We’ve all been anxiously awaiting to find out what the Patient Protection & Affordable Care Act (aka “Obamacare”) will mean for all of us in terms of health insurance prices. And finally, there is some news to pay attention to, in the form of actual prices released by the nation’s largest state.
California just released expected premium rates for its newly implemented individual health insurance exchange, Covered California, which will start (like all state exchanges) at the beginning of 2014.
And as many have predicted, there is some SERIOUS sticker shock for consumers. However, it’s not in the way most expected.
Premiums are coming in at rates that range from just 2% above to 29% below premiums currently offered to small group rates for comparable coverage for what Covered California expects to be its most commonly enrolled plan.
And this is prior to any of the subsidies available to lower income individuals being applied that would offset those premiums (subsidies paid for through an increased Medicare tax on incomes over $250,000).
Here is a chart of what the prices look like for the “silver plan” compared to 2013 group plan averages (on the right):
The “silver plan” (70% of non-preventative costs covered after a $2,000 deductible is met, up to a maximum out of pocket of $6,400 for individual and $12,800 per family) is pretty darn generous as far as benefits go. There are other plans, including a cheaper “bronze” plan and unsubsidized “catastrophic plan” available to those under age 30 that compare more directly to what we commonly know as high deductible health plans. There is a cost-estimate calculator, but it is only estimating silver plan costs at the moment.
What this Means for you?
1. Prices are lower than expected: and that’s a good thing.
2. Remember, this is for individual health insurance: prices in state exchanges won’t reflect any plans that you have through your employer.
3. You can still buy outside of the exchange: if you don’t find a plan that you like in the public exchange, you can still shop with individual insurers and private exchanges. Indeed, if you are young and healthy, you should definitely shop around to see what prices you can get. You are only eligible for subsidies if you purchase your insurance through a public exchange, however.
4. Your prices, by state, may vary: California was “all-in” in making their health exchange work, by all accounts. 33 insurers applied, but only 13 with the lowest prices were accepted to the exchange. Other states have not embraced the changes as wholeheartedly, and many have opted to have the federal government run their exchange. How this will impact prices in your state remains to be seen.
California does boast some of the highest costs across the board in every cost of living category, including health care. So if you are anywhere but California, these prices come as good news.
Uninsured individual percentage rates vary by state and competition from insurers to win new customers on the exchanges will have a huge state-by-state impact.
This story is just beginning and it is waaaaay to early to celebrate, but if the 16.7% of population who could not previously afford health insurance now can with subsidies, those who were being hammered by pre-existing conditions can now afford reasonably priced insurance, and most of the rest of us will actually see lower rates and more contained health care inflation, then maybe it’s hard to see much negative.
Meanwhile, if it fails, we can always hold on to hopes for single-payer.
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