Report: HHS Expects Premiums under HIEs to be Lower than Expected

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HIE-thumb6The HHS report released today contains some positive indicators for health insurance exchanges and their impact on premiums among the 36 states where the federal government is involved, Harris Meyer at Modern Healthcare reports.

At first glance, it seems “that premiums will be significantly lower than expected in 2014.” Furthermore, consumers will be able to choose from “an average of 53 plan choices, almost everyone will have a choice of two or more insurance issuers, and the average premium nationally for the second-cheapest silver-tier plan will be $328 a month without a federal premium subsidy—16 percent lower than projections based on Congressional Budget Office estimates. Counting federal tax credits, 56 percent of uninsured Americans may pay less than $100 per person per month for coverage, including Medicaid in states that expand Medicaid.”

HIEs will offer anywhere from six to 169 local plan choices; eight health insurers have signed on to the exchanges; and “the report found that premiums tend to be lower in states with more participating insurers.”

“With tax credits, a 27-year-old individual in Texas could pay $83 a month for the lowest-cost bronze plan, while a family of four in that state with an income of $50,000 could pay just $57 a month,” Meyer writes. “That’s only slightly more than the family would have to pay under the healthcare reform law’s tax penalty for not getting coverage in 2014.”

Of course, we’re speaking only about premiums. What about deductibles, copays, and coinsurance?

And this is, admittedly, one of the major kinks in the roll-out.

Meyer reports, “ACA supporters acknowledge that out-of-pocket costs may prove a barrier to care for some lower-income exchange subscribers, though households earning less than 250 percent of the federal poverty level will qualify for cost-sharing subsidies.”

While the setup of the exchanges seems to have gone more smoothly than reports earlier this year were indicating, the major factor is the variance in cost between states.

First, the tiered coverage must be understood first: if you purchase a bronze plan, that will cover 60 percent of your costs, a silver will provide 70 percent coverage, gold 80 percent, and platinum 90 percent.

If you live in Minnesota, the average silver-plan premium is $192, but in Oregon its $250, while in Indiana, the silver is $403, and in Wyoming its $516.

Meyers writes, “The report shows that many individuals and families will be able to pay modest amounts for bronze and silver coverage if their income is between 100 percent and 400 percent of the federal poverty level and they qualify for premium subsidies. In Jackson, Miss., a 27-year-old earning $25,000 with a subsidy will be able to pay $8 a month for the lowest-cost bronze plan, in Indianapolis, $70, in New Orleans, $74, and in Houston, $81. The cheapest bronze plan, counting the subsidy, will cost more in other places—$123 in Philadelphia, $124 in Sioux Falls, S.D., and $142 in Columbus, Ohio.”

He continues, “For a family of four with an income of $50,000, the price of the lowest-cost bronze plan after taking into account the tax credit will be $0 in Anchorage, Jackson, Miss., and Fairfax County, Va.; $11 in Indianapolis; $26 in Dallas; $32 in St. Louis; $134 in Wichita, Kan.; $202 in Phoenix; and $273 in Columbus, Ohio.”

Once again, states with less competition among plans tend to have higher premium rates, which is why rates in Alabama, New Hampshire, West Virginia, and Mississippi will probably have higher rates than Arizona and Florida, where the number of plans offered is above 100.

The question then becomes, is this cost variance more of a state issue than a federal issue? No doubt, President Obama was playing fast and loose with the details yesterday when he said, “When people look and see that they can get high-quality healthcare for less than their cellphone bill, they’re going to sign up.”

There’s truth in his statement, of course, but it’s a lot like those lose-weight-in-60-days commercials. It only works for some.

Nevertheless, here we are, folks. As healthcare executives, are you optimistic about the exchanges? What do you foresee beyond the horizon now that we’re here?

-by Pete Fernbaugh

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