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Wednesday, September 25, 2013

What Insurance Premiums Will Cost Under Obamacare

Health and Human Services Secretary Kathleen Sebelius testifies on Capitol Hill in Washington, April 12, 2013. (J. Scott Applewhite/AP)

Department of Health and Human Services Secretary Kathleen Sebelius says “six in 10 Americans who currently lack insurance will be able to find coverage that costs less than $100 a month” in health insurance exchanges set to open next week. Here, Sebelius is shown testifying on Capitol Hill in April. (J. Scott Applewhite/AP)

Starting next week, individuals seeking to buy health insurance as mandated by the Affordable Care Act will be able to check out and sign up for private health insurance plans offered by federally-run health care exchanges in 36 states.

Today the Obama administration unveiled the costs of the premiums that people will pay for the health plans. Costs will vary widely from state to state.

In general, younger, healthier buyers will pay more than they do currently for health insurance while older, less healthy people will pay less.

The average individual premium for the second-cheapest plan, which is called the “silver plan” in these exchanges, ranges from a low of $192 per month in Minnesota to a high of $516 in Wyoming.

Guest

  • Larry Levitt, senior vice president at the Kaiser Family Foundation.

Transcript

JEREMY HOBSON, HOST:

From NPR and WBUR Boston, I'm Jeremy Hobson.

ROBIN YOUNG, HOST:

I'm Robin Young. It's HERE AND NOW. Today we learned about the sticker prices for some of the insurance plans that Obamacare will offer. The Obama administration released the cost of premiums in 36 states, where the federal government will run health care exchanges under the Affordable Care Act.

HOBSON: Prices will vary state to state and depend on how healthy you are, and the average consumer will have 53 plans to choose from. Joining us is Larry Levitt, senior vice president at the Kaiser Family Foundation. And Larry, first of all, let's just set the stage here. Who does this apply to? Who's going to have to look at these plans and decide which one they're going to get?

LARRY LEVITT: Well, that's a great question. I think people are seeing the headlines today about Obamacare premiums released, and they probably think it's premiums for them. And the truth is that for the majority of the population, who now get their insurance through their employer or through Medicaid or through Medicare, these premiums actually don't affect them immediately.

There are for the new health insurance exchanges or marketplaces, which are for people buying insurance on their own or for people who are now uninsured. So it's important, and it's the main way that more people are going to get covered, but for most people they don't have to pay a whole lot of attention right now.

HOBSON: So for the people who are in the market for health insurance and do want to go to these exchanges, I see that they are going to have on average 53 plans to choose from, which sounds pretty time-consuming and potentially frustrating.

(LAUGHTER)

LEVITT: There's no question this is complicated, but you know, much in life is complicated. Doing your taxes is complicated, buying a car, picking a cell phone plan, and there's going to be a lot here that will make it simpler. For example, right now when you go out and buy insurance on your own, you have to fill out a long questionnaire about your medical history because insurers now do something called medical underwriting, where they look at your medical history and they exclude you if you have a pre-existing condition or charge you a higher premium.

That all goes away starting October 1. All insurers have to take everyone regardless of their health, and they can't charge sick people more than healthy people.

HOBSON: And the prices vary dramatically. We see that in Minnesota, on average people would pay $192 a month for the lower-cost plan, but the same level of coverage in Wyoming would be $516 a month.

LEVITT: Right, I mean Tip O'Neill, you know, used to say that all politics is local, and all health care is local too. The premiums vary a lot, mostly because the insurance markets vary a lot. In places like Wyoming and in Mississippi, there are not a lot of insurers competing, and so the premiums tend to be higher. In other places there are a lot of insurers competing for business, and that's brought the premiums down.

HOBSON: And are you restricted to buying insurance in the state that you live in?

LEVITT: You are. You'll buy based on actually your zip code and which insurers are selling in your area, and they'll charge different amounts based on where you live.

HOBSON: And what about young people who may be healthier versus older people who may not be as healthy? Is there going to be a dramatic difference in what people pay for their coverage?

LEVITT: There will. I mean there are a lot of reasons why premiums will vary. One is based on where you live, but it's also your age. Older people can be charged up to three times younger people, which sounds like a lot, but it's actually less than the variation today. Whether you smoke or not will affect your premium. And potentially most importantly your income, because most people who are uninsured or who will be buying their own insurance will receive a tax credit from the federal government, and that tax credit will reduce the premium sometimes significantly for people.

HOBSON: And one of the interesting things about these figures that we're talking about is they are being put out before these exchanges know exactly who's going to sign up for them, which makes you wonder, well, what if only sicker people sign up for these, then don't the numbers go up?

LEVITT: Yeah, I mean insurance is a crystal ball business. You know, what - we pay insurers premiums so that they take the risk. I mean they're the ones who are taking the risk for who's going to sign up and how much health care they use. So how much premiums go up in 2015 will depend critically on who enrolls during this open enrollment period, which starts October 1.

You know, we know sick people who have been excluded from the insurance market are going to be the first ones to line up to buy insurance, but we really need to get young and healthy people into the insurance system as well if we want to keep premiums down.

HOBSON: And we should say the numbers that have been put out by the Obama administration are for the 36 states where the federal government is going to run the exchanges. Do we know about the costs in the other states, where the states are running their own exchanges?

LEVITT: We know about most of those other states. Not all of them have released the figures yet. They should all be out by October 1, when open enrollment starts. And there it's, you know, it's a mix. I mean, again, it really depends on what the market looks like, what the cost of living looks like. Some areas with a high cost of living, with high medical care costs, will see high premiums, you know, even if the state is aggressively doing everything they can to implement the law.

HOBSON: Larry Levitt is senior vice president at the Kaiser Family Foundation, talking with us about the new health exchanges. And as he says, enrollment begins - as he said many times, enrollment begins on October 1. Larry Levitt, thanks so much.

LEVITT: Thank you. Transcript provided by NPR, Copyright NPR.


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