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California has unveiled prices that consumers will pay for a selection of health plans offered through the state under the Affordable Care Act, providing a glimpse into how health care reform may look as it is rolled out across the nation.
Under the federal health care reform law, people who do not get or cannot afford health insurance through their jobs can buy coverage through an exchange, at a group rate negotiated by state regulators.
The cost to a 40-year-old who needs coverage would vary from about $40 to $300 per month for a mid-level plan in California, depending on income. Some young adults, who are less expensive to cover, could pay nothing, depending on how much they earn.
The prices in California, along with those announced in Washington, Vermont and other states, show that premiums under "Obamacare" can be more affordable than had previously been thought. Consumer advocates welcomed the new exchange.
"It's a revolutionary improvement to move from a broken market where people are charged by how sick they are, to a competitive market where people pay what they can afford, based on a percentage of their income, on a sliding scale," said Anthony Wright, executive director of advocacy group Health Access.
"Most consumers buying coverage in the individual market will get financial help and see their premiums go down," he said.
The sweeping federal reform law seeks to extend health insurance to many of the 49 million Americans without it, and alter how care is delivered so as to curb what has been an inexorable rise in healthcare spending.
Republicans who oppose the law had predicted that high premiums would sink Obamacare as the uninsured would not be able to afford coverage even with federal subsidies.
Even the modest rates announced Thursday do not really signal that the program will work, said California Republican Assemblyman Dan Logue.
"This is like a shell game to me," said Logue, co-chair of the assembly health committee, who predicted that taxes would go up to pay for the subsidies, forcing other prices to rise.
"They're not going to tell you that you're going to pay for it in your gas or your food or going to the show," he said.
About a dozen states have set up these exchanges, or large group plans, which are a key element of the giant national health reform effort. Several have already released rates for monthly premiums, and most say the cost will not go up as high as skeptics had feared.
In California, a 40-year-old who makes less than four times the federal poverty level - that is, $95,000 for a family of four or $46,000 for an individual - would pay as little as $40 per month for a mid-level plan in which about 70 percent of medical costs and all preventive care is covered. This excludes additional costs to cover children or a spouse.
The same plan for a person who makes too much to qualify for a subsidy would run about $300 per month on average, the state said. In addition, the total amount consumers would have to pay each year for co-payments and other out of pocket costs would be limited to $6,350 or less, depending on income.
Patients could choose plans that offer lower co-pays if they wished, but would pay higher premiums. In some cases, particularly for low and moderate income workers in their 20s, the premiums are free once a federal subsidy is factored in.
The exchange will also offer what it calls platinum plans, in which co-payments are very low or non-existent. These plans would cost $500 for those who do not qualify for subsidies, but as little as $300 per month for low-wage earners.
The biggest subsidies go to people who make less than 150 percent of the federal poverty level, or about $17,000 for a single person.
Peter V. Lee, a longtime health advocate recruited by the state to help set up and run its program, said costs had been expected to skyrocket because the Affordable Care Act requires health plans to offer more benefits and cover more people than they might otherwise have done.
For example, the plans must cover people with or without pre-existing conditions that would make their care more expensive. The actuarial firm Millman had predicted a 30 percent rise in the cost of monthly premiums for individuals in California under the new exchange.
But Lee said that did not happen. While rates without subsidies may be moderately higher for some consumers next year, most will pay less, he said. The rates announced on Thursday must still be approved by state regulators.
Democratic Congressman Henry Waxman, who backed the health reform act, said the program would protect millions from bankruptcy due to medical costs.
"Californians buying coverage on their own will now have access to the same quality coverage that people get through their employers at the same or lower rates," he said.
California's exchange will offer coverage from 13 insurers; more than 30 had applied to participate.
Among them are some of the biggest names, including Anthem Blue Cross, Blue Shield and Kaiser Permanente. Coverage will also be offered by some companies that had previously limited their activity to the Medicare and Medicaid markets.
Paul Markovich, president of Blue Shield of California, which is offering coverage under the plan, said that to keep prices low, doctors and hospitals had lowered some of their rates. Some insurers also agreed to limit profits, Lee said.
The policies vary in their provider networks, but Lee said consumers would have access to about 80 percent of doctors in the state, and some of its premier medical centers.
Consumers will be able to begin signing up on October 1 for plans that will go into effect in January. Next month, the California exchange will reveal plans and prices for insurance that small business owners can purchase for their employees.