September 25, 2013

Preliminary Obamacare cost preview data released (with cost calculator)

Premium costs on the federal health insurance marketplace are expected to be lower than previously forecast for about 95 percent of the eligible insured because of competition among insurers and federal subsidies.

Federal officials on Tuesday released their first snapshot of what health insurance is likely to cost for millions of Americans who will buy coverage on the Obamacare exchanges beginning next week.

The lowest-cost comprehensive plan, the study showed, will cost an average of almost $3,000 a year before federal income tax credits are applied. The exchanges are intended mainly for people who don’t get health insurance from their workplace.

The study did not detail the benefits in the policies examined, which will vary by insurer. The report also shows that actual costs of coverage may vary widely, depending on age, income, the size of the tax credits, the type of policy, and geography. Some could be substantially lower than the average.

A 27-year-old in Wichita, for example, may pay $121 a month for the cheapest insurance plan, before federal tax credits, while a 27-year-old in Anchorage, Alaska, will pay $254 for the same policy.

Officials explained the gap by pointing to vastly different health care costs by region and insurance company competition in the states. They also said the cost estimates might change before Oct. 1.

Tuesday’s report, which largely examined policies on the federal marketplace, did not include specific premium projections for the Kansas City area. Instead, analysts studied the largest urban area in each of the affected 36 states, as well as statewide trends.

But officials with the Department of Health and Human Services said they were pleased with their early findings. Almost all Americans who now lack insurance, they said, should be able to find affordable coverage when the exchanges open for business.

“For millions of Americans, these new options will finally make health insurance work within their budgets,” Secretary Kathleen Sebelius said Tuesday.

Not everyone shares her optimistic view.

While Health and Human Services officials touted lower-than-predicted premium costs, some Republicans, led by Sen. Ted Cruz of Texas, renewed their efforts to remove Obamacare funding from a catch-all spending bill now before Congress.

“This grand experiment is simply not working,” Cruz said as he launched into an extended speech about the law.

An estimated 326,000 Kansans and 800,000 Missourians are eligible to use the marketplace to buy insurance coverage, although only a fraction are expected to use the exchanges next week.

The Affordable Care Act — known as Obamacare — requires almost all Americans to buy health coverage by the end of the year or face a tax penalty.

Health and Human Services officials said they were pleased with the number of insurers who would offer policies on the federal exchange. Kansans and Missourians must use the federal marketplace,, because their state legislators declined to establish a state-based exchange.

The department said insurance company competition was expected to provide consumers an average of 53 health plans to review.

There are four levels of coverage — bronze, the cheapest with the fewest benefits, to platinum, the most expensive. Companies in some circumstances also may offer cheap “catastrophic” plans, designed to prevent financial disaster in the event of the most serious or prolonged illnesses.

Officials said the “vast majority” of Americans would have at least two health insurance companies, and usually more, offering plans on the federal marketplace.

Blue Cross and Blue Shield has announced its participation in Kansas and Missouri. Other companies have yet to confirm participation, and the federal government is not releasing insurer information until Oct. 1.

Based on its initial study, Health and Human Services thinks it understands what customers will pay for insurance on the exchange.

According to initial estimates, for example, the premium cost for individual coverage for a 27-year-old in Kansas will be $104 a month for the lowest-cost comprehensive plan after the federal tax credits in Obamacare are applied. A family of four in Kansas, with a $50,000 income, will pay $133 monthly for the policy.

But the figures also illustrate the difficult situation for hundreds of thousands of Kansans and Missourians who don’t make enough to use the tax credits but earn too much to qualify for Medicaid, the state-based program for the very poor.

According to the figures, for example, a 27-year-old Missourian earning $25,000 annually will pay roughly $87 a month for the lowest-cost plan after using the tax credits.

But a 27-year-old earning $10,000 a year doesn’t make enough to qualify for those tax credits. That means he must pay $162 a month for the cheapest policy, nearly twice as much as the $25,000 earner.

That lower earner simply won’t buy insurance, predicted Dennis Dunmyer of the Kansas City CARE Clinic.

“I sure hope people look at that and say, ‘For goodness sake, let’s expand Medicaid,’” he said.

Obamacare assumed lower earners would be covered by an expansion of Medicaid in the states, not through the tax credits. But the U.S. Supreme Court made expanding Medicaid optional, and both Missouri and Kansas have declined to do so.

Health care advocates said they were working on plans to explain the problem to the uninsured when the marketplace opens.

The Health and Human Services report focused on costs for 27-year-olds because that’s the first year individuals are required to have coverage on their own after aging out of possible coverage in their parents’ plans.

Officials emphasized that the figures are subject to change. They also vary by location and plan choice.

In Kansas, the family’s pre-tax credit premium costs for a mid-level “silver” policy could average $619 a month, but just $282 once the credits are applied. In Missouri, similar family coverage might cost $798 before the credits but $282 after.

The big difference between levels is cost sharing through deductibles and co-payments. Bronze covers 60 percent of expected costs; silver, 70 percent; on up to platinum at 90 percent.

Oct. 1 marks the beginning of the federal marketplace enrollment period that runs through March 2014. Coverage is set to begin as early as Jan. 1, and officials urged participants to study the plan choices and decide by mid-December.

People who already have health insurance through their employment or through other government plans such as Medicare or Medicaid do not have to buy other coverage.

The exchanges are set up under the Affordable Care Act to provide insurance purchases options for consumers who are uninsured or have been uninsurable because of insurance companies’ underwriting policies.

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