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From Bronze to Platinum Plans, What Will New Insurance Exchange Premiums Cost?

September 25, 2013 at 12:00 AM EST
New details were released about coverage choices for consumers in the new health care exchanges. What will their premiums cost? Ray Suarez is joined by Louise Radnofsky of The Wall Street Journal to answer some of your most frequently asked questions.
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GWEN IFILL: Now we take a deeper dive into the health care story with the first look at what premiums will cost as the new marketplaces known as exchanges come online.

Among the details released today: Customers will be able to choose from a variety of plans, ranging from lower-cost plans in a bronze or silver category with less coverage to higher-cost ones known as gold or platinum with greater coverage and benefits.

The average monthly premium for an individual buying insurance through one of the cheaper options will be $328 a month. Then it gets complicated.

Ray Suarez picks it up from there.

RAY SUAREZ: It’s not simply a matter of picking among these different categories like bronze or silver. Each class of plans will have a number of options to choose from and, in many cases, people will also be able to get a subsidy to help purchase the insurance.

But the premiums will vary by age, health status, geography and other factors. And there are additional costs, too.

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We try to walk through this now with Louise Radnofsky of The Wall Street Journal.

And, Louise, for a long time, the opponents of the Affordable Care Act have threatened that premiums were going to go way up once these exchanges opened and people had to buy their own insurance. Now the administration answers with its own survey of the products being offered in those exchanges. What do they have to say?

LOUISE RADNOFSKY, The Wall Street Journal: Well, the data has something for everybody.

It is true that for young, healthy people who previously got very attractive rates because they were known to insurers to be a really good risk, they might see that their skimpy products that they currently have aren’t available anymore and that their rates are going up once they’re being treated blindly.

At the same time, if you were an older or sicker consumer and you were being rated on your health status, you won’t be rated on it next year, you might see your premium go down. You might see That you’re getting a more generous coverage for a similar rate. And this could be a big win. The administration is also able to point to the rates that have come in being lower than they were expected to be by the Congressional Budget Office. And so that’s why they’re saying these are less expensive than expected.

RAY SUAREZ: Is this really the design of the program? Health and Human Services Secretary Kathleen Sebelius said in many cases premiums will cost significantly less than what was originally projected.

Is it because of the way these marketplaces have been structured?

LOUISE RADNOFSKY:  Well, the administration is certainly praising the competition. They’re hoping That when plans become more uniform and people are able to compare them side by side, they might make decisions based more on competition, and the insurers are going to behave accordingly.

RAY SUAREZ: There are families of different size, obviously, different levels of coverage, as we have discussed, in the different plans.

To arrive at the numbers that they released in this survey, does the administration compare apples to apples, like policies to like policies across the states?

LOUISE RADNOFSKY:  The nature of insurance and what it covers is changing fundamentally between 2013 and 2014. The way it’s priced is also changing.

There isn’t really an apples-to-apples comparison. The administration sort of tries to do it, but it isn’t able to. Nobody is truly able to do it. But if you’re interested in the fruit market, then apples to oranges is still an important comparison.

RAY SUAREZ: Well, Jeanne Lambrew, Obama’s deputy assistant for health policy, the president’s adviser in this regard, says that the exchanges have done a pretty good job of getting affordable options on the shelves.

Are we talking just about the states where the federal government will be managing the exchange, rather than states that are doing their own programs?

LOUISE RADNOFSKY:  Well, what the administration released today is data on the 36 states where it’s running some or all of the marketplaces.

There’s some huge markets in there, like Texas and Pennsylvania, that we didn’t have a glimpse into in the federal data came out. We have seen some data from other states before. We have also seen information from the states that are running their own exchanges off the Northeastern states, in California, and New York, places like this. And what we’re seeing there is actually relatively similar to what’s going on in these states. It’s been really interesting.

RAY SUAREZ: Now, competition was supposed to bring down prices, and the number of choices in these states range from just a few, like seven or eight policies, all the way to 106 different products you can choose from.

In those places where there are more participants in the market offering more products, are the prices lower? Is it working out that way?

LOUISE RADNOFSKY:  That’s certainly something the administration is pointing to. They’re very hopeful the competition has brought down prices.

The number of carriers available in a given area and the prices of premiums in a given area is sort of tied to local health conditions and the cost of delivering care, the cost of living in the area, as well as a number of other factors. It’s hard to pinpoint one.

Certainly, one of the arguments going around is that officials in states that are supportive of the law have done various things to try and make premiums lower. There’s not a lot of evidence to support that being the only factor, but it certainly could be one.

RAY SUAREZ: Let’s talk about that a little more. There are wide variations in what these policies are going to cost state to state. When you do control for how many people you’re buying for and what medal, precious medal you’re working with, whether silver or platinum or gold, in some states, it’s just so much more money. What is it that drives health care costs in those places?

What makes it more costly to get treatment, and always? It was the case before the Affordable Care Act. What makes health care more expensive in some places than others?

LOUISE RADNOFSKY:  Well, what’s really interesting is that actually while there is still a striking range to people in premiums between the states, they’re actually closer than they have been before, because before you had these state insurance practices that varied much more widely. The federal rules sort of create a new standard where at least insurance is similar state to state, if you want to make comparisons.

But it’s true that delivering care in Wyoming, for example — it’s a rural area — is generally considered to be more expensive. Delivering care in the Northeast, because of the cost of living, in Massachusetts, even before the state overhaul law, was always expensive. You would this knock-on effect in premiums.

One of the states that came in with very low premiums is Nashville — is Tennessee, and particularly in the Nashville area. It may have something to do with the way that the health economy there operates or it may just be something else to do with Tennessee. It’s certainly a really interesting study. And there’s more grist to really dell into it in future years than there ever has been before.

RAY SUAREZ: Finally, are the people who are running these exchanges for the federal part of the plan, are they expecting that customers will only slowly commit?

The windows open up on October 1, next Tuesday, for six months. Is it going to be a rush to beat the deadline at the end, or do they expect steady traffic through the whole period?

LOUISE RADNOFSKY:  They’re not entirely sure what to expect, but administration officials have been down playing the October 1 start date for a while now, saying it’s the launch of the six-month period. People can come in at any time. They do have to have coverage starting January 1 to avoid a penalty, although really, in practice, there’s probably a few weeks’ leeway even after that.

What people are being encouraged to do, particularly by consumer advocates, is to buy by December 15 to have coverage that starts January 1 to get essentially the maximum benefit out of what they’re being offered.

RAY SUAREZ: So, if you really do need health insurance, might as well buy it once it takes effect, right?

LOUISE RADNOFSKY:  Right. You can’t get coverage until — your coverage won’t take effect until January 1. You could buy it really early. You could buy it later. But either way, you are not going to be covered if you don’t currently have a plan by buying something on the new exchange until January 1. That’s the real start date.

RAY SUAREZ: Louise Radnofsky of The Wall Street Journal, thanks a lot.