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HHS releases federal exchange prices—sort of

September 25, 2013

    Dan Diamond, Managing Editor

    The federal insurance exchange's calculators may not be working yet, which could complicate efforts to get the Affordable Care Act off the ground.

    But HHS has calculated about how much premiums will cost in those exchanges, which are slated to go live in 36 states next week. And that's given the agency something to celebrate.

    According to a long-awaited report released on Wednesday, nearly everyone who shops in a federal exchange will have a choice of at least two insurers, and individuals and families will have an average of 53 plans to pick from. 

    Officials also announced that premiums would be notably lower than originally expected. "Prices are affordable, and tax credits will make them even more affordable," according to Gary Cohen, director of the CMS Center for Consumer Information and Insurance Oversight.

    Cohen added that the average premium costs for the least expensive silver plan sold on the exchanges came in about 16% below the Congressional Budget Office's estimates.

    Low prices, significant variation

    The Huffington Post's Jeffrey Young notes that HHS touted several examples of how subsidies under the Affordable Care Act could significantly reduce the price of health insurance through the federal exchanges. Here's Young:

      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.

    Altogether, the actual numbers appear to be a far cry from the doom-and-gloom predictions that the federal exchanges would attract few plans and end up pricing out younger adults and working families. And strikingly, the premium costs in the federal exchanges aren't so different from the prices in the state-run exchanges.

    But writing at Politico, Brett Norman and Jason Millman observe that there's still a lot we don't know: Namely, what happens if you're not in one of HHS's cherry-picked scenarios?

    From their story:

      The report gives lots of examples of the kinds of people who will get good prices—but everyone else will remain in the dark until at least next Tuesday, when Obamacare is supposed to open its doors... The report also says nothing of the rates that small businesses can expect to pay if they decide to enter the so-called SHOP exchanges, which will offer coverage to firms with fewer than 50 employees.

    Based on HHS's weighted averages, at least, premium prices in two of the most-watched states for ACA implementation—Florida and Texas—appeared to be roughly in line or lower than health insurance costs in many other exchanges across the nation. 

    The average price for the lowest-cost bronze plan before subsidies in Florida will be $257, while the price for a similar plan in Texas will be $211 before tax credits. In comparison, the national, weighted average for the lowest-cost bronze plan will be $249.

    Why pay special attention to those two states? Keep in mind that the Obama administration has set a goal of enrolling at least 7 million Americans in the exchanges next year—and there are more than 9.5 million uninsured people in Florida and Texas alone.

    (And given that both states are sitting out of the ACA's Medicaid expansion, the federal exchange will be the chief vehicle for uninsured residents to obtain new, relatively inexpensive health coverage.)

    But the report did signal that residents in a handful of mostly rural states, like Alaska and Wyoming, may see relatively expensive premiums when purchasing through the exchanges. 

    And in Mississippi—where Humana had to step in to provide coverage after officials realized that nearly half of the state's counties were slated to go without an insurance option in the exchange—the average price for the lowest-cost silver plan is $403, among the highest rates in the nation. 

    Update, 1:50 p.m. ET: Via late-night tweet, Chas Roades made an important point: HHS may be quoting low premiums, but that's "only half the story. 'High deductibles' is the other, very important half." And many of the plans that will be available on the exchanges will require consumers to absorb relatively high out-of-pocket costs before they hit their maximum. What will that mean for bad debt (a key issue for patients and providers) and utilization?

    For more here, check out this new Avalere Health white paper which reviews benefit design in six states, finding that the average deductible for a bronze plan was $5,150.

    Three ways to prepare for the exchange tsunami

    For hospital leaders, being ready for health insurance exchanges will be the difference between 24 million challenges and 24 million opportunities.

    Watch the video now to learn more.

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