By Rebecca Adams, CQ HealthBeat Associate Editor
September 27, 2013 -- The first look at health insurance landscape in the federally run marketplaces reveals a system where premiums are lower-than-projected and the choice of plans for consumers varies widely by state.
Health and Human Services officials say that premiums in the 36 exchanges that federal officials will operate or will run in partnership with some states are about 16 percent lower than originally projected.
In those marketplaces, the number of health insurance companies selling coverage will range from one to a high of 13, according to a report federal officials recently released. About 95 percent of the people under the age of 65 in the 36 states live in areas with two or more insurance plan choices, said the report. Each insurer will offer more than one type of health plan, and people will have anywhere from six to 169 choices as they sift through different plans that are classified like metals, with platinum covering about 90 percent of health care costs at the high end and bronze plans covering about 60 percent of costs.
The report did not include an average premium rate for the federal exchanges, but did include a weighted average of the rates for people of all ages in all the state-run and federal exchanges in 47 states and the District of Columbia. Their calculations show that the average monthly premium for a bronze plan is expected to be $249. The average for second-cheapest silver plan—the option that federal subsidies are based upon—is $328 per month. Three states—Hawaii, Massachusetts and Kentucky—did not report their data to HHS in time to be included.
Although the report did not compare rates in the federal marketplaces to those in exchanges run by the states, it said that state-run marketplaces "tend to have greater issuer participation," which drives down rates, than federal exchanges.
HHS also acknowledged that the rates still could change slightly before the new marketplaces open in one week, on Oct. 1. And averages don't tell the whole story in a nation where coverage will vary significantly—even within a state.
Even before the data were revealed, lawmakers on both sides of the aisle put out statements about rates in the exchanges.
"The closer we get to the health law's launch next week, the more reports that confirm the sad and expensive reality of the looming rate shock set to strike millions of folks, young and old," said House Energy and Commerce Chairman Fred Upton, R-Mich. "Such rate shocks threaten to devastate the budgets of families who are still struggling to get back on their feet."
House Minority Leader Nancy J. Pelosi, D-Calif., issued a statement on the rate report. "As health insurance marketplaces come online, we must act to ensure that the protections of the law strengthen all the health and health care of all Americans—and that partisan distractions are not allowed to undermine the health and economic security of the American people," Pelosi said.
The numbers in the report underscored the wide variability in premiums, which have been evident in previous projections.
HHS officials said the report summarizing rates is the only information that consumers will have before Oct. 1. At that point, consumers can go online to find out rates specific to them, said Director of the Center for Consumer Information and Insurance Oversight Gary Cohen. Some of those rates may differ significantly from the information the administration provided in the report.
People will be able to search for plans only offered by a specific insurance company if they want, Cohen said.
"Consumers can do side-by-side comparisons and can select traits they want to see" in plans, he said.
Federal officials also said they are not concerned about reports that some insurers are keeping rates low by creating narrow networks of doctors and hospitals. Insurers don't have as much leeway as they have in the past to structure benefits because they have to comply with the law's requirement to offer 10 categories of essential health benefits, so many companies are creating tight networks of providers as a way to try to lower costs.
The trend of restrictive networks began before the passage of the health care law (PL 111-148, PL 111-152), Cohen told reporters, and he said he trusts state insurance regulators to meet the federal law's requirement that they make sure that the networks are adequate. Networks are supposed to be "sufficient in number and types of providers, including providers that specialize in mental health and substance abuse services, to assure that all services will be accessible without unreasonable delay."
Regulators "don't want to get a bunch of phone calls from people who have health coverage but can't get health care," he said.
The report did not spell out which insurers will participate in each state. Federal officials have already acknowledged that the nation's largest insurance companies, including United HealthGroup, Cigna, and Aetna—which currently are big players in large group markets but not the individual market—will only offer coverage in a relatively small number of exchanges. That compares with Blue Cross Blue Shield plans, which are likely to be offered in most of the exchanges in the individual market.
Roughly 95 percent of uninsured people who might qualify for marketplace coverage live in states with lower-than-expected premiums, said federal officials.
Federal officials said they are pleased with the results.
"We are excited to see that rates in the marketplace are even lower than originally projected," said HHS Secretary Kathleen Sebelius. "In the past, consumers were too often denied or priced-out of quality health insurance options, but thanks to the Affordable Care Act consumers will be able to choose from a number of new coverage options at a price that is affordable."
The numbers provided by the administration show relatively low costs for single people choosing the bronze plans, but those may not ultimately be the best deal for consumers, depending on their medical costs and income. People who choose silver plans will have lower cost-sharing, such as co-pays and deductibles. And people whose income is up to 250 percent of the federal poverty limit can get additional subsidies to help with those out-of-pocket costs if they choose a silver plan.
Before subsidies are considered, a family of four would pay monthly premiums for the second-cheapest silver plan ranging from $584 in Tennessee and $600 in Arizona on the low end to $1,131 per month in Alaska and $1,237 in Wyoming on the high end, according to the report. While subsidies will bring down those costs, some families whose income is just above the level that would get a subsidy could find the costs high if they have recently lost employer-provided insurance. An annual survey by the nonpartisan Kaiser Family Foundation found that in 2013, the average cost of family coverage through employers was $16,351 per year, but workers only saw $4,565 in annual costs deducted from their paychecks because the companies picked up the rest of the tab. The Congressional Budget Office has estimated that about seven million people will sign up for coverage in the first year. It is unclear whether the lower-than-projected premiums will attract more people to buy coverage on the exchanges than estimated, or whether negative publicity from critics, early potential technical snafus and a lack of awareness among the uninsured about how to enroll might lead to lower enrollment than expected.