Obamacare Individual Premiums To Increase 30-40%
By Dr. James Palermo // August 4, 2013
MORE FLORIDIANS EXPECTED TO ENTER INDIVIDUAL MARKET
The Patient Protection and Affordable Care Act (PPACA, aka Obamacare) will have two primary impacts on the Florida individual healthcare insurance market, in which consumers pay their own way without help from employers, when enrollment starts on October 1.
First, insurance companies can no longer screen out and exclude coverage for customers who may have pre-existing conditions or are considered higher health risks.
The above PPACA provision drives the second major consequence: a sharp increase in premiums, estimated by state insurance officials to be in the range of 30 to 40 percent for those who buy their own policies on the new federally-run exchange under Obamacare.
OIR LISTS HEALTH PLANS AND PREMIUMS FOR STATE’S FEDERALLY-RUN EXCHANGE
The premium rate increase projections were based on the state’s comparison of the average monthly cost of the standard “silver” plan to be offered on the exchange by the 11 plans participating in the individual market for 2014 versus the average monthly cost of a hypothetical plan ($293) offered today with similar benefits.
The silver plan is not the least expensive. Lower-cost bronze plans with high deductibles and higher-priced gold and platinum plans will also be available on the exchange.
In a recently released report from Florida’s Office of Insurance Regulation (OIR) that lists the participating insurance plans and the monthly premiums for their “silver” plan, the rates range from a low of $315 a month for a Humana HMO to $464 a month for Sunshine State Health Plan. The list of participating health plans includes Brevard-based Health First Health Plan, which offers their monthly “silver” plan premium at $373.
RATE REVIEWS ESSENTIAL TO UNDERSTANDING PPACA IMPACT ON FLORIDA
Federal authorities and some consumer groups have challenged the state authorities and questioned the “comparison” methodology used to make the projections, claiming that it is impossible to make direct comparisons to existing plans.
In reference to the state’s projections, Florida Insurance Commissioner Kevin McCarty said in a statement, “Although the form and rate review process is ongoing, we have released this information to help the public and our state policymakers understand the full extent of federal health care reform and its imminent impact on our state.”
McCarty points out that premium increases are driven by the fact that the plans available on the exchange must offer better benefits than the ones many people have today, must enroll anyone regardless of pre-existing medical conditions, and are limited on how much a person’s age can affect his/her health plan costs.
Also, there is a difference between the cost of premiums and the amount that a consumer will pay because the increase doesn’t take into account the federal tax subsidies that are expected to help millions of Floridians. The PPACA tax subsidies cut the price of health coverage purchased through the exchanges for those with incomes up to four times the poverty level.
STATE’S AVERAGE ACROSS THE BOARD RATE INCREASE 5-6 PERCENT
Most Americans must have health insurance next year or face federal fines. Only a small fraction of Floridians–about 850,000–have obtained coverage on the individual market in the past. However, given that insurers can no longer turn people away as of January 1, and, in anticipation of Obamacare, employers are restructuring to move more employees to part-time status and off group benefits, that number is expected to grow.
According to the OIR, small-group plans will see rate increases that average 5 to 20 percent, but the majority of Floridians who have private insurance are in larger groups and will see a rate increase of about 5 to 6 percent.
Factoring in the relatively small percentage of Floridians (historically 5 percent) who purchase coverage on the individual market with those in small and large groups, the OIR projects the state’s average increase in health-insurance premiums under the PPACA for 2014 will be in the range of just 5 to 6 percent. However, as more individuals go to the exchange with its higher premiums, that average increase will rise.