Thursday, September 12, 2013

Six things to know about Obamacare premiums in Arkansas

Posted By on Thu, Sep 12, 2013 at 9:18 AM

click to enlarge The "Get In" campaign aims to sign people up to insurance plans on the new marketplace. Soon, consumers will know the prices.
  • The "Get In" campaign aims to sign people up to insurance plans on the new marketplace. Soon, consumers will know the prices.
Some time this week or next, the Arkansas Insurance Department will release the plans that will be available on the Health Insurance Marketplace, the regulated marketplace for private insurance created by Obamacare, which begins enrollment in October. The biggest news will be the premium prices, which impact the cost and effectiveness of Obamacare, the cost of the “private option” policy here in Arkansas, and (not least!) the prices that Arkansans shopping for private insurance will see come October. 

Whatever the prices end up being, there will be a whole lot of political spinning! After the jump, a preview, with what you need to know and look out for:

1. The Health Insurance Marketplace (HIM) — and the prices you’re going to see — is for people buying their own insurance on the private market, either directly from an insurance company or through a broker. Most Arkansans get their insurance through an employer or through a public program such as Medicare or the existing Medicaid program, and won’t be shopping on the HIM. In most cases, folks getting their insurance through an employer or a public program will simply keep the insurance they have. 

2. The prices we’ll see are the sticker prices, but hundreds of thousands of Arkansans will be eligible for subsidies that will automatically reduce the price of the premium that consumers pay. Subsidies are available on a sliding scale to people between 139 and 400 percent of the federal poverty level (approximately $15,000 to $46,000 for an individual, or $31,000 to $94,000 for a family of four). Around 87 percent of the uninsured will be eligible for subsidies (95 percent if we include the "private option" folks). Around half of those currently buying their own private insurance (and 70 percent of young adults currently buying their own private insurance) will be eligible.

3. People below 139 percent of the federal poverty level (again that’s about $15,000 for individual, $31,000 for family of four) will shop on the HIM and won’t have to pay a premium at all — the government will pick up the full tab via the “private option” version of Medicaid expansion. For that reason, the HIM prices will impact the overall cost of the “private option.” Will the premiums be higher or lower than the numbers predicted by the actuarial study presented by the Department of Human Services? This will be the first test for the cost projections used during the legislative debate over the policy.

4. Some healthy people who currently buy their own insurance on the private market will likely see higher premiums than the cheapest plans currently available. This is the “rate shock” that you may have seen on GOP social media feeds. The first thing to keep in mind is #2 above — people with low to moderate incomes will get subsidies to offset those costs. But healthy people above 400 percent FPL will probably have to pay more. And even some people (like me!) eligible for subsidies will probably still see a net increase in premiums, even after the government help.

5. While some will likely see rates go up, others will likely see rates go down (or will become insurable after years of being denied). The brings us to why we’re likely to see higher prices for healthy folks. Right now, healthy people — particularly young, healthy males — can take advantage of the various forms of price discrimination and exclusionary policies in the private insurance market. I can get a sweet deal from Blue Cross precisely because they keep sick people out (or charge them exorbitant premiums). If you want people with pre-existing conditions to be able to get affordable coverage, that has to change. Obamacare basically creates a dynamic in which the healthy are subsidizing the sick. Broadly speaking, that’s the way that insurance pools work. You might think that it’s unfair that a healthy person can’t keep the super-cheap rates they have now, but remember that without Obamacare, many folks can’t get affordable coverage in the private market at all. And also remember that healthy people can become sick!

6. The other reason that the plans will be costlier than the cheapest plans currently available (well, available to healthy people) is that the Obamacare plans will cover more and offer more protections for consumers. Stuff like maternity coverage, which is a nightmare in the private market today, where you typically have to pay a hefty fee for a maternity rider for a full year before you even have coverage. Obamacare plans also won’t have lifetime caps, so there is no risk that you’ll suddenly lose coverage if you face a medical catastrophe that accrues extremely high costs over the years.

6a. *BONUS NEWS YOU CAN USE: If your current private plan has lower rates than the Obamacare plans, it’s possible to keep it for most of calendar year 2014. The law allows folks to renew for 364 days on Dec. 31, and insurance carriers in Arkansas are promoting the practice. But be careful: going this route means you won’t get subsidies and you will face the individual mandate penalty (something that insurance companies are not being clear to customers about). You also won’t be getting the additional coverage and protections that come with Obamacare. The “early renewal loophole” may be a good option for some, but you’ll want to read the fine print (and likely do some math).

Obamacare critics say that healthy people won’t accept higher prices and don’t need the essential health benefits that will now be guaranteed. If healthy people don’t participate, Obamacare is in trouble. Ultimately, the question of whether Obamacare is a good deal will be up to the consumers buying health insurance on the HIM. We’ll know more once enrollment begins in October. Meanwhile, the premium prices will be the first big clue as to how the law is likely to function.

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