By Caroline Humer
Sept 25 Americans will pay an average premium of
$328 monthly for a mid-tier health insurance plan when the
Obamacare health exchanges open for enrollment next week, and
most will qualify for government subsidies to lower that price,
the federal government said on Wednesday.
The figure, based on data for approved insurance plans in 48
states, is the broadest national estimate for the cost of
coverage when President Barack Obama's healthcare reform law
takes full effect next year. The prices of the new plans are at
the heart of a political debate over whether they will be
affordable enough to attract millions of uninsured Americans
when enrollment begins on Oct. 1.
Obama, who is facing a Republican threat to eliminate
funding for the law or shut down the federal government next
week, said the fierce opposition stems from the fear that
Americans will embrace the program.
"Essentially they're saying people will like this thing too
much, and then it will be really hard to roll back," Obama said
on Tuesday in a conversation about healthcare with former
President Bill Clinton. "What we're saying is, just look for
yourself. Take a look at it, and you will discover that this is
a good deal for you."
The Obama administration is counting on signing up 7 million
Americans, including 2.7 million younger and healthier consumers
who are needed to offset the costs of sicker members, in the
first full year of reform through the state exchanges.
A major factor in determining the price was the level of
competition among insurance companies, with rates significantly
higher in states with fewer players, the U.S. Department of
Health and Human Services said in its report.
The new health plans are organized in five tiers with
different monthly premiums and out-of-pocket costs: catastrophic
coverage, bronze, silver, gold and, in some areas, platinum.
The national average cited by HHS refers to the
second-cheapest among silver plans on the market - which many
healthcare economists expect to be the most popular for their
balance of coverage and out-of-pocket costs. On average, the
least expensive plans in this group were reported in Minnesota,
where it costs $192 per month, and Tennessee, $245.
At the high end of pricing are states with large rural
populations, where it can be more expensive to deliver
healthcare: Mississippi at $448 per month; Alaska, $474; and
Wyoming, $516. Florida came in right at the national average at
U.S. Senate Republican Leader Mitch McConnell said the new
plan prices were still a costlier proposition for Americans,
based on what they may have paid for individual plans in the
past. Under the Affordable Care Act, insurance plans must cover
a wider range of preventive and other medical services and
cannot turn away applicants based on prior illnesses.
"Even the Administration is having a terrible time spinning
this law," McConnell said in a statement. "About the best they
could claim was that some premiums would be lower than
projected. Note that I didn't say lower, but lower than
Debate over whether Obamacare will prove affordable for
millions of uninsured Americans has intensified in the past few
months, as states have announced rates. States that have
supported the law said it would lead to lower prices. Others
that have opposed the reform - including Georgia, Florida, and
Indiana - warned of "rate shock" for consumers compared with
what they could buy on the individual insurance market a year
HHS said the average price was 16 percent lower than its own
projections on premiums. In addition, consumers who earn up to
400 percent of the federal poverty level, or $62,040 for a
couple, will qualify for subsidies that will lower the price
The data is mostly based on 36 states where the federal
government will operate the insurance exchange. About 14 other
states and the District of Columbia are running their own
exchanges. Three states - Hawaii, Kentucky and Massachusetts -
had not released premium information at the time of the report.
States with the lowest average premium tend to have more
insurance companies offering plans, the report said. It said
eight issuers on average were selling plans in the states with
average premiums in the lowest 25 percent, while states with
average premiums in the top 25 percent had only three insurers
Pricing varies widely not only by state but by community.
For instance, Florida has 67 different geographical rating
areas, and their prices for the second-lowest-cost silver plan
range for a 40-year-old from $239 to $352 a month.
"The take-up of the exchanges is going to vary significantly
by state and by community as word gets out," said Michael
Sparer, professor of health policy at Columbia University's
Mailman School of Public Health.
Texas has been among the Republican-led states most fiercely
opposed to Obamacare, but its monthly rates came in below the
national average, HHS said. With 76 plans to choose from in
Austin, a 27-year-old would pay $169 per month for the
lowest-cost mid-tier one. In Dallas-Fort Worth, that monthly
premium was $217, from 43 plans available, the report said.
"The rates in Texas are looking good," said Gary Cohen, who
is charged with overseeing the exchanges at the Centers for
Medicare and Medicaid Services.
Insurance industry surveys show rates are the most important
factor in drawing consumers to the exchanges, which is key to
making the healthcare overhaul work.
Another concern has been that insurance companies will limit
access to doctors to keep prices low. Cohen said that these
so-called "narrow networks" were a trend before the Affordable
Care Act took effect.
The law was adopted in 2010, but two of its main pillars,
the health exchanges and the expansion of Medicaid, take effect
in 2014. Household names like UnitedHealth Group Inc,
Aetna Inc, WellPoint Inc and Humana Inc
will sell plans on at least some exchanges. Newcomers such as
Medicaid specialist Molina Healthcare Inc will also play