NCPA - National Center for Policy Analysis

Health Insurance Costs Set for a Jolt

July 3, 2013

Healthy consumers could see insurance rates double or even triple when they look for individual coverage under the federal health law later this year, while the premiums paid by sicker people are set to become more affordable, according to a Wall Street Journal analysis of coverage to be sold on the law's new exchanges.

A review of rates proposed by carriers in eight states shows the likely boundaries for the least-expensive and most costly plans on the exchanges. The lower boundary is particularly important because the government wants to attract healthy people to the exchanges, and they may choose to pay a penalty and take the risk of going without coverage if they believe they can't get an acceptable deal.

  • For a 40-year-old single nonsmoker -- in the middle of the age range eligible for exchanges -- a "bronze" plan covering about 60 percent of medical costs will be available for about $200 a month in most places, the proposals show.
  • Though less generous than "silver" and "gold" plans on the exchanges, a bronze plan would still include fuller benefits than many policies available on the individual market today.

The challenge for the law is that healthy 40 year olds can typically get coverage for less today, especially if they are willing to accept fewer benefits or take on more costs themselves.

Virginia is one of the eight states examined and offers a fairly typical picture.

  • In Richmond, a 40-year-old male nonsmoker logging on to the eHealthInsurance comparison-shopping website today would see a plan that costs $63 a month from Anthem. That plan has a $5,000 deductible and covers half of medical costs.
  • By comparison, the least-expensive plan on the exchange for a 40-year-old nonsmoker in Richmond, also from Anthem, will likely cost $193 a month, according to filings submitted by carriers.

The law is likely to offer a benefit to those who have difficulty getting insurance now or are pushed out of the market because they have had illnesses. Under the current system, the rate on the $63-a-month plan could be revised higher if a consumer indicates prior health problems in a medical questionnaire that must be filled out before buying the plan. The application also could be rejected entirely based on specific answers given. Under the new health exchanges, plans are available regardless of health status, and a price can't change once it is offered.

Source: Louise Radnofsky, "Health Insurance Costs Set for a Jolt," Wall Street Journal, June 30, 2013.


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