It is expected that millions of uninsured Americans will enroll into Obamacare when the insurance exchanges opens on October 1, 2013. The U.S. Department of Health and Human Services (HHS) has published the monthly premium rates for Obamacare. The HHS report primarily focuses on plans with lowest premiums as consumers are more likely to choose them. As per the report, the average monthly premium for Obamacare is $328. The rates are estimated on the basis of data for approved insurance plans in 48 states (36 states where the federal government will run the exchange and the District of Columbia and 11 other states which will run their own exchange).
Each state exchange will offer four types of insurance plans: platinum, gold, silver and bronze. Platinum plans have the highest premiums, but lowest out-of-pocket expenses; bronze plans have lower monthly charges but feature more cost-sharing where consumers have to pay for the portion of their healthcare costs that the plan does not cover. Gold and silver stand in between the platinum and bronze plans. However, one question that’s in the air is – how affordable is Obamacare?
Whether Americans at large will consider plans as offering good value and whether they will be able to afford the monthly premiums and out-of-pockets costs that most plans feature will depend on various factors such as age, health issues, where they live, how much they earn and whether they qualify for free or low-cost care through Medicaid or Medicare. The paradox is that some people may also end up comparing the cost of buying a plan with the penalty for not having insurance to see if it is cheaper to go without coverage!
The average premiums for the lowest cost silver plan, second lowest silver plan and lowest cost bronze plan are $310, $328 (regarded as most popular for balance of coverage and out-of-pocket costs) and $249, respectively. Premiums are comparatively higher for states with high rural populations (for instance, Mississippi at $448 per month, Alaska at $474 per month and Wyoming at $516). For the lowest cost mid-tier plan in Texas, the monthly premium for a 27-year-old in Austin is $169 and in Dallas-Fort Worth is $217.
According to the U.S. Senate Republican Leader Mitch McConnell, new prices are costlier for Americans while comparing to what they have paid for individual plans before. The Affordable Care Act says the insurance plans must cover a wider range of preventive and other medical services and that an applicant cannot be denied coverage based on his/her prior illness.
The HHS report also says that the premium costs can be reduced further with federal subsidies, which will be given for the consumers who earn up to 400 percent of the federal poverty level or a couple who earns $62,040. For example, a 27-year-old with an Income of $25,000 would need to pay $336 as monthly premium for second lowest silver plan in Jackson, Mississippi. After the tax credit, the amount to be paid would be only $145.
Even so, Americans are not still aware of how the plans will be, the kind of coverage they offer and whether the coverage for plans offered by the exchange would be as good those available outside of it. Also, there is no clear idea about deductibles, coinsurance and out-of-pocket costs. Though premiums will largely determine the popularity of plans available on the health insurance exchange, they are only one aspect of health care cost.
The many questions on the affordability of health insurance will be answered over the next few months when the exchanges begin operation.