Prices under wraps as Texas health coverage marketplace takes shape
People without health insurance are required to buy it by 2014 or face tax penalties. The health insurance exchanges created by the Affordable Care Act will start open enrollment for people to shop for health insurance on Oct. 1.
by Jim Landers & Robert T. Garrett
August 02, 2013
Source: The Dallas Morning News
In October, a federal health insurance market is coming to Texas under the auspices of Obamacare. If you don’t have health coverage, you need to check it out.
What’s it going to cost?
Health insurance premiums overall are likely to go up. So will benefits. Subsidies will be available to most of those expected to shop on the new exchange.
The actual plans and costs, however, are still under wraps.
Texas has opted out of running a health insurance marketplace under the Affordable Care Act, leaving it to the federal government to run one for state residents. Mike Hash, who heads the office of health care reform at the U.S. Department of Health and Human Services, said the plans contain “market-sensitive” information and won’t be released until September.
Katrina Daniel, associate commissioner for life, accident and health at the Texas Department of Insurance, would not release even an average of rate filings she’s seen so far for 30-year-old men — a demographic key to the marketplace’s success. Some insurers haven’t filed rates with the state yet, Daniels explained.
“What we have is not complete so it wouldn’t be accurate, it wouldn’t reflect the market,” she said.
The state’s role is to make sure that forms required by Texas law have been filed properly, but the federal government is in charge. Texas is doing nothing to impede the marketplace’s rollout, she said.
The different and confusing hoops that insurers must jump through have some feeling a little anxious.
“We hope to hear as soon as possible” from the state and federal agencies involved, said Ray Smithberger, general manager of individual and small group plans for Cigna.
The federal Health Insurance Marketplace at www.healthcare.gov is scheduled to open on Oct. 1 — two months from now. Enrollment will be open until March 1, though those who sign up before the end of the year can start getting coverage on Jan. 1.
For a little over half of Texans, health insurance will remain a job benefit. People who get health insurance through their employer won’t need to use the new insurance exchange. It is meant for people who buy insurance on their own, or who don’t have health insurance.
“The plans are going to be affordable, but we really haven’t seen what the prices are going to be yet,” said Mimi Garcia, Texas director of Enroll America, a nationwide campaign to get people to take advantage of insurance made available under the Affordable Care Act. The group has strong ties to President Barack Obama’s administration and to the health care industry.
Bert Marshall, president of Blue Cross Blue Shield of Texas, said recently that premiums are going up for individuals, but the cost will depend on subsidies keyed to a person’s income.
The Society of Actuaries (professionals who analyze the financial consequences of risk) took a detailed look at the cost of individual and small group insurance policies marketed across the country, and projected how the Affordable Care Act would change that landscape. In Texas, they estimated the monthly premium for the average individual policy would go from $249 in 2013 to $333 in 2014 under the Affordable Care Act.
The study also estimated that the uninsured rate in Texas would fall under the law from 27.1 percent of the population to 10.2 percent.
Federal health official Hash said premiums have come in lower than expected in several states that have announced average rates, such as California, New York and Montana.
New York acted before the new law took effect to require insurers to issue policies to applicants regardless of any pre-existing health conditions, and having more healthy people enter the market under the new law could lower overall premiums.
No coverage denial
In states like Texas, where in the past insurers could deny coverage to people with pre-existing conditions, the Affordable Care Act’s ban on such refusals is likely to raise rates, insurers said.
John Goodman, president and CEO of the conservative National Center for Policy Analysis, said guaranteed coverage for people with health problems could lower rates for some of them compared with what insurance costs today. But if only the sick sign up, insurance costs will go sharply higher.
“The worry is that there will be lots of sick people that will enroll — everybody that’s got a health problem,” he said. “If only the sick sign up, the plans are going to get costly very quickly.”
Texans who defend the law, though, say some rate creep is the price of progress.
Currently, the state’s individual insurance market, where people buy coverage for themselves with no help from an employer, serves only about 5 percent of the population. The market is unavailable to or prohibitively expensive for people with chronic health conditions, said former Texas Medicaid official Anne Dunkelberg.
“The current individual market includes few older or sicker people — they are either denied or priced out,” said Dunkelberg, associate director of the Center for Public Policy Priorities, which supports the federal law and advocates for low- and moderate-income Texans.
“Only the sickest and those who can afford it get [state] risk pool coverage,” she said, referring to a subsidy program for 23,000 Texans, including nearly 2,400 in Dallas County and 1,400 in Collin County.
It is scheduled to cease operations when the federal law’s ban of denying a person coverage for a pre-existing condition takes effect Jan. 1.
“Average rates must increase when we move to a world where no one is denied,” Dunkelberg said.
Republicans for some time have been warning that Obamacare will mean big premium increases, scaring younger and healthier people away from the marketplaces. While Democrats insist subsidies and other aspects of the law will take the sting out of the price, conservative analysts predict many people will resist.
The law includes a requirement that people who don’t have insurance must buy a policy in 2014 or pay a penalty.
This year, thousands of individual insurance policies were available in Texas with annual premiums ranging from $363 for a single, nonsmoking man under 30 to $8,387 for a single 30-year-old woman who smokes. The plan costing the least — $30.25 a month — is a catastrophic care policy that doesn’t provide insurance until after the policyholder spends $10,000, and then only picks up half the tab until the policyholder has spent $17,000.
The most expensive policy — at $698.92 a month — provides insurance once the policyholder has spent $500. It picks up 80 percent of the cost of healthcare until the policyholder has spent $3,000, and then absorbs all of the cost.
The variety of plans won’t necessarily end once the Obamacare marketplace goes into effect. But unless the plans meet the requirements of the new law, purchasers could still face the penalty for not buying insurance. In 2014, that penalty will be $95 or 1 percent of income, whichever is greater. The penalty increases in 2015.
Cigna’s Smithberger said premiums in Texas could go down as well as up, depending on the buyer. The Affordable Care Act limits the difference insurers can charge because of a person’s age, for example. That could mean higher premiums for young people, but lower premiums for someone older.
“I would venture to say even in Texas some people may be seeing significant premium decreases based on their age and health status,” he said.
Five types of plans will be offered on the federal exchange. They differ in cost and the amount of coverage.
The cheapest monthly premiums will apply to policies for those under the age of 30 who want insurance only for the most extreme sorts of health problems costing tens of thousands of dollars. These catastrophic plans require policyholders to spend thousands of dollars of their own money before health insurance kicks in. Once the insurance starts paying, it covers only half the cost of medical care under the policyholder has spent at least $6,000.
Four other types of plans offer increasing levels of insurance — and premiums. Bronze plans cover only 60 percent of the medical costs until an out-of-pocket limit on policyholder spending is reached. Silver plans cover 70 percent. Gold covers 80 percent, and Platinum covers 90 percent.
Smithberger said Cigna is offering about 15 plans in Texas in the four categories. Marshall said Blue Cross Blue Shield of Texas intends to offer plans in all categories.
The cost of plans offered in the first year of the exchange is based on the requirements of the law, and also on estimates for how many people will sign up. The more young and healthy people there are in the exchange, the less the cost will be for everyone. If the young and healthy stay away, insurance will be more expensive for the rest.
The toughest ones to get into the exchange are expected to be single young men, said Garcia of Enroll America, but there’s a marketing strategy for them.
“Experience shows us that the most influential person in a man’s life is a woman,” she said. “A wife, a girlfriend, a sister, a mother. Honestly, mothers have a huge influence.”