By Julie Appleby
Will premiums go up or down under the health law?
It’s been one of the most contentious questions in recent weeks, as states examine the rates submitted by insurers applying to sell coverage through new online marketplaces that open for enrollment Oct. 1. Critics of the law have argued that new rules, benefit requirements and taxes will drive up costs for many, while supporters say increased competition and transparency, enrollment of more healthy young people and subsidies will moderate premiums.
Now, the Government Accountability Office is weighing in with its own analysis of how much it costs now for policies offered in each of the 50 states.
The report released Wednesday is based on prices reported by insurers to a government database and shows that consumers face a wide range of premium prices, deductibles and annual exposure to out-of-pocket costs, often depending on their age, health history, family size and where they live. It was requested by Sen. Orrin Hatch, R-Utah, the ranking member of the Finance Committee. Congressional Republicans say the law will increase coverage costs for many people.
With some caveats — the data used by the GAO capture only 80 percent of insurers and reflect premiums before insurers add extra charges for such things as poor health — the report is one of the broadest looks at what the estimated 14 million Americans who currently buy their own insurance face on the market today. It also doesn’t figure in the tens of thousands of people with chronic diseases who are unable to buy insurance at any price in most states.
Some of the numbers are eye-popping. In many states, coverage offered to families often does not even kick in until medical costs of $20,000 or more are incurred by the policyholder.
Premiums range widely and the report separates them into lowest, median and highest for each state across six categories based on age and gender and family size. For example, the least expensive plan offered to a family of four in California is $2,832 a year. The median-priced plan for that family is $8,841 and the most expensive is $43,632. Because the data did not include enrollment figures, no one knows how many people buy each of the policies.
Some premiums are quite low: $673 a year for the lowest cost plan available to a 30-year-old nonsmoking man in Colorado, for example. That policy doesn’t kick in, however, until the consumer incurs $10,000 in medical costs, and requires him to pay 50 percent of the costs after meeting that deductible, up to a maximum of $17,500. The median priced plan for that same aged man would cost $2,424 a year, while the most expensive clocks in at $11,439, according to the report.
America’s Health Insurance Plans spokesman Robert Zirkelbach said the report shows “the wide variety of choices people have on the amount of coverage they want to buy.”
Starting in January, new rules take effect that will change some of those choices, both for consumers and insurers. Insurers will be barred from rejecting applicants with health problems — or charging them more than the healthy, which they can currently do in most states. Insurers must also include a range of “essential health benefits,” including prescription drug coverage and maternity care, which many policies currently do not offer. The law also limits out of pocket maximums — the amounts consumers must pay in deductibles and copayments for medical care — to about $6,350 for individuals or $12,700 for family coverage.
Almost a third of plans currently offered to consumers exceed those caps, according to an earlier analysis of the government data by U.S. News & World Report and Kaiser Health News.
Some of those new rules could drive up premiums from current levels, especially for people “who purchase a low premium, high deductible” policy, said Zirkelbach. Other provisions in the law could encourage competition among insurers and more enrollment by younger, healthier people, which supporters say would help moderate premiums.
Last week, premium prices hit the news when New York State said costs for people who purchase their own coverage could fall by an average of 50 percent. Experts said that was mainly because costs in New York are currently among the highest in the country, fueled by longstanding state rules requiring insurers to take applicants regardless of their health status, without requiring everyone to buy insurance. The Obama administration also issued a report that said average premiums in some states next year could be lower-than-expected, based on a comparison with rates projected by the Congressional Budget Office.
Kaiser Health News is an editorially independent program of the Henry J. Kaiser Family Foundation, a nonprofit, nonpartisan health policy research and communications organization not affiliated with Kaiser Permanente.