Bare-bones health insurance could cost just $11 a month for a family of four in Indianapolis on the federal government's new exchanges, which start serving customers next week.
A similar family in New Orleans might pay as little as $23 a month, although they’d have to shell out $282 for a more generous “silver” plan, the Health and Human Services Department estimates.
And, on average, people will have more than 50 different health plans to choose from if they live in states where the federal government is running the exchanges, HHS says in a report issued Wednesday.
HHS has analyzed the plans that have been approved to go on offer starting Tuesday and finds that in most states, there’s plenty of choice with reasonable prices. That gives the administration ammunition against critics who have been warning that health insurance will cost more in the exchanges than it does now.
“In many cases, premiums will cost significantly less than what was originally projected,” Health and Human Services Secretary Kathleen Sebelius told reporters on a conference call. The report finds that 95 percent of Americans live in states where the premiums for individually purchased health insurance will be less than what had originally been expected.
The health insurance exchanges are one of the supporting pillars of the health reforms called for under the 2010 Affordable Care Act. The law, widely known as Obamacare, is meant to get more Americans covered by health insurance so they’ll take better care of their health.
The administration has been fighting a pitched battle against Republicans who oppose the health reforms, and who have been making a show of the law down in Congress -- although they are unlikely to win out against a Democratic-controlled Senate and President Obama.
Most Americans -- about 55 percent, or 157 million people -- get health insurance through an employer, and 30 percent more get Medicare, Medicaid or some other government insurance, with just a few buying their own insurance privately. The U.S. Census Bureau says 15 percent of Americans don’t have insurance at all.
Experts expect about 7 million people will sign up for insurance on the new exchanges. These are Internet-based sites where customers can choose from several levels of coverage -- from basic “bronze” to cover-it-all “platinum” plans.
The federal government is running or helping to run the exchanges in 36 states. The rest plan to run their own exchanges. People who already have insurance won’t need to go to the exchanges, but people who may newly qualify for Medicaid in the 20 or so states that are expanding their plans can use the exchanges to sign up.
The premiums charged by insurers will vary based on where people live and what kind of coverage they choose. Bronze plans will cover less, with patients paying more out of their own pockets every time they see a doctor, visit a hospital or fill a prescription. More luxurious gold and platinum plans will cost more monthly but will cover much more of the price of a service.
On average across all comers, a benchmark "silver" plan will cost $373 a month in California, $328 in Florida and $305 in Texas, HHS says.
A lot depends on competition, and the HHS officials are clearly delighted to find that dozens of insurers have signed on to offer plans on the exchanges in most states.
“In states where there is less competition, we are seeing higher rates. It depends very much where you are,” said Gary Cohen, director of the Center for Consumer Information and Insurance Oversight at HHS. For example, a family of four in Jackson, Miss., with an income of $50,000 would have to pay $1,200 a month for a "silver" plan if they didn't qualify for government help -- although they'd pay just $282 after the federal tax credit they almost certainly would qualify for.
Critics have pointed out that some plans may be cheap because they have limited networks. Patients will have to pay extra if they go to "out of network" doctors or clinics. But Cohen said state insurance regulators make sure those networks aren't too slim to provide reasonable care options to people.
Health consultants Avalere Health says people will have to pay a lot out-of-pocket for some of the plans with lower premiums. For the cheapest "bronze" plans, the average deductible was $5,000, Avalere found.
“Consumers will need to balance lower monthly premiums against the potential for unpredictable, expensive out-of-pocket costs in plans with higher deductibles,” said Caroline Pearson, vice president of Avalere Health. “Furthermore, there is a risk that patients could forego needed care when faced with high up-front deductibles.”
In a separate report, also released Wednesday, the PwC Health Research Institute said it found most health insurance companies it surveyed were going to offer products on at least some of the exchanges.
“According to a survey of more than 100 health insurance executives by PwC’s Health Research Institute (HRI), 69 percent said they planned to offer coverage on the state exchanges; though some are entering gingerly,” the report reads.
And some states will have very little to offer. People living in some counties in West Virginia may have only one plan on offer, Cohen says. “In Mississippi, for example, two companies will sell on the exchange in 2014, but 95 percent of the state’s 82 counties will have just one to choose from,” PwC adds.
“By contrast, 16 insurers will sell coverage in New York.”
And companies have chosen with care, going for "safe bets,” PwC says. “Some of the largest national insurance carriers -- such as Humana, Aetna and its subsidiary Coventry -- are entering around 12 to 14 markets in the first year,” the report reads.
All plans offered on the exchanges have to meet the minimum requirements imposed by the federal government, including a list of 10 areas they must cover, from paying 100 percent of the cost for breast or colon cancer screening to paying for mental health care.
Insurers will no longer be able to dump patients who are starting to cost too much, they won’t be able to charge women more than men and they have to cover anyone who can pay.
“Because of the Affordable Care Act, the health insurance that people are buying will actually cover them,” Cohen said.
And the federal government will pay for part of the premiums. The government will help pay the premiums for anyone making up to about $46,000 for an individual and as much as $94,000 for a family of four.