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Health-Insurance Costs Set for a Jolt
For the Healthy, Rates Could Soar Under New Law; Sicker Consumers to See Relief.
Today’s Wall Street Journal sounds the latest alarm on the looming rate shock set to hit Americans when Obamacare takes effect reporting that healthy individuals could see their rates double or triple. The Wall Street Journal’s analysis echoes similar findings compiled in an Energy and Commerce Committee report released in May on “The Looming Premium Rate Shock.” The committee report chronicled internal analyses provided by 17 of the nation’s largest health insurance companies. One leading insurance company that insures millions of Americans predicts premiums will nearly double for individuals getting a new plan, while those keeping their insurance will see an average increase of 73 percent, and some individuals could see increases over 400 percent. Many Americans, from recent college graduates to older adults, will not be able to afford the law’s higher costs.
JUNE 30, 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.
The exchanges, the centerpiece of President Barack Obama’s health-care law, look likely to offer few if any of the cut-rate policies that healthy people can now buy, according to the Journal’s analysis. At the same time, the top prices look to be within reach for many people who previously faced sky-high premiums because of chronic illnesses or who couldn’t buy insurance at all.
Several big provisions in the law taking effect in six months affect rates for the estimated 20% of Americans who don’t have coverage through an employer, Medicare or Medicaid. Plans must be available to consumers regardless of their health and must cover certain items such as hospitalization, maternity care and prescription drugs. The exchanges are set to open Oct. 1 selling plans effective Jan. 1.
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% 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. Supporters of the law say tighter regulation on insurance practices gives consumers more protection and is worth the extra cost, but they have to persuade people who don’t have an immediate need for health care of that. If only sick people buy into the new insurance pools, prices could shoot up.
Bob Laszewski, a Virginia health-care consultant and former insurance executive, said the new offerings were likely to anger people who had preferred lower-cost products that were no longer available.
“If a person in 2013 has a choice of buying a Chevrolet or a Cadillac health plan, and in 2014, they can only buy a Cadillac…are they going to be upset? I think the answer is, yes,” he said. …