TOPICS > Politics

How Does Health Care Reform Affect the Cost of Insurance Premiums?

September 19, 2013 at 12:00 AM EDT
Whether you already have health insurance or will soon be shopping for coverage through one of the insurance exchanges, what can you expect to happen to the cost of your premiums? NewsHour analyst Susan Dentzer joins Ray Suarez to answer some of our most frequently asked questions about the new health care reform law.
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GWEN IFILL: Finally tonight: understanding the health care reform law. We have been examining the changes scheduled to take effect when online insurance marketplaces known as exchanges open next month.

Our series of reports answering some of your more frequently asked questions continues, with Ray Suarez as our guide.

RAY SUAREZ: We again focus on essential questions about the exchanges and insurance rates. Tonight, what do we know about what premiums might cost?

We have received a lot of questions about this, and this time we’re joined by “NewsHour” regular Susan Dentzer.

Susan, there’s widespread either misunderstanding or confusion about what this is going to mean, even among people who are already insured. They think something is coming to change their lives. We got questions like this one.

BURTON CATLEDGE, Odenton, Md.: My name is Burton Catledge. I’m from Odenton, Maryland.

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And my question for the Affordable Care Act is, will the premiums go up for those that currently have health insurance, and, if so, how much?

RAY SUAREZ: Do we even know that yet?

SUSAN DENTZER: Well, if you have health insurance through your employer, your health insurance is probably only going to be affected by all the normal things that affect health insurance premiums, like the fact that health care costs are rising.

And even though they’re not rising as fast now as they were several years ago, they’re still going up 4 percent or more a year. So, generally speaking, for everybody, health insurance premium are going to continuing to rise. For people buying coverage through the exchanges or the — as they’re officially called, the marketplaces, the premiums are going to be different from premiums available on plans previously, because the plans are different.

New plans are coming into the market. They have new requirements on them about what they have to cover. We now know that no preexisting condition restrictions are going to be held against anybody. That’s going to affect the price. And we also know that things like no more annual limits on what health care insurance payouts can be have come into effect, no lifetime limits.

So, in essence, the coverage is different from what was available previously for people buying coverage in the individual market. And the prices are going to vary exchange by exchange, depending on how many insurers bid to participate in the program and how heavy a bargain states drove with the health insurers who are coming into the marketplace.

So we’re seeing a lot of variation in rates around the country. That said, it’s also fair to say though that, in general, the rates are lower than many people expected they would be.

RAY SUAREZ: Among that first group, the majority of Americans who have health insurance coverage and get it through their employer, aren’t there any taxes or fees that are going to be added to the premiums they already pay to help implement this new system?

SUSAN DENTZER: Eventually, that’s right.

Very high-cost health insurance plans are going to be subject to a so-called Cadillac tax. But that doesn’t take effect right away. So, in general, for the early years of this, if you have employer-provided coverage, you will be subject to the same forces that were driving health insurance premiums up all along, some additional expense related to some of the changes in that coverage.

As we know, for example, adult children can now stay on their employer plans that their parents have. So modest effects on that — on premiums from that, but, in general, most of the difference in premiums is going to be seen by people who previously had to buy coverage on the individual health insurance market and now have the ability to buy that through a marketplace.

RAY SUAREZ: Some people who are entering the exchanges are a little worried about what they’re going to find there and what affordable means.

We got a letter from Bill Williams of Fort Collins, Colorado, who writes: “I presently pay approximately $100 a month per person in our household. How come the Obamacare premiums I hear bandied about are $600 for each person? How can this be considered even remotely affordable? This takes us from $300 per month to $1,800 per month. And $1,800 per month totals to $21,600 per year.”

What can you tell Bill?

SUSAN DENTZER: Well, there are going to be a variety of plans available on exchanges, including in Colorado’s, subject to, for example, different levels of coverage.

They are going to be rated by so-called medals, bronze level, silver level, gold, and platinum. And what that speaks to is how much of a person’s total health care costs every year does the insurance plan cover. The bronze plans cover only 60 percent of total costs. And the silver, which many people will buy, covers 70 percent and so on. So, depending on what level of coverage you pick, premiums will be lower or higher.

For example, in Colorado, a bronze level plan, available for a 40-year-old male, can be had for as low as $186 a month. So there’s going to be some variation. There also is variation within states, depending on what the county is and how many health care providers and insurers bid to provide coverage.

And also it’s very clear that in some states and some exchanges, insurers drove very hard bargains with health care providers to get them to take lower rates and make the coverage more affordable.

RAY SUAREZ: So, quickly, in a case like Bill’s, he may not be comparing his $100 per family member month plan to an equivalent plan to get this $600 that he has heard about, and frankly scares him a little bit.

SUSAN DENTZER: That’s right. And the $600 may be a platinum level plan that is potentially more generous than what he is buying now.

It is going to be very difficult for people to make apples-to-apples comparisons, because the coverage has changed, the options have changed, and, frankly, the underlying marketplace has changed.

RAY SUAREZ: Susan Dentzer, thanks for joining us.

SUSAN DENTZER: Great to be with you, Ray.

JUDY WOODRUFF: Our series continues online, where you can leave your questions about the new health care law. And we will try to answer those in the coming weeks.