A flurry of new reports from prominent health care research organizations show the cost of individual health coverage under Obamacare will vary widely among states next year, but drastic predictions of premium “sticker shock” have not materialized thus far.
New research by the Kaiser Family Foundation, the RAND Corp. and Avalere Health have found competitive, affordable prices for individual coverage in states where the information is available. Those states include Washington, California, Florida, South Carolina and Texas.
“Our analysis found no widespread trend toward sharply higher prices in the individual market,” said a statement by Christine Eibner, a senior economist at RAND, a non-profit research organization based in Santa Monica, Calif.
The report from the nonpartisan Kaiser Family Foundation examined individual premiums for the largest cities in 17 states that have released either actual 2014 premium rates or rate requests from insurers.
“We know what the cost of employer-based insurance is, and these rates are what you’d expect to see for similar benefits,” said Gary Claxton, vice president of the Kaiser Family Foundation. “These rates don’t look to be so high that we should have the sort of widespread sticker shock.”
New research by the conservative Manhattan Institute appears to be an outlier. Its report found nine states will see premiums increase, on average, under Obamacare next year, while five others will see average rate declines.
The Affordable Care Act makes sweeping changes to the way health insurance is bought and sold outside the workplace. Beginning next year, insurers in the individual market must provide beefed-up coverage and cannot deny insurance based on current or past health problems.
The estimated 125 million Americans with job-based coverage won’t be affected by the changes.
In fact, only 15.4 million people purchase individual policies. But that number will increase dramatically, beginning next year, when premium tax credits become available to help low- and middle-income people buy individual policies in the new state insurance marketplaces. An estimated 80 percent of marketplace enrollees will qualify for the tax credits.
The Kaiser study found that monthly premiums for a 40-year-old earning nearly $29,000 will run about $146 per month in Baltimore next year and $155 in Albuquerque, N.M., for the cheapest “Bronze” plan, which covers 60 percent of health care costs.
The insurance marketplaces divide individual coverage into four tiers based on the portion of medical expenses they cover. “Silver” plans cover 70 percent, “Gold” plans cover 80 percent and “Platinum” plans cover 90 percent.
Residents in Seattle and Portland, Ore., will pay $213 and $165 monthly respectively for the same lowest-cost Bronze plan, which will cost $308 in New York City and $336 in Burlington, Vt.
Kaiser estimates that tax credits will lower the cost to $111 in Baltimore, $136 in Albuquerque, $123 in Seattle, $157 in Portland, $111 in New York and $116 in Burlington.
“It’s hard to believe we’ll see things that are way different from this in other places, but there could be a few surprises,” Claxton said.
The Manhattan Institute expects such surprises. The institute found that individual premiums will rise in states like New Mexico, Vermont, South Dakota and Connecticut, while Maine, Colorado, Ohio and New York will see rates decline on average.
Ohio, which is projected by the institute to see a 30 percent decline in average premiums, is notable because the state insurance department predicted in June that rates would rise by 81 percent next year, and then lowered the projected increase to 41 percent in August.
Avik Roy, a Manhattan Institute senior fellow and an ardent critic of Obamacare, said Ohio’s surprising numbers stem from the different methodologies used by the state and the institute.
In a study of 12 states, Avalere found that minimum premiums for a 40-year-old non-smoker averaged $261 for a Silver plan. Maryland had the lowest-cost Silver plan at $197 per month, while Vermont’s lowest-priced Silver plan cost the most at $383.
“Regardless of whether the state or federal government is operating the exchange, we are seeing competitive Silver premiums in the low $200 to $300 range in most markets,” said Caroline Pearson, Avalere vice president.
Although tax credits are based on the second-lowest-cost Silver plan, individuals can use their tax credit toward the purchase of a cheaper Bronze plan.
Pearson said these “buy downs” will be a likely occurrence.
“We expect consumers to disproportionately enroll in lower-cost plans,” Pearson said. “Bronze plans are offering a significant reduction in monthly costs relative to Silver products, which is likely to entice healthier enrollees to opt for a less generous benefit package.”The RAND Report on the Affordable Care Act
The Kaiser Family Foundation report
Manhattan Institute interactive graphic
By Tony Pugh
McClatchy Washington Bureau