Friday, September 27, 2013

"Lower than anticipated" doesn't mean affordable.

The U.S. Department of Health and Human Services (HHS) earlier this week released some preliminary premium prices for health insurance plans that will be available on the federal exchange. Supporters lauded these as “lower than anticipated” and pointed out that Arizona’s expected exchange premiums are among the lowest in the country. That’s like being the cleanest shirt in the laundry bin, and it doesn’t mean much for Arizonans who struggle to afford coverage now, and for whom coverage likely won’t become any more affordable when the exchange opens for business next week.

To really understand what these premium prices mean, we need to compare them not to the Congressional Budget Office’s (CBO) projections, or to premium prices in other states, but to real prices that people were paying prior to the Affordable Care Act. For working Arizonans whose premium prices shoot up, it will be of little comfort to know that they are paying less than someone in California, or less than the CBO expected them to have to pay.

A 27-year-old male living in Phoenix, for example, will be able to get “bronze level” coverage on the exchange for about $139 a month before subsidies. Currently, the 27-year-old could get coverage for about $38 a month. The relative value of these plans is still in question; HHS has not released information about network availability, deductibles or consumers’ out-of-pocket costs. This means that he is going to see his premium payment nearly triple, while his ability to see the physician he sees now remains in question, and his deductible and out-of-pocket costs will likely stay the same or increase. If he is eligible for subsidies, that could help. But if he’s like most Arizonans he will face a double whammy: higher premiums, and higher taxes to pay for the subsidies that others will receive.

It is important to qualify this analysis with the fact that private commercial individual policies outside of the exchange will still be available. These plans may remain cheaper than plans on the exchange, as they are currently, and offer consumers more choices (between 14 different carriers, as opposed to 7 that will be available on the exchange). However, for those who are eligible for and wish to take advantage of subsidies, they must purchase insurance on the exchange.

It is very possible that premiums will go up both in the exchange and on the private market in the future. The Affordable Care Act requires insurers to provide more expansive coverage and changes the way insurers calculate premiums. Insurers must cover a broad array of “essential health benefits” and can no longer exclude those with pre-existing conditions or charge more for consumers with chronic conditions. They must also allow dependents to stay on their parents’ plan until they are 26. 

The health insurance companies are working to implement the changes required by law in the most affordable and least disruptive way and working with hospitals to improve the quality of health care and make it more affordable. It is also important that consumers do their research to ensure they find the right affordable plan for themselves and their families. But, as the law is fully implemented, consumers won’t be judging its effectiveness and affordability based on numbers coming in below what the CBO and others projected. After all, the administration didn’t title this the “Lower than the CBO anticipated” Care Act, and these recently released premium prices are yet another indicator that the bill isn’t living up to its promise of providing more affordable health care for more Americans. 

No comments:

Post a Comment