Insurance Premiums Seen Lower Than Forecast on Health Law

Premiums for some medical plans to be sold to the uninsured next year will be 18 percent less costly than government analysts expected under President Barack Obama’s signature health-care law, his administration reported.

A benchmark measure of the Affordable Care Act’s promise shows monthly rates for “silver” plans will average $321 in 11 states examined in a report today from the Health and Human Services Department. Congressional Budget Office estimates from last year saw silver premium rates averaging $392, HHS said.

Obama touted the findings at a White House event designed to promote the benefits of a law that his Republican opponents in Congress are trying to derail before the core provisions take hold Jan. 1. The report shows that only one state, Vermont, reported premiums for silver plans higher than the CBO estimate -- $400. New Mexico had the cheapest at $226.

“They’re trying to get the message out that health reform is a good deal,” Joseph Antos, a health economist at the American Enterprise Institute who advises the CBO, said in a phone interview. “They’re comparing it not to what people actually pay today, or what people expect to pay, but rather frankly a guess from the Congressional Budget Office from last year that really doesn’t represent a good indicator of whether people are happy with their options or not.”

The White House press secretary, Jay Carney, cited a report from New York state officials yesterday that forecast health insurance premiums will drop about 50 percent on average for consumers who buy new plans through a state-run marketplace created under the health-care law.

Meeting Targets

“This is in line with what we’ve seen in other states, like California and Oregon,” Carney said. “Competition and transparency in the marketplaces, plus the hard effort by those committed to making the law work, are leading to affordable, new, and better choices for families.”

Obama, citing slower growth of health-care costs and rebates some consumers have received from their insurers, said in his speech today that the law has proven effective at delivering “more choices, better benefits, a check on rising costs and higher quality health care.”

The health-care law seeks to expand coverage to most of the nation’s 50 million uninsured people. About 7 million people are expected to enroll in exchange plans next year, rising to 25 million by 2018, according to the CBO. The law also encourages states to expand their Medicaid programs for the poor to cover people earning close to poverty-level wages.

Young Buyers

Many people who are uninsured probably expect coverage on the exchanges “to be such a good deal that you can’t pass it up,” Antos said. While that should be true for people with extremely low incomes, once you get above about 200 percent of poverty “that’s absolutely not going to be true,” he said.

The HHS report examines the price of silver plans because they determine the amount of subsidies people will receive when they shop in the exchanges. There will be four levels of coverage available through the exchanges -- bronze, silver, gold and platinum. Bronze plans, covering 60 percent of the cost of care, will be the cheapest. Platinum covers 90 percent of care.

For the president’s plan to succeed, almost 40 percent of the 7 million people targeted in the first year need to be young, healthy adults to balance the cost of insuring older people at higher risk of illness.

Health Access

The cheapest bronze plan available to a 25-year-old in Los Angeles County’s 90021 zip code next year will be $152 a month, and subsidies would reduce the premium for many purchasers. That same person today could buy a basic health plan from Kaiser Permanente for as little as $88, according to the online broker EHealth Inc. That policy doesn’t cover all of the benefits that would be required under the health law, and anyone with a health condition would likely be quoted a higher price or perhaps denied coverage altogether.

The health law keeps insurers from denying coverage and also requires them to charge the same rates to men and women starting next year. It also prohibits them from charging older people more than three times the cost of the cheapest plan for young adults. People earning as much as four times higher than the poverty level -- meaning an income of about $94,000 for a family of four this year -- will be eligible for subsidies that will further reduce the plans’ cost beyond the advertised prices.

“The reforms in the health care law ensure consumers will have access to better coverage at a lower cost in 2014,” HHS Secretary Kathleen Sebelius said in a statement.

Public Perception

About 60 percent of men ages 18 to 34 who currently buy insurance on their own may be eligible for subsidies or expanded Medicaid programs next year, according to the report’s authors, Laura Skopec, a program analyst in the HHS’s Planning and Evaluation division, and Richard Kronick, the deputy assistant secretary for health policy in the division.

“Concerns expressed that millions of young men will be priced out of coverage due to the new rating reforms may be unfounded,” Skopec and Kronick wrote.

Obama has been trying to combat negative public perceptions about the law that have resulted from Republican opposition as well as his administration’s failures to promote and implement it.

Earlier this month, the administration decided to delay a requirement that businesses with 50 or more employees provide workers with insurance, a key part of the law’s goal of expanding coverage to most of the nation’s uninsured people.

House Votes

Republicans seized on that decision as evidence that the law is unworkable and should be repealed. Yesterday, the Republican majority in the House voted to scale back two of the most significant provisions of the law, the individual and employer mandates.

“I recognize there are still a lot of folks, in this town at least, who are rooting for this law to fail,” Obama said. “We’re just going to blow through that stuff and keep on doing the right thing for the American people.”

With the House bills unlikely to pass the Democratic-controlled Senate, the votes were largely symbolic measures designed to highlight opposition to the law and put Democrats on the defensive. Twenty-two Democrats voted with Republicans to delay the individual mandate, which requires most Americans to carry insurance beginning Jan. 1.

Building Enrollment

Republican-controlled state legislatures and governors also have refused to cooperate with the law’s initiative to expand Medicaid coverage for the poor and declined to set up exchanges where individuals can buy insurance, leaving the job to the federal government.

The HHS report examined 2014 premiums for California, Colorado, New Mexico, New York, Ohio, Oregon, Rhode Island, Vermont, Virginia, Washington state and Washington, D.C.

All but Ohio and Virginia have been largely cooperative with the federal government in implementing the health-care law.

“It is theoretically possible that the 11 states for which we have data are not representative of the rest of the nation,” Skopec and Kronick wrote. That “seems unlikely,” they said, because health care costs in the 11 states are in-line with national averages, as are premiums for insurance plans sold to small businesses.

A “likely explanation” for their findings, they said, “is that greater competition and greater transparency are driving down prices” for plans to be sold in new government-run marketplaces called exchanges.

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