After nearly two years of speculation and less than one week before they debut, prices for insurance plans on the new federally run health-care exchanges were revealed Wednesday.
The Department of Health and Human Services released its estimates for insurance coverage options offered on the exchanges that were created under the Affordable Care Act. The average American will be paying $328 per month for mid-tier coverage under the new law, without subsidies.
The data is based on 53 approved insurance plans in 48 states. States with more insurers participating on exchanges had lower and more competitive prices than those with fewer insurers, HHS reported. The department is hoping to sign up seven million Americans in its first full year, which accounts for 2.7 million younger-- and more importantly, healthier--individuals who will help subsidize cost for older and less healthy policyholders.
This broad estimate also does not include subsidy discounts, which will be available for those making up to 400% of the federal poverty Level. For an individual, this tops out at around $45,000 per year, and for a family of four, this cuts off at around $94,000 a year, according to the Kaiser Family Foundation. HHS reports this average price is 16% lower than what it had originally projected for premiums, before subsidies.
Open enrollment begins on Oct.1, and ends March 31, 2014, via the ACA’s state and federally-run exchanges.
HHS reports that in 15 states, the second-lowest cost plan, referred to as the “silver plan”, will be less than $300 a month before tax credits. Young adults will pay lower premiums, the report states, and also have the option of a catastrophic plan that covers prevention, primary care and high costs in case of accident or illness. The lowest average monthly premium for a 27-year-old in 36 states, pre-subsidy, was $129 for a catastrophic plan, $163 for a bronze plan and $203 for a silver plan.
These plans are tiered according to both cost and coverage.
But making apples-to-apples comparisons between the HHS estimates and what policyholders are paying today isn’t possible, says Gary Claxton, vice president of the Kaiser Family Foundation.
“Some people will be paying more than they are today, because if you buy non-group insurance, you can’t move around and if you get sick, your premiums will go way up,” Claxton says. “And for people on non-group plans today, they are generally there for a short period of time, and came in when they were relatively healthy and pay less. The people who stay around longer [on non-group plans] are probably not paying the lowest premiums.”
Those who are young and healthy and can pass today’s medical underwriting process, would likely be paying less at today’s rates than they are under the law, without considering subsidies, he says.
“But there are probably fewer mental health benefits, and maybe limits on prescription drugs,” he says, because the Affordable Care Act requires insurers to cover 10 essential health benefits for policyholders, including the aforementioned. “There are other limitations that are harder to figure out.”
Robert Zirkelbach, American’s Health Insurance Providers’ director of strategic communications, says the HHS rates are proof that insurers are doing their best to keep coverage costs as low as possible.
“This is all about trying to make coverage affordable,” he says, adding that pricing will depend on many factors.
“The impact the reform law has, simply looking at averages doesn’t detail how this impacts a particular person in a particular state,” he says. “It matters what coverage they have today, their gender, where they live, their health status—all of those particulars.”
Also comparing the HHS averages to today’s plans doesn’t account for the fact that today many are purchasing low-cost premiums with high deductibles, Zirkelbach says.
“It's often just enough [coverage] to protect themselves from medical bankruptcy,” he says. “It’s dramatically different from [exchange] estimates.”
For a full break down of states and costs click here for the HHS report.