The Affordable Care Act’s bottom line looks to be an elusive figure for consumers in the 17 states about to bring health reform to market.
A study of the largest cities in those states and the District of Columbia found significant variations in insurance premiums for individuals, but they’re “generally lower than expected” by federal bean counters.
California fared well in the comparisons, but some other state plans offered better values, at least before tax credits are applied. California ranked second in the total number of insurers participating in the health exchange, 12.
The nonpartisan Kaiser Family Foundation study did not compare rates with existing health insurance plans for individual buyers since the differing scopes of coverage create an apples-and-oranges dynamic.
Researchers looked at sample premiums based on ages and Obamacare “metal levels” of coverage. They used the second-lowest price for each level.
For Los Angeles (area 15), a 25-year-old making almost $29,000 a year would pay $147 a month for “bronze” health insurance, compared with $196 in Indianapolis. (The bronze level has the highest co-payment, with 60 percent of medical costs covered.)
The same 25-year-old would pay $200 for “silver” coverage vs. $158 in Portland. (Silver covers 70 percent of expenses.)
For a 60-year-old, that bronze coverage would cost $398 a month compared with $531 in Indianapolis and $508 in Sioux Falls, S.D. The L.A. rate was undercut by New York ($300) and Baltimore ($310).
The 60-year-old’s silver plan would cost $541, a good bit lower than in Hartford ($697) and Portland ($626), but more than in New York ($390) and Portland ($427).
The Kaiser researchers said differences from state to state would generally level off after accounting for tax credits. (Most but not all participants in the individual health care plans would be eligible for the credits.)
Those credits can have a dramatic effect on monthly premiums.
An L.A. couple of 60-year-old adults with a combined $30,000 income would pay $1,080 for silver, but receive a $932 tax credit — meaning their cost is $150. For the same couple, the bronze plan ultimately would be free before co-payments.
Kaiser said “the latest projections from the Congressional Budget Office imply that the premium for a 40-year-old in the second-lowest-cost silver plan would average $320 per month nationally.” Fifteen of the 18 ratings areas studied came in below that level. In Los Angeles, the 40-year-old would pay $255, a monthly savings of $65 off the Obamacare rate expected by the feds.
Addressing the wide spread in monthly premiums, researchers said: “Unsubsidized exchange premiums vary from state to state due to several factors, such as differences in the underlying cost of health care, market competition, and the effectiveness of state rate review programs at lowering premiums.
“Exchanges also vary in their authority to negotiate premiums with insurers or exclude plans.”
The California health insurance exchange is to begin taking orders Oct. 1 for policies taking effect Jan. 1, 2014. Almost all Americans are required to have insurance, although the vast majority already are covered via employer-sponsored plans.
Read the Kaiser Foundation report “An Early Look at Premiums and Insurer Participation in Health Insurance Marketplaces, 2014”
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