A recent Avalere Health study offers individuals and employers a sneak peak at what the cost of premiums will be once open enrollment for the health insurance marketplaces begins on October 1, 2013. Avalere Health used data from the rate filings released by 12 states, including Ohio, New York, and Indiana, to conclude that the marketplaces were producing competitive Silver Plan premiums in the low $200 to $300 range. The Avalere Health study appears to confirm the Department of Health and Human Services’ belief that individuals will have affordable health care options in the exchanges – apart from the premium subsidies that 80% of individuals who purchase health insurance in the marketplace will qualify for to reduce the cost of insurance.
The Avalere Health study adds a new thread in the discussion about the premium rates for plans offered in the marketplaces – and how many Americans will actually purchase health care coverage in the marketplace. Without premium rate information, an individual is unable to make even some initial decisions about whether purchasing insurance in the marketplace makes good financial sense for him or her.
Beginning in 2014, the Affordable Care Act requires that most people purchase health insurance or face a financial penalty. For many currently uninsured individuals, purchasing health insurance coverage in the marketplace will be the best available option to avoid government penalties for non-compliance with the law. For those who are currently insured, the marketplace may offer a new option for accessing affordable quality coverage.
Health plans sold in the marketplace come in four “metal levels” determined for their actuarial value: Bronze, Silver, Gold, and Platinum. The levels of the plans indicate the portion of health care expenses that the plan will cover for an average group of enrollees. Bronze plans will cover 60% of medical costs, Silver plans will cover 70%, Gold plans will cover 80%, and Platinum plans will cover 90%.
The Avalere Health study determined that the average monthly plan premium across all states reviewed will be $274 for the Bronze plan, while the average Silver plan premium will be $336. In states without community ratings, the premium amounts varied significantly among different age groups. For example, for a Silver Plan, an adult age 60+ will pay almost $300 more than a 40+ aged adult.
For individual health plans in Ohio, 12 insurance carriers will offer 200 different health plans in the federally-run marketplace. According to Avalere Health, the average monthly Silver plan premium for a nonsmoking, 40-year-old in Ohio will be $326. In Indiana, the average monthly Silver plan for the same type of individual will be $334. In New York, where the state follows community rating, the average monthly plan for the same type of individual will be $444. The Avalere Health study does not make a comparison between existing rates and the rates of those plans that will be available in the marketplace.
Avalere Health’s figures do not account for available subsidies and tax credits which, for those eligible, will reduce the cost of an individual’s premium. Nearly 4 out of 5 enrollees in plans offered in the marketplace will qualify for some amount of subsidies and/or credits. However, an individual may or may not consider these reductions when he or she is making the purchasing decision.
In fact, substantial uncertainty remains around whether individuals are considering their 2014 insurance options at all. The answers to many unanswered questions will become more clear as we see additional data released about the plans and early data about enrollment. We have less than three weeks until we are able to start to see how things will work.