Guess what? They’re pretty darned affordable.
“In just 99 days, millions of Americans will finally have the security and peace of mind that have eluded them for years,” U.S. Health and Human Services Secretary Kathleen Sebelius said on a press call, “as coverage starts to kick in on insurance purchased through the new health insurance marketplace.”
To help people comply with the individual health insurance mandate that takes effect on Jan. 1, the federal government will launch an Orbitz-style online marketplace on Oct. 1 for consumers to apply for tax credits and compare and purchase health plans.
According to the federal report released Tuesday night, Texas will have comparatively low premium rates for health plans offered in the federal marketplace compared with other states. The average monthly rate for a standard plan in the 48 states analyzed in the report was $328, while Texas’ was $305. Fourteen states and the District of Columbia will have lower rates on average than Texas for a standard health plan offered in the marketplace.
“Texas has historically had a reasonably competitive insurance market compared to some states,” said Gary Cohen, director of the Center for Consumer Information and Insurance Oversight at the federal Centers for Medicare and Medicaid Services. He explained that in some states one insurance carrier may dominate 75 to 80 percent of the market. “Texas has not had that situation,” he said.
Texans will have on average 54 health plan options available in the federal marketplace. The number of available plans will vary depending on the region. For example, people in Austin will have 76 health plans to choose from on average, while people in the Rio Grande Valley will only have 30 options on average.
Four types of plans will be offered in the marketplace: Bronze, Silver, Gold and Platinum. In general, Bronze plans will have lower monthly premiums but higher out-of-pocket costs, while Platinum plans will have the highest monthly premiums but lower out-of-pocket costs. Premium rates and out-of-pocket costs will vary depending on age, the number of people in the household and the region in which the person lives, among other factors. Ultimately, the prices are based on the estimated cost of health care services over the course of a year.
People who have annual incomes between 100 and 400 percent of the federal poverty line will qualify for sliding-scale tax credits to help them purchase a health plan in the federal marketplace. For an individual, that’s an annual income of $11,490 to $45,960; for a family of four, it’s $23,550 to $94,200.
Click over to see some detailed information about what will be available in Texas, or click here to see the full report. Some highlights from the latter:
Individuals will have an average of 53 qualified health plan choices in states where HHS will fully or partially run the Marketplace
- Individuals and families will be able to choose from a variety of bronze, silver, gold, and platinum plans in the Health Insurance Marketplace, as well as catastrophic plans for young adults and those without affordable options. Health insurance issuers can offer multiple qualified health plans, including multiple qualified health plan choices within a single metal level. In the 36 states in this analysis, the number of qualified health plan choices available in a rating area ranges from a low of 6 to a high of 169 plans. On average, individuals and families will have 53 qualified health plans to choose from in their rating area. Young adults will have an average of 57 qualified health plans to choose from, including catastrophic plans. The average number of choices will likely increase after including final data from state-based Marketplaces, which tend to have greater issuer participation.
- On average, there are 8 different health insurance issuers participating in each of the 36 Marketplaces included in this analysis. This ranges from a low of 1 issuer to a high of 13 issuers within a state. About 95 percent of the non-elderly population in these 36 states lives in rating areas with 2 or more issuers. Roughly one in four issuers is offering health plans in the individual market for the first time in 2014.
Premiums before tax credits will be more than 16 percent lower than projected
- The weighted average second lowest cost silver plan for 48 states (including DC) is 16 percent below projections based on the ASPE-derived Congressional Budget Office premiums.11 In 15 states, the second lowest cost silver plan will be less than $300 per month – a savings of $1,100 a year per enrollee compared to expectations. Overall, 95% of the uninsured potentially eligible for the Marketplaces live in states with average premiums below ASPE-derived CBO projected premiums (see Figure 1).
- Young adults will pay lower premiums and also have the option of a catastrophic plan that covers prevention, some primary care, and high costs in cases of major accident or illness. The weighted average lowest monthly premiums for a 27-year-old in 36 states14 will be (before tax credits): $129 for a catastrophic plan, $163 for a bronze plan, and $203 for a silver plan. More than half of the uninsured potentially eligible for the Marketplaces live in a state where a 27-year-old can purchase a bronze plan for less than $165 per month before tax credits. There are an estimated 6.4 million uninsured Americans between the ages of 25 and 30 who may be eligible for coverage through Medicaid or the Marketplaces in 2014.
Premiums after tax credits
- Tax credits will make premiums even more affordable for individuals and families. For example, in Texas, an average 27-year-old with income of $25,000 could pay $145 per month for the second lowest cost silver plan, $133 for the lowest cost silver plan, and $83 for the lowest cost bronze plan after tax credits. For a family of four in Texas with income of $50,000, they could pay $282 per month for the second lowest cost silver plan, $239 for the lowest silver plan, and $57 per month for the lowest bronze plan after tax credits.
- After taking tax credits into account, fifty-six percent of uninsured Americans (nearly 6 in 10) may qualify for health coverage in the Marketplace for less than $100 per person per month, including Medicaid and CHIP in states expanding Medicaid.
It should be noted that it’s not all butterflies and lollipops, as Wonkblog explains.
Health experts say it is a good sign for consumers that premiums have come in lower than expected. Under the law, the plans must offer a basic set of benefits, including mental health and maternity care, which previously were not included in many private plans. Insurers are also forbidden from rejecting or charging people more because of preexisting conditions.
Many experts worried that those factors would drive up the cost of insurance. They partially credit competition on the marketplaces, where people will be able to directly compare plans from different insurance companies, for restraining premiums.
But they warn that premiums don’t tell the whole story.
The low rates are possible in part because insurance companies created special plans that include fewer in-network doctors and hospitals than many current plans.
This may not be a problem for healthy people who currently lack insurance. But those with illnesses may discover that their specialists are not covered by an exchange insurance plan. Low-income people accustomed to a certain community clinic may find that going there is no longer an option. And everyone may encounter long waits to see a doctor.
In addition, many of the lowest-cost plans may carry high deductibles, despite a cap imposed by the law that limits out-of-pocket costs to $6,350 per person per year.
“Despite the fact that the premiums are lower than expected, enrollees on exchanges are likely to face very high out-of-pocket costs before they hit their cap, and they are at risk of being in very narrow network plans that may or may not include all the providers they need access to,” said Caroline Pearson, vice president of health reform at the consulting firm Avalere Health, which did its own report on rates this month.
It’s still going to be a lot better than having no insurance, and for people who are currently paying exorbitant prices for individual plans, or who can’t get insurance at all because of pre-existing conditions, it will be awesome. That will include millions of Texans, some of whom are friends of mine, and all of whom Ted Cruz cares nothing about. Kevin Drum and the Kaiser Family Foundation have more.