Health insurance costs under ACA up for debate

A study by the Kaiser Family Foundation released earlier this month found that the costs of private health insurance in Connecticut will be lower than previously expected after the Affordable Care Act goes into effect on Oct. 1. However, the merits of the new insurance policies — which will standardize health care plans — continue to be under debate.

Next month, Connecticut will open a health insurance exchange called Access Health CT, which is an online marketplace where individuals can choose from a range of health plans organized into tiers. The tiers range from bronze plans with a 40 percent copay to platinum plans with a 10 percent copay. Access Health CT expects to sell coverage to between 80,000 and 100,000 state residents.

The Kaiser Family Foundation — a nonprofit focusing on major health care issues nationwide ­— compiled data from the largest cities in 13 states, including Connecticut, California and Indiana, and found that while the face value price for a plan varied by state, these differences were mitigated by the addition of federal tax subsidies offered to enrollees with relatively low incomes. In Connecticut, the Foundation anticipated that a 60-year-old couple living at twice the federal poverty level would pay nothing for a bronze plan.

“You can get a plan now for $60 in some places,” said Gary Claxton, one of the KFF study’s co-authors. “They may not be very good plans but … these rates look pretty good compared to what we see in the group market for comparable coverage.”

The Affordable Care Act will also implement a form of community rating to reduce discrepancies in health premiums based on demographic factors. Because premiums cannot vary by more than a factor of three for all ages, sticker prices are expected to rise for young adults. Avik Roy of the Manhattan Institute, who conducted a separate analysis of health plan premiums in Connecticut and other states, warned that this provision forces young adults to bear greater costs of health care for the benefit of the elderly, and these young adults may not be able to shoulder the burden when working part-time or entry-level jobs.

Still, the Kaiser Foundation found that many young people will qualify for a tax subsidy, so the price difference should be negligible to the consumer. The study also pointed out that a 25-year-old in Connecticut could purchase a bronze plan for a monthly premium of $67 each month after subsidies. In addition, inexpensive but high-deductible “catastrophic” plans are available to adults under the age of 30.

Since gender differentiation of prices has also been prohibited, premiums are expected to rise for men, who tend to have fewer health-related costs, according to KFF data.

Roy, though, projects that once the ACA is implemented, health plan premiums will be an average of 59 percent higher than pre-ACA levels.

After tax subsidies, 27-year-old male Connecticut residents will see their premiums increase from $120 to $238, while 60-year-old males will see their premiums rise from $531 to $683 even after tax subsidies, according to the KFF study. The Congressional Budget Office previously predicted that the average premiums in 2016 would amount to $483 a month before the subsidy, but the KFF estimates that they would cost even less.

Subsidies are available for Connecticut residents earning less than $45,960 or families earning less than $94,200.

 

Clinton Wang contributed reporting.

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