Report: Rates for health insurance cheaper than projections
BY MONIFA THOMAS Health Reporter September 25, 2013 12:00PM
Gov. Pat Quinn
Updated: October 28, 2013 7:08AM
The federal government unveiled a report Wednesday that showed average premium rates for health insurance in 36 states, including Illinois, would be far lower than initially projected.
The report from the U.S. Department of Health and Human Services analyzed insurance plans and premiums 36 states where the federal government will either run or help run “the exchanges,” which are websites where state residents can shop for and buy health insurance starting Oct. 1.
Similar to Tuesday’s announcement by Gov. Pat Quinn, the HHS report gave glimpses of what can expected to be offered when the Illinois’ online program, now known as Get Covered Illinois, starts under the Affordable Care Act. But the report didn’t include all health plans and rates, making it hard to get the full picture.
Still, it showed that 95 percent of Americans in the states will have two or more plans to choose from, with the average premium for all states being $328 a month, the HHS said.
The Congressional Budget Office originally projected the average price across regions would be $392.
“For millions of Americans, these new options will finally make health insurance work within their budgets,” Health and Human Services Secretary Kathleen Sebelius told reporters in a preview call Tuesday.
However, an independent analysis, which was also released Wednesday, found that the annual deductible for a mid-range “silver” plan averaged $2,550 in a sample of six states studied by Avalere Health — more than twice the typical deductible in employer plans. A deductible is the amount consumers must pay each year before their plan starts picking up the bills.
Avalere also found that the new plans will require patients to pay 40 percent on average for certain expensive drugs. At the same time, preventive care will be free of charge to the patient.
Responding to the Avalere study, the Obama administration told the Associated Press that the new plans aren’t as generous as employer coverage, but said they nonetheless represent a big improvement over currently available individual policies, which can have gaps in coverage and even larger out-of-pocket costs.
A total of 165 health plans are expected to be sold in Illinois. Quinn has said that 95 percent of Illinois residents will have access to at least 34 rates that will be as low as $120 per month for a 25-year-old in Chicago.
The Illinois rates will be more than 25 percent below what HHS had estimated.
In the HHS report, it gave more examples of a 27-year-old making $25,000 and a family of four with an income of $50,000. For example, a 27-year-old making $25,000 in Illinois could buy the second-lowest silver plan for $188 a month before the tax credit and $145 a month after the credit.
That makes Illinois the 9th lowest cost prior to taxes of the 36 states in the report. California and New York weren’t part of the study, but Iowa ($683/month), Michigan ($731/month) and Wisconsin ($861/month) all cost more than Illinois. After the tax credit was factored in, though, all of those states paid the same amount for a family of four, the HHS report shows.
Health insurance plans will be offered through the Health Insurance Marketplace, a one-stop online shop offering coverage. It will be categorized as bronze (lowest cost), silver, gold or platinum (highest cost). All plans are required to carry what’s considered “essential health benefits,” such as maternity benefits and prescription drugs. Bronze plans, though, would have lower premiums but higher out-of-pocket costs such as co-pays.
Catastrophic plans for young adults and those without affordable options also will be available.
The Obama administration estimates that 7 million uninsured Americans will use online marketplaces, known as exchanges, to buy insurance in the six-month enrollment period that starts next week and ends March 1.
The full report can be viewed here: http://aspe.hhs.gov/health/reports/2013/MarketplacePremiums/ib_marketplace_premiums.cfm