Health insurance premiums for individuals who buy their own policies will rise 14 percent in 2014, a new study predicts.
The increase without effects of the Affordable Care Act would be about 9 percent, said consultants to the state-backed marketplace, Covered California.
Meanwhile, those who qualify for subsidies — tax credits, lower deductibles — may pay significantly less in monthly premiums compared with recent years, the Covered California report said March 28.
An insurance trade group said in response that “lower cost sharing, richer benefits and more predictable coverage will come at a cost for some” who buy from insurers via the program that springs from the Affordable Care Act — aka Obamacare.
Families earning up to $94,200 annually could be eligible for subsidies. Their out-of-pocket costs are influenced by many factors, including the level of coverage (the so-called “metal levels“) purchased by the consumer. Age, income and location of residence continue to be major factors in premiums.
Premiums increase with age, as they always have with health insurance. But pre-existing conditions and medical condition do not affect premiums under the Affordable Care Act, starting in 2014.
Individuals can buy “leaner or richer plans,” affecting both premiums and co-pays, the report said.
Some buyers of health exchange policies would see higher premiums but lower overall costs because of reductions in co-pays for doctors appointments and prescription drugs, Covered California said in announcing results of its health care costs report, done by the actuary firm Milliman.
About 6 percent of Californians bought their own insurance in 2011, vs. 45 percent who received coverage via employers. The report did not address typical employer-backed insurance.
Another new study, from a different group of risk-forecasters, said beneficiary claims under individual policies in California will cost insurers 62 percent more by 2017. That report did not factor in government subsidies and it did not include employer health insurance policies, which cover most Americans. Most if not all of that cost will be reflected in premiums, presumably.
The premiums paid in 2014 reflect what the insurers believe their pay-out costs will change under the Affordable Care Act, the Covered California study said.
Other factors in premiums, according to the insurer trade group the California Association of Health Plans:
- Younger beneficiaries will see the biggest jumps, since the formula used to figure ages into premiums has changed. This will lower premiums for older people.
- Some premiums increases will occur because of “essential benefits” required under the Affordable Care Act but not used by specific beneficiaries — such as pediatric dental care for those without children.
- The ACA sales tax on insurers (“health insurer assessment”) will be passed on to consumers, adding about $5,000 to an average California family’s premiums over a 10-year period.
The ACA sales tax will hit California the hardest of any state, the insurer trade group said in its statement on premiums earlier this month. The group predicts the cost to be $22 billion over the next 10 years, shaking out to as much as 3 percent in premiums.
“All these expansions add to the already increasing cost of care — costs that have outpaced inflation as obesity, chronic conditions and many other factors have driven up medical expenditures,” said CAHP president Patrick Johnston in response to the Covered California study.
Individuals and small businesses who are eligible for coverage under the Affordable Care Act don’t have to buy their health insurance via the exchanges, but presumably many will be better off if they do.
The Covered California cost calculator shows (using a base age of 38 for the youngest adult) that a family of four making 80,000 a year would be eligible for a $515 tax credit from the government. A family of two making $55,000 would get a $753 credit. Individuals would see the credit disappear north of $45,000.
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