HHS reveals Obamacare coverage prices for federal exchanges
By: Brett Norman and Jason Millman
September 25, 2013 12:04 AM EDT
The Obama administration on Wednesday released a long-awaited report on premiums in Obamacare’s federal insurance exchanges — the first look at the rates that will apply in the vast majority of states.
There’s just one big catch: The report doesn’t actually reveal very much about what most people will pay.
The administration put the best face on the health insurance premiums, emphasizing that the rates have come in lower than expected in the 36 states where the feds will run part or all of the exchanges. That part of the report gives them a snappy answer to the widespread predictions of “rate shock” by critics of Obamacare.
“For millions of Americans, these new options will make health insurance work within their budgets,” Health and Human Services Secretary Kathleen Sebelius said in a conference call with reporters Tuesday.
But it was a far cry from full disclosure.
Want to know what you might pay for health coverage in an exchange next year? Too bad. The report gives lots of examples of the kinds of people who will get good prices — but everyone else will remain in the dark until at least next Tuesday, when Obamacare is supposed to open its doors.
The carefully selected numbers the administration did produce generally undercut the more dire projections that have been made. The report highlights the premiums for 27-year-olds — members of the young adult group who were expected to suffer most under Obamacare’s market reforms — and finds that generally, they would not be bankrupted.
The cheapest “bronze” plan, the lowest level of coverage in most exchanges, would cost from $119 per month in Tennessee to $286 in Wyoming. And that’s before the subsidies are factored in, which could lower the prices for people whose incomes are below 400 percent of the federal poverty line.
But younger adults tend to have smaller incomes, and the report shows that individuals in the same group with an income of $25,000 would have their premiums subsidized heavily. The prices for the cheapest plan would range from $48 a month in Arkansas up to $120 in Arizona, with rates below $100 in most states.
The report also highlights the impact on a working family of four with a household income of $50,000. After subsidies, that family would pay no premiums at all for a bronze plan in Arkansas, but as much as $192 a month in Arizona.
The federal exchange premiums released Wednesday do not stick out as starkly different from what’s been released by the 16 state-run exchanges. Those have largely come in lower than expected as well.
What the report fails to say is what the health plans in the federal exchanges would cost anybody else — i.e., the majority of Americans.
Gary Cohen, director of the Center for Consumer Information and Insurance Oversight, the agency that’s implementing the law, told reporters Tuesday that the rates are still being finalized. But he said the averages should be representative of the final figures.
The report also says nothing of the rates that small businesses can expect to pay if they decide to enter the so-called SHOP exchanges, which will offer coverage to firms with fewer than 50 employees.
The report was issued to news organizations on Tuesday under a strict embargo, with specific instructions not to share the information with anyone else, like outside health insurance experts who might be able to provide more analysis of the numbers.
Apparently, though, the word still leaked out. Douglas Holtz-Eakin, president of the American Action Forum and a leading critic of the law, reached out to POLITICO to give unsolicited reaction to the new numbers — which POLITICO did not share with him.
“There are literally no comparisons to current rates. That is, HHS [has] chosen to dodge the question of whose rates are going up, and how much,” Holtz-Eakin said.
He did allow that the rates “don’t appear dramatically different than in the state exchanges” — but said that only proves that “with all that market power, HHS doesn’t seem to have delivered much.”
Overall, the average individual premium in the 48 exchanges that have reported will be $328 per month, the administration said. That’s lower than expected, administration officials said, because it’s 16 percent below an estimate derived from Congressional Budget Office projections. They said that’s a victory for the health law and consumers alike.
The average premium the administration calculated is for a mid-level plan — specifically, the second-lowest cost “silver” plan. But those figures don’t say much about what a given person might pay.
And they are extremely difficult to compare against what is available today, before the market reforms and exchanges arrive on the scene. For instance, no one can be turned down based on a pre-existing condition next year, women won’t be charged more than men and insurers will be limited in how much more they can charge older people than young adults — all new rules that haven’t been in effect before.
The report says competition will help keep prices down — because states with the lowest premiums have twice the number of insurers as states with the highest rates.
“Markets in way too many states were dominated by one or two companies [before]. … Now, there will be more choice and more competition, thanks to the marketplace,” Sebelius said.
The vast majority of the uninsured — 95 percent — will be able to choose from at least two insurers on the exchanges, according to the administration. And 25 percent of those carriers are offering plans in the individual market for the first time.
The report also says, however, that 5 percent of the uninsured population still live in areas served by only one insurer on the exchange.
Consumers in the 36 states with federal-run marketplaces on average will have 56 different health plans to choose from. Though, shoppers in Alabama on average will have just seven exchange plans to choose from, while Arizonans can pick from 106.