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The average price for basic health coverage purchased on health insurance exchanges created by President Barack Obama's health care reform law will be $249 a month, not counting subsidies, in 48 states reviewed by the Department of Health and Human Services, according to a government report published Wednesday.
The health insurance exchanges, marketplaces for uninsured people and consumers who don't get health benefits from their employers, are scheduled to launch on Oct. 1 for an enrollment period that runs through the end of March for 2014 coverage. This latest analysis of what the health insurance plans will cost comes just six days before people will be able to find out what they'll actually pay.
"For millions of Americans, these new options will finally make health insurance work within their budget," Health and Human Services Secretary Kathleen Sebelius said during a conference call with reporters Tuesday. Reporters were provided access to the report prior to its publication.
The figures released by the Department of Health and Human Services represent averages and prices will vary widely by geographic location as well as family size, age, tobacco use and income. Even the average price of a so-called bronze plan, designed to cover 60 percent of medical expenses not counting monthly premiums, masks big variation. The average price of the cheapest bronze plan in Minnesota is $144 while in Wyoming, comparable coverage costs $425 on average, not including subsides.
For people who currently are uninsured and who qualify for financial assistance or enrollment in Medicaid, the federal-state health program for the poor, the average prices look to be low: 56 percent of uninsured will be able to get coverage for less than $100 a month per person, Gary Cohen, director of the Center for Consumer Information and Insurance Oversight, said during the conference call.
The report cited examples of families and individuals who could qualify for subsidized coverage that would greatly reduce its cost, and Cohen said some low-income people will even be able to obtain a bronze plan with no monthly premium because of the subsidies.
A 27-year-old in Dallas who earns $25,000 a year will be able to purchase a bronze plan for $74 a month, including federal tax credits to discount the price. A family of four in Dallas with a $50,000 household income could choose a bronze plan for as little as $26 a month, including the subsidies. A family of four earning $50,000 a year purchasing the least expensive bronze plan would pay $36 a month in Charlotte, N.C., $32 a month in St. Louis and $24 a month in Ft. Lauderdale, Fla., including subsidies.
Premiums for the cheapest silver plan on 36 state-based health insurance exchanges the federal government is at least partially managing are 16 percent lower than originally projected by the Congressional Budget Office, Cohen said.
Prices for some people who already buy their own insurance will rise above today's level, however, largely because the health care reform law doesn't allow insurance companies to exclude people with pre-existing conditions, guarantees a minimum benefits package, doesn't allow women to be charged more than men, and limits how much more older people must pay. The current market favors healthier people, but is more challenging for older and sicker people, who often can't find coverage.
Less than 4 percent of people who currently have health insurance are only covered by insurance they buy directly, as opposed to getting it through work or from a government program like Medicare. While some of these people will qualify for financial assistance, some will see higher sticker prices for coverage.
The Obama administration and the states cooperating with implementation of the health law, and some independent analysts, maintain that's why prices on today's individual market for health insurance can't accurately be compared with the cost of plans sold on the exchanges.
"There have been a lot of products on the market where people thought they had health insurance, but then they found out it didn't cover hospital visits, for example," Cohen said. Improved benefits and consumer protections in exchange plans make them more valuable, he said.
"People will have high-quality coverage that will cover essential health benefits, that will be there when they need it, and the rates they will have to pay for those plans are reasonable and good rates, particularly after the application of tax credits, when they are extremely reasonable," Cohen said.
The health care law provides tax credits on a sliding scale based on income. People earning from the federal poverty level, which is $11,490 for a single person this year, to four times that amount, or $45,960, may be eligible for financial assistance. The value of the tax credit is tied to the second-cheapest silver plan where a person lives. People who earn up to 250 percent of poverty can get extra help covering their out-of-pocket expenses. In about half the states, Medicaid benefits will be available to anyone who makes up to 133 percent of poverty, which is $15,282.
Health insurance sold on the exchanges is categorized by metal levels from bronze to silver to gold to platinum, denoting how generous their coverage is. Lower-end plans generally will have lower monthly premiums, but higher out-of-pocket costs, while higher end plans will have higher premiums and less out-of-pocket spending. People younger than 30 or who can't afford insurance even with subsidies can opt for high-deductible catastrophic plans that aren't eligible for tax credits. Nearly all legal U.S. residents are required to obtain health coverage or face a tax penalty under the law's individual mandate.