety of choices, a new report from the Department of Health and Human Services indicates.

And many young consumers will be able to select health plans that cost $100 a month or less, according to the report, which is based on a preliminary analysis of premiums that insurers will charge when the insurance becomes available Jan. 1 in 36 states.

Premiums will be even less expensive — and free in some places — for low-income consumers who qualify for government subsidies through the Affordable Care Act, commonly known as Obamacare.

Obama administration officials did not release exact figures for each health plan being sold, explaining that rates will not be final until next Tuesday, when consumers are scheduled to be able to start shopping on the marketplaces.

The report also includes specific data only from the 36 states that have elected to have the federal government run their marketplaces.

Premium information from the 14 states operating their own insurance marketplaces — including Oregon, California, Maryland and Connecticut — in most cases is available through state websites.

Despite that missing data, the new report provides an important overview of the kind of options that millions of consumers will have.

The report also demonstrates that many consumers will probably find an affordable option, though some may face higher premiums, as critics are quick to point out.

"We are seeing, across the board, fairly competitive prices," said Caroline Pearson, vice president of Avalere Health, a consulting company that has been closely following the rollout of the marketplaces. "The health plans are convinced that people will buy based on price, and they are working very hard to put low-cost products in the markets."

Under the Affordable Care Act, most Americans will continue to get health insurance through an employer. The marketplaces will enable consumers who don't get benefits at work to comparison shop for health plans, much as they buy airline tickets.

Insurers selling on these marketplaces will be prohibited from denying coverage to consumers, even if they are already sick. The insurers also cannot put annual or lifetime limits on what they cover. And for the first time, all plans will have to provide a standardized set of health benefits.

"There have been a lot of products on the market where people would find out that they thought they had health insurance, but then they would find out that it wouldn't cover hospital visits, for example," said Gary Cohen, the Health and Human Services official who oversees the online marketplaces. "It's important to understand that, because of the Affordable Care Act, the health insurance that people will be buying will actually cover them in the case of them getting sick."

But averages can be misleading. When it comes to the new health care law, individuals can get dramatically different results based on their particular circumstances.

Where you live, the plan you pick, family size, age, tax credits based on your income, and even tobacco use will all affect the bottom line. All those variables could make the system hard to navigate.

For example, the average individual premium for a benchmark policy known as the "second-lowest cost silver plan" ranges from a low of $192 in Minnesota to a high of $516 in Wyoming. That's the sticker price, before tax credits.

In the three states with the highest uninsured population, the benchmark plan will average $373 in California, $305 in Texas, and $328 in Florida. Differences between states can be due to the number of insurers competing and other factors.

The second-lowest-cost silver plan is important because tax credits are keyed to its cost in local areas.

But consumers don't have to take silver. They can pick from four levels of coverage, from bronze to platinum. All the plans cover the same benefits and cap annual out-of-pocket expenses at $6,350 for an individual, $12,700 for families.

The big difference is cost sharing through annual deductibles and copayments. Bronze covers 60 percent of expected costs; silver, 70 percent, on up to platinum at 90 percent. Bronze plans have the lowest premiums and the highest cost sharing.

The administration report found that factoring in tax credits, a 27-year-old making $25,000 a year would see the premium for the benchmark silver plan drop to $145 in nearly every state. But if that hypothetical young adult used the tax credit to buy the cheapest bronze plan, he or she could cut the monthly premium to $74 in the Dallas-Fort Worth area, $102 in Orlando, and $119 in Pittsburgh.

For a family of four making $50,000, the tax credit would cut the monthly premium for the benchmark silver plan to $282. But if the family used its tax credit to buy the cheapest bronze plan, the premium would be $26 a month in Dallas-Fort Worth, $126 in Orlando, and $209 in Pittsburgh.

Such differences are sure to leave many people scratching their heads. Officials said they're due to complicated interactions between the tax credits and insurance company pricing strategies in dynamic markets.

Millions of low- and moderate-income Americans who make less than four times the federal poverty level — about $46,000 for an individual — will qualify for the government subsidies.

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