May 30, 2013 / 3:40 PM / 6 years ago

More than 100 insurers sign up for Obama healthcare exchanges: memo

WASHINGTON (Reuters) - The White House, seeking to show early success for President Barack Obama’s health reforms, said more than 120 insurers have applied to sell plans on federally-run online marketplaces that begin offering subsidized coverage in just over four months.

Based on a memo released by senior administration officials, about 5 million consumers could be able to choose from a variety of plans from at least five insurance companies with coverage that meets new quality standards set down by the 2010 Patient Protection and Affordable Care Act.

Each insurance company applicant would offer 15 separate plans on average.

The administration did not provide a state-by-state breakdown. Officials, who spoke on condition of anonymity, said some markets now dominated by one or two insurers may not see significant change.

The data was described as preliminary but officials said it was encouraging as an early indicator of consumer choice and competition that could help restrain health insurance costs and help some avoid the sticker shock that Republicans and some analysts have predicted.

Healthcare analysts cautioned that competition alone would not guarantee affordable rates or convenience.

Dr. Arthur Kellermann of RAND Health said it was important to have enough plans to provide choices and promote competition. But “having a zillion plans to pick from may be bewildering for people coming into a market they’re not that familiar with.”

The Obama health plan is under political pressure from skeptical Republicans as well as Democratic lawmakers worried that a troubled rollout could hurt their chances in the 2014 midterm elections.

The state marketplaces are expected to attract 7 million enrollees beginning October 1. The markets, or exchanges, are seen as the linchpin for the law’s package of sweeping reforms.

The data in the memo is based on insurer applications to sell plans in 19 states, including the huge markets of Texas and Florida, where the administration is setting up federal markets. Data also comes from states including California that have released data on their own marketplaces. All these states account for some 80 percent of anticipated enrollees, or about 5.6 million people.

All told, the administration will run exchanges in 33 states and provide substantial support in two others. Fifteen states and the District of Columbia are working to establish their own marketplaces. All exchanges are slated to begin operating on January 1, when the reform law comes into full force.

Some analysts have forecast rate increases of 30 percent or more for the exchanges, which will offer individuals and small groups greater coverage levels with a broader range of benefits than are often available in today’s marketplace.

A report issued on Thursday said rate hikes of up to 60 percent could occur in states with federal exchanges. The report was released by Center Forward, a Washington coalition led by former Democratic Representative Bud Cramer that aims to find common ground between Republicans and Democrats in Congress.

The administration will not release cost data for the federal exchanges until September. But officials said the level of participation so far could suggest enough competition to restrain cost growth and pointed to preliminary forecasts for state-run exchanges in California, Oregon and Washington that suggest lower-than-expected costs.

In any case, by purchasing coverage through the marketplaces, consumers with low-to-moderate wages can qualify for federal subsidies that would limit their insurance premiums to somewhere between 2 percent and 9.5 percent of annual income.

The White House memo said three-quarters of states with federal exchanges would see at least one new insurer enter the market with plans for individual coverage.

One in four insurance company applicants are new to the individual market, and about two-thirds of new entrants are looking at states that today have one dominant insurer.

New insurers include state cooperative plans set up in 6 states with the help of federal loans, according to separate market data. The states are Arizona, Louisiana, New Jersey, South Carolina, Tennessee and Wisconsin.

The administration also said it will offer multi-state plans in at least 31 states in 2014, with coverage expanding to all 50 states and the District of Columbia no later than 2017.

Additional reporting by Caroline Humer in New York; Editing by Vicki Allen and Tim Dobbyn

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