How the insurance exchanges stack up

Kelly Kennedy | USA TODAY

WASHINGTON — Most Americans buying insurance from new state health exchanges will have at least two insurers to choose from, and six out of 10 people could pay less than $100 a month in premiums, a report to be released Wednesday by the Department of Health and Human Services shows.

The report analyzed insurance plans and premiums in 36 states where the federal government will either run or help run the exchanges, which are websites where state residents can shop for and buy health insurance starting Oct. 1.

In those 36 states, 95% of people will have two or more plans to choose from, while the average premium for all states and all ages will be $328, according to HHS. However, anyone who makes less than 400% of the federal poverty level, or about $94,000 for a family of four, will be eligible for a federal tax subsidy that will immediately be deducted from the cost of the insurance policy.

Wednesday's report is the latest review of exchanges' rates and policies from HHS and various states. Most have shown lower rates than anticipated, as more insurers have entered the markets and pegged their prices to capture more customers. The Obama administration estimates that 7 million uninsured Americans will use the exchanges to buy insurance in the six-month enrollment period that starts next week and ends March 1.

"Individual markets in way too many markets were dominated by one or two insurers," HHS Secretary Kathleen Sebelius said, adding that they now have an average of 53 plans to choose from. "The bottom line is that January 1 will be a new day for millions of Americans."

Uninsured Americans will be able to choose from four levels of plans, starting with bronze and moving upward to silver, gold and platinum. Catastrophic coverage will be available for people younger than 30. Because of the 2010 health care law, which created the exchanges, insurers may no longer prohibit people from buying insurance or charge them more if they have pre-existing medical conditions.

"About one in four insurance companies are newly offering in the individual market, a sign of healthy competition," said Gary Cohen, director of the center for consumer information and oversight. "The prices are affordable. I think when you factor in the tax credits, you'll see the lowest cost bronze average is only $93."

The report broke down insurance costs for a variety of prospective buyers based on their ages, family sizes and states. For example, a 27-year-old making $25,000 in Dallas could buy the second-lowest silver plan for $223 a month before the tax credit and $145 a month after the credit. A bronze plan would cost the same person $74 a month after the tax credit.

States with the lowest rates and most competition tended to be states that had their own marketplaces, rather than using the federal marketplace, the report showed.

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Analysts outside the government say rates under the law will be higher. Avik Roy, a senior fellow at the Manhattan Institute for Policy Research, wrote in a column in USA TODAY that the law will increase premiums in the individual insurance market by 24%.

Don Stewart, a spokesman for Senate Minority Leader Mitch McConnell, R-Ky., said there's a difference between insurance rates being lower than HHS expected and lower than they are now on the market. "The White House is making every effort possible to spin the bad news that seems to come every day, but the American people know that even this rosy scenario is not what they were promised when Democrats were ramming this bill through Congress on a party-line vote," Stewart said.

Cohen said those comparisons don't take into account the law's provisions that allow customers to see what each policy covers and how much it costs.

But rates for residents of some states will rise, Cohen said. That's particularly true for residents of states that did not provide much regulation about what types of coverage insurers must provide. Rates may also increase in places where health costs are higher in general — a kidney stone in New York City might cost more than a kidney stone in Indianapolis, for example.

Potential insurance customers can check www.healthcare.gov on Oct. 1 to find out actual costs.

None of the operation of the exchanges would likely be affected by a government shutdown, Cohen said. The law's budget is made up of mandatory spending, not the discretionary spending that would be affected by a shutdown. But Cohen said the Office of Management and Budget is working with other agencies to make sure work continues. He called the prospect of a shutdown "irresponsible."

To see the complete report, visit http://aspe.hhs.gov/health/reports/2013/MarketplacePremiums/ib_marketplace_premiums.cfm.

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