The average Obamacare recipient will pay less for health insurance in 2015, but prices vary by user, plan and location, a new analysis finds.
Worried consumers have cited that they think their health care premium costs are on the rise, but recent analyses show the price of insurance is going to vary widely - primarily depending on where people live, but also depending on medical providers, the number of insurance companies and how many people ultimately choose to enroll.
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Saturday kicks off the second open enrollment season under the Affordable Care Act, a period during which Americans can buy health insurance through federal or state websites, commonly called exchanges or marketplaces. The websites give people the opportunity to compare plans at different levels of care and allow them to qualify for tax subsidies on insurance that they could not afford otherwise. The government places caps on how much of total income Americans should spend on insurance, and then picks up the tab for the rest. Plans vary from bronze to platinum, or from lower cost and fewer benefits to higher cost and more benefits.
Health officials have stressed that Americans should compare plans that are available this year. If they do not they will be automatically re-enrolled in the same plan they purchased last year, though by doing so they may miss out on an opportunity to pay even less in 2015. Some prices will go up and others will go down; new insurance companies will be available to buy from, while other companies are leaving the market completely.
But plans vary significantly across locations and type of plan, shows an analysis from the Kaiser Family Foundation published Tuesday. On average, costs will decrease slightly for a nonsmoking American who makes $30,000 a year and purchases the second-lowest cost silver plan. With a tax credit for the plan, a consumer will pay 0.2 percent less this year, and without a tax credit will pay 0.3 percent less.
For customers who bought the lowest-cost bronze plan, prices will increase 2.7 percent with a tax credit, and 3.1 percent without one. John Holahan, a fellow at the Urban Institute, explains that tax credits are determined as a percentage of income, so a person who is receiving one may not see his or her costs increase much because the government would help cover the rest. The Kaiser Family Foundation data reflected this, showing very little variation in cost among most states after the credit was factored into the cost of the silver plan, which most people choose.
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'Overall it really does depend on where you live,' says Cynthia Cox, senior policy analyst at the Kaiser Family Foundation. 'On average there is a slight decrease, and that's very unusual for health insurance. It speaks to how competitive the market is.'
The Affordable Care Act requires people to buy health insurance or pay a tax penalty. Some Americans are covered by employee-sponsored plans, and others are covered by Medicaid, the government's health insurance program for the poor and disabled. The online marketplaces are designed to help people afford insurance when they do not fit into either category.
This year health officials expect to enroll at least 9.1 million people on individual state insurance websites or on Healthcare.gov, the federal website that 34 states use. Customers currently pay $82 per month on average and are given an average subsidy of $264 per month - or $4,700 per year - which equates to about $36 billion in government spending. This year's enrollment season will show both higher and lower prices for premiums.
'It is really variable,' says Jim Whisler, national leader for Deloitte actuarial practice. 'In some markets if you stay in the same plan you'll see increases as high as 30 percent, and in others you could see prices go down.'
The Kaiser Family Foundation data show prices for the silver plans listed before a tax credit will go down 10 percent in Phoenix; 15 percent in Denver; and 11 percent in Philadelphia, in Albuquerque and in Providence, Rhode Island.
In Minnesota, the insurance company that had enrolled the highest number of people - largely due to its low rates - will not be participating in the state's exchange this year. The result is that in Minneapolis premium costs will rise by nearly 19 percent for customers who hold thesilver plan listed with or without subsidies. Those with the least expensive bronze plans will spend 21 percent more on average this year, with or without a subsidy.
'Minnesota has gotten a lot of attention because of this big jump, but it has one of the lowest rates for health insurance in the country, so it's all relative,' Cox says.
In Alaska, rates for people with the silver plan analyzed are projected to rise 28 percent from last year before a tax credit. Insurers say they have unique market in which they need to charge higher prices, Cox says, though she added that data were not available to analyze this claim.
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A similar report from the Urban Institute earlier this month showed that the largest increases in premium prices were likely to occur in rural areas.
'In rural areas there are not as many insurers and it's harder to negotiate with hospitals and doctors because there aren't as many; you need them all,' Holahan says. 'Everyone is a must-have provider.'
Prices not only depend on ensuring that there are multiple insurance companies to choose from, but multiple providers as well, he says. Insurance companies are able to negotiate the best rates by choosing certain health care providers, he explains, creating a network of care that allows for the best bargains.
Prices also are contingent on customers. This enrollment period, health insurance companies hope to recruit more healthy young people to the marketplaces. Their participation is key to balancing the cost of a sicker population, which was more likely to sign up for health insurance early on because under Obamacare companies are not allowed to turn away people with pre-existing conditions.
'The first people to join are sicker on average, so to get the premium down then it's importation to bring on healthy people,' Whisler says. If companies cannot gain more customers during this enrollment period, then insurance could go up significantly next year, he says.
Of all Obamacare enrollees, 28 percent were young adults - meaning ages 18 to 34. Still, among those who did not sign up for coverage two-thirds said they couldn't afford it, though more than half of the total never visited an online marketplace to find out, shows a Deloitte survey from April.
'I don't think people are well-informed,' Whisler says about potential customers in the market, 'but also it's really complicated; it's hard to understand.'
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The intricacy of the program and its costs are only part of the concern. Last year customers complained of glitches, long load times and errors to personal information they submitted to the site. Though the agency has reported that improvements have been made to the site, they also largely caution that there will be imperfections.
One way customers can offset costs this year is by choosing a less expensive health plan.
' There's a very good chance that the plans consumers signed up for before are no longer the lowest-cost plans,' Cox says. ' Premium options are going to be favorable for a lot of people, but you'll need to shop around to take advantage of that.'
There are several factors to consider going into selecting a health plan, however. Cox says that people have expressed in Kaiser Family Foundation surveys that they feel they have less choice of doctors. 'You may not be able to sign up for a doctor that you want to see,' she says, adding that consumers also should check the prices of their medications and see whether deductibles increase.
Consumers are more likely to use health care services when they are covered by insurance, but the costs of premiums aren't the only ones that can be expensive.
Copays for doctor's appointments, hospital care or medications might make care for some unaffordable, and could change from year to year. Nearly half of all respondents in the Deloitte Center for Health Solutions 2013 Survey reported increased out-of-pocket health care spending in the previous year - up slightly from and 42 percent in 2011. Fifteen percent of Americans will ask about price of care before they agree to treatment, and one-third will use home remedies or over-the-counter medicines instead of going to see a health care professional, the report shows.
'The root cause of high costs are not due to the insurance program, but the care itself,' Whisler says.
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