Insurance Department releases plans for Obamacare marketplace | Arkansas Blog

Monday, September 23, 2013

Insurance Department releases plans for Obamacare marketplace

Posted By on Mon, Sep 23, 2013 at 11:32 AM

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The Arkansas Insurance Department today released the plans that will be available on the Arkansas Health Insurance Marketplace, the regulated marketplace where consumers will buy private health insurance, with enrollment beginning next month. 

There will be 71 plans offered, divided into levels based on coverage and price—bronze, silver, gold—with gold being the most expensive and offering the most coverage. 

Rates depend on age and region of the state (see map here) so there is a lot of variance. We'll have more details soon. The Insurance Department highlighted two examples (both of these sticker price BEFORE SUBSIDIES).  

For a 30-year-old individual in Arkansas, the average base premium of plans to be sold in the Marketplace will be $284.74 a month.

For two 40-year-old adults with two children, the average base premium of plans to be sold in the Marketplace will be $948.82.

The new marketplace was created as part of the healthcare law and as a handy shorthand, we’ll call these Obamacare plans. But here’s what we mean by that: Four private insurance companies, Arkansas Blue Cross and Blue Shield, the national Blue Cross and Blue Shield, QualChoice, and Centene, are offering plans on the marketplace. Because of Obamacare, all of these plans must cover ten essential health benefits, and they are not allowed to deny coverage or charge higher prices based on pre-existing conditions (more on what that means here and here). 

These plans are for people buying their own insurance on the private market, either directly from an insurance company or through a broker. This doesn’t impact the overwhelming majority of people, who get insurance either from an employer or from a big public program like Medicaid or Medicare.

Scanning the rates, appears like there are three big headlines from the plans today, though all of them more or less in line with what we’ve been expecting: 

1. The premiums are lower than what was projected by the actuaries that the Department of Human Services used to predict the cost of the “private option.” If that trend continues in future years, the total gross cost of expanding Medicaid via the “private option” will be significantly less than projected during the legislative debate. (For the state of Arkansas, that would mean the total net projected savings to the state’s bottom line would be even higher than the current projection of almost $670 million over 10 years).

2. Arkansas continues the national trend of premiums coming in lower than the average rate predicted by the Congressional Budget Office. That means the cost to consumers and the overall cost of Obamacare is less than expected.

3. For some healthy people currently buying cheap plans on the private market, rates are going up. 

For background on what all of this means, read this, our post which detailed the context of these numbers. But I want to again highlight three points in particular about these plans. 

1. What you’re seeing is the sticker price but most people shopping on the exchange will pay less, sometimes dramatically so. That’s because subsidies will automatically lower that price.

  • 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). 

  • People below 139 percent FPL will pay zero for premiums via the “private option” for Medicaid expansion. 

  • Around 87 percent of uninsured adults eligible to shop on the marketplace 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.

2. While healthy people will likely see rates go up, people with pre-existing conditions will often see rates go down. There’s a tradeoff here. Which do we value more: cheap rates for the healthy or coverage/security for all?

3. Obamacare plans offers more coverage and more protections than the cheapest plans. In fact, if people end up having health issues, they will often save on total health costs, including out of pocket costs, even if they’re paying more for premiums.

How much higher are the Obamacare premiums than the cheapest plans currently available on the private market? Avik Roy, a former healthcare advisor for Mitt Romney (and a familiar face in Arkansas during the “private option” debate, when Americans for Prosperity brought him to a townhall the night before the vote in the House) has a tool that looks at this. The interactive map allows you to compare the cheapest plans available today with the Obamacare plans. There are various quibbles one can make (and keep in mind that the cheapest plans may have extremely high deductibles and barebones coverage), but you can read Roy’s methodology here and it’s a good baseline for pre-Obamacare cheap coverage in Arkansas.

Roy found that a non-smoking male can get these premiums today: (27 years old: $54; 40-year-old $81; 64-year-old, $287) And a non-smoking female (27-year-old: $91; 40-year-old: $125; 64-year-old: $268). So there will be some dramatic jumps in price for some. 

Now again, worth repeating, most people shopping on the Arkansas Health Insurance Marketplace will get subsidies and won’t actually see the “sticker shock” above. But people who make more than 400 percent of the federal poverty level will, and even accounting for subsidies, some healthy people who buy private health insurance may end up seeing a net increase in premium costs.

There will be lots of debate in the coming weeks about whether those premiums represent “rate shock” and more broadly about whether the changes to the healthcare landscape that Obamacare is imposing are an improvement on the status quo or a TRAINWRECK!!

But the big question — the one that goes to the heart of whether Obamacare will work or not: Will consumers that don’t get health insurance through a job or a public program think that the Obamacare plans are a good deal? Or a good enough deal given that the alternative is paying a penalty? Anyone that says they know the answer for sure is lying. Enrollment starts in October. 

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