Posted: 11:02 p.m. Wednesday, July 17, 2013
By Phil GalewitzJulie Appleby
Ratcheting up the campaign to sell the health law, President Barack Obama was expected to deliver a speech Thursday touting how individuals buying insurance in new online marketplaces this fall will pay lower-than-projected premiums on average in at least 10 states and the District of Columbia.
The remarks piggyback on the announcement Wednesday that New York State regulators have approved health insurance rates for individual policies for 2014 that are at least half the cost of current policies on average.
The administration released a fact sheet Thursday showing that average insurance premiums for individuals buying health insurance on their own and small employers will be lower than previously projected not just in New York, but in at least nine other states and the District of Columbia.
Premiums on average will be 18 percent less expensive in those states than projections from the nonpartisan Congressional Budget Office, according to the analysis by the U.S Department of Health and Human Services. Still, some people will pay more than they do now, while others will see greater savings.
Proposed and final premium rates from California, Colorado, New Mexico, New York, Ohio, Oregon, Rhode Island, Vermont, Virginia, Washington and D.C. were included because they have been publicly reported. However, those states are not necessarily representative of the rest of the country, since most , though not all of them, are supportive of the law and are running their own insurance marketplaces.
The analysis comes as the White House pushes back at critics of the health law, who have long said that its fees, broad benefit requirements and other rules will cause rates to skyrocket. On Wednesday, the Republican-led House of Representatives also approved largely symbolic legislation to delay the controversial mandate that most Americans carry health insurance.
Obama is also expected Thursday to say millions of Americans are already benefiting from the law, partly through a provision that requires insurers to pay rebates to consumers if they fail to spend at least 20 percent of their premiums on medical care. Some of the people who have benefited are expected to join the president at the event.
“Anything that is good news for the law is helpful politically,” said Sara Rosenbaum, health policy professor at George Washington University.
Others cautioned that the report averages premium costs and actual premium prices are likely to vary widely. “The impact of the ACA will vary considerably depending on a person’s age, gender, health status, and where they live,” said Robert Zirkelbach, spokesman for the America’s Health Insurance Plans. “Simply looking at averages doesn’t tell you what these reforms are going to mean for a particular person in a particular state.”
The new premium rates do not affect the majority of Americans who receive insurance through their employers, only those who buy it on their own. The online markets for individuals and small groups will start enrollment Oct. 1; policies will go into effect beginning in January.
Senior administration officials said the analysis compared the rates submitted by insurers in those states and DC with projections from the CBO, which has previously estimated what premiums might look like after the law is implemented. As of late yesterday, HHS had not released details on how the calculations were made.
Plans sold in the new marketplaces must provide broad benefits, including hospital and prescription drug coverage. Policies will be grouped according to how generous they are in covering expected medical costs, ranging from platinum, which will cover the highest percentage of costs, down through gold, silver and bronze.
The analysis, officials said, found the average cost of the lowest cost silver plan will be $321 a month in those regions studied. That’s lower than the monthly national average cost of $392 a month projected by the CBO data.
Comparing the new rates to the CBO projections is a valid way to consider changes the law will bring, say policy experts. “CBO is the gold standard of the projection universe,” said Shana Alex Lavarreda, director of health insurance studies at UCLA. “I can understand why HHS is rightfully pleased.”
Still, Joe Antos, an economist with the conservative American Enterprise Institute, said the data is unlikely to resolve longstanding disagreements about the law's impact on premiums.
“The Republicans will say there is something wrong with numbers and it doesn’t tell you everything need to know,” said Antos. “The Democrats will say this proves the president’s plan is working.”
Previously, critics and supporters of the law have compared premiums of new policies to be sold in the online marketplaces with the cost of plans currently sold to individuals. But because current plans often cover fewer benefits – and insurers are not held to the new rules until Jan. 1 – such comparisons have been criticized as inaccurate ways to measure differences.
In addition, none of the analyses can say for sure how much an individual might pay, because rates will vary by age, geographic location – and by insurer. Also, most people expected to sign up for coverage through the new marketplaces are expected to qualify for sliding scale federal subsidies, which will offset some of the premium costs. Subsidies are available to people earning up to 400 percent of the federal poverty level, or about $46,000 for an individual.
Most of the rates considered in the HHS study are being submitted in states that will oversee their own marketplaces, rather than relying on an exchange run by the federal government. Some experts say those states might see lower-than-expected rates because insurers think they may be better equipped to market to younger and healthier people. Some of the state-run exchanges, such as the one in California, also negotiate rates with insurers, which can help push down premiums.
Rosenbaum, at George Washington, said the data show the exchanges are working as designed. “They are stimulating insurers to sell more but at a lower costs,” she said.
Antos said consumers will still be looking for more information.
“This is only addressing premiums, not the other two factors that really matter, which are will I get to see my doctor and what will it cost me out of pocket?“
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.