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.
You should keep in mind that you will only be eligible for a subsidy if your employer does not offer a plan deemed “affordable” that provides minimum essential coverage.
“Affordable” means that the employee premium for employee-only coverage cannot exceed 9.5% of your W-2 wages. So, if your employer offers a plan that is “affordable” you cannot get subsidized coverage via the exchange for yourself.
Also, take a look at the plans – there is some significant cost-sharing going on, especially if you look at the bronze plans. This is not necessarily a bad thing (particularly for the young and healthy) but it does mean the premium price is not the total price you could pay – it could be a lot more if you have a bad year.
These premiums seem very high for plans with a $2000 deductible. I don’t feel it’s comparing apples to apples. Young healthy people will struggle to spend $2000 in healthcare needs so essentially it’s a higher premium for catastrophic care.
I wonder how this affects the self-employed crowd.
The downside for those with employee covered care is that as of 2013 you will pay taxes on the employee portion of your coverage. At least that’s what my tax preparation company told me (by way of an ACA info form). In my 2013 taxes, the form stated that I MAY be required to pay a fee of approximately $800 for my employee coverage for a single 20-something. The form states that the fee will double for 2014. I’ve read that this is not true in articles from January/February, but I did my taxes in April so it seems as if something may have changed, or at least the tax company thought strongly enough about it to include it. I hope they are wrong, but if they aren’t, I’ll be switching to a high deductible plan.
I do not think that is true. I know that health insurance will show on your W2, but for informational purposes only, I believe.
You may be referring to the “Cadillac” plan tax, which is employer portions over a very high amount are subject to tax. Only some very generous union and executive plans will hit the threshold, at least in the short term. (The threshold grows at less than the expected growth of healthcare over time)
“most of the rest of us will actually see lower rates”
STRONGLY disagreed. Taxes are already being levied on employers (ultimately consumers) to raise around 80B to pay for the subsidies and exchanges. I’m in the industry, and this is a zero sum game. Rates are already rising 3-5% due to the ACA fee on insurers.
Are those prices per month!? 0.0 If so I’m screwed!
The original article needs some serious revision. The “unintended consequences” of the AFCA are immense, and will be felt in all kinds of ways. Some of the increased costs are already in the pipeline, and most of the promises made to sell the program are now proving to be worth exactly what critics said they would be: zip, nada, zero. Watch for the unions (supposedly exempt from the onerous provisions of AFCA) to lead the charge in making the transition very uncomfortable for the Administration — if, that is, HHS can even get the program up and running. It is going to be an interesting couple of years.
Those of us who went through the HMO debacle in the 1980s already know how this is going to play out. Ask your doctors if any of them went through the “bought practice” gambit and how they came out. Twenty-somethings will not like the horror stories they will hear. Unfortunately, we all know who PAYS for the mistakes of government.
Just reporting the facts on the first prices we’ve seen here, George. What partisan “serious revisions” would you recommend be added to that?