Insurance Premiums a Mixed Bag under Obamacare
Policy + Politics

Insurance Premiums a Mixed Bag under Obamacare

REUTERS/Kevin Lamarque

President Obama on Friday touted California as a prime example of how his signature Affordable Care Act already is working, with state officials gearing up to provide an array of affordable health care policies and protections for the uninsured and defying the predictions of  “doom and gloomers” of skyrocketing premium costs. 

Speaking at a health care event in San Jose, Calif., Obama promoted the new law that will fully take effect next year, saying that it will provide added protections, benefits and rebates for the 85 percent of Americans who already have insurance while providing affordable or subsidized insurance for many of the more than 40 million uninsured in the country.

“If you’re one of nearly six million Californians or tens of millions of Americans who currently don’t have health insurance, you’ll soon be able to buy quality, affordable care just like everybody else” beginning Oct. 1, when new on-line private insurance exchanges will be set up in states across the country.

But not all states are faring so well under the new health care overhaul law which will take full effect next year, including Ohio – which warned this week of skyrocketing premiums for people turning to the new exchanges for health insurance coverage.

California announced late last month a wide array of choices for the 5.3 million people expected to qualify to purchase coverage through its new online marketplace, with premiumsthat surprised many consumer advocates and analysts who had been anticipating much higher prices. The 13 insurance companies approved for the exchange include the state’s dominant commercial players, such as Anthem Blue Cross, Kaiser Permanente, HealthNet and Blue Shield of California, as well as a number of regional and quasi-public health plans.

The rate for an individual plan offered by Blue Shield of California will increase an average of 13-percent for existing customers, according to a top company official. But the benefits as mandated by federal and state regulators and uniform across all health insurance packages, will be similar to the comprehensive insurance workers receive from employers, according to a company official.

Obama seized on these positive developments to validate his program, which has come under attack by Republican leaders in Congress and many state capitals across the country.  “Now a lot of the opponents of the Affordable Care Act had all kinds of sky-is-falling, doom and gloom predictions that not only would the law fail, but what we would also see is the cost would skyrocket for everybody,” Obama said today. “Well, it turns out, we’re actually seeing that in the states that have committed themselves to implementing this law correctly, we’re seeing some good news. Competition and choice are pushing down costs in the individual markets just like the law was designed to do.”

Obama conceded that there will be numerous problems or “hiccups” in the program – and that some consumers will find their premiums going up for a variety of reasons, including efforts by insurers and companies to shift costs to employees. But he said the benefits to the program far outweigh the shortcomings, and urged Republicans and conservative critics to abandon efforts to impede or undercut implementation of the new program.

“The bottom line is you can listen to a bunch of political talk out there – negative ads and fear mongering geared towards the next election – or alternatively you can actually look at what’s happening in states like California right now,” he said.

While California – with the largest number of uninsured residents of any state in the country -- is fast emerging as a poster child for the health care reform law, Obamacare’s likely impact on premiums in other states is mixed.

On Thursday, officials of Ohio’s Republican-led administration released figures showing that insurers there were anticipating an 88 percent increase in their costs under the new law. A total of 14 Ohio companies filed proposed rates for 214 different insurance plans, according to the Ohio Department of Insurance. The companies’ projected costs for providing coverage ranged from $282.51 to $577.40 per month for individual health insurance plans.

By comparison, the California state agency implementing the new law announced last month that the average monthly premium for the 13 plans that will be available on the exchange is only $321.

“We have warned of these increases since a state specific study in 2011 indicated Ohio would be significantly impacted by the ACA,” Ohio Lt. Gov. Mary Taylor said in a statement. “The department’s initial analysis of the proposed rates show consumers will have fewer choices and pay much higher premiums for their health insurance starting in 2014.”

In Maryland, Care First Blue Cross Blue Shield-the state’s dominant insurance company—proposed a 25 percent hike in its premiums. Chet Burrell, the insurer's CEO, said in April that the increase was needed to cover the cost of more sick people who will be joining the insurance rolls under health care reform, as well as new taxes, fees and assessments required under the new law.

In Nevada, individual-market premiums could rise 11 percent to 30 percent, according to a study by Massachusetts-based Gorman Actuarial. The study found that for a healthy, 25-year-old male, the monthly premium on an individual plan with a $2,500 deductible and comprehensive pharmaceutical coverage would jump 115 percent, from $119 to $257. And a family of four would pay 61 percent more, with premiums rising from $674 to $1,088. 
These prices must be approved by state regulators, so they are still subject to change.

But the picture is far more positive in Colorado, Oregon, Rhode Island, Washington State and Vermont, where state officials forecast premium rates to either remain the same or drop slightly compared to policies already on the market.  That’s because those states already highly regulate insurance policies. States with more lenient regulations, however, may see higher premiums.

Vermont, the first state to release its insurance premium rates under Obamacare, anticipates the rates will drop on the new exchange. The state says a single self-employed person earning $40,000 a year could see his monthly premium drop from $600   to $317.   For a family of four earning $34,000 a year, the state says their premium would plummet from $700 a month to only $45 a month.

The Fiscal Times’ Brianna Ehley contributed to this report.