PPACA rates in California come in less than expected

[shotgunner]

MSN reports today that the cost of a Silver plan sold in the California health exchange have come in lower than estimated.

Obamacare prices roll in lower than forecast- MSN Money

 

[bUU]

I wonder if this news will garner more, less, or the same amount of attention as the speculation that PPACA was going to cause rates to skyrocket.

 

[footenote]

Rates went down in MA and are lower than anticipated in CA.

This is getting attention in the political analyst / opinionator world (Wonkblog, Kevin Drum).

PPACA is the only reason I am seriously considering ER at 55. Without it, we would be stuck back in the MN High Risk Pool. We were grateful it was there, but it would push ER out a few years.

 

[Live And Learn]

Maybe I'm reading this wrong, but it doesn't look "cheaper" than any of the calculators have proposed. Perhaps its lower than something or another that was applicable to CA only.

According to the Kaiser site an unsubsized 40 year old non smoker should pay $3,857 per year ($321 / month). That amount is exactly the average on page 6 of the booklet linked in the report.

http://coveredca.com/news/PDFs/CC_Health_Plans_Booklet.pdf

 

[ziggy29]

Maybe I'm reading this wrong, but it doesn't look "cheaper" than any of the calculators have proposed. Perhaps its lower than something or another that was applicable to CA only.

According to the Kaiser site an unsubsized 40 year old non smoker should pay $3,857 per year ($321 / month). That amount is exactly the average on page 6 of the booklet linked in the report.

Well, "lower than expected" doesn't necessarily mean lower than it is now if the conventional wisdom was that premiums would rise considerably.

It's like Congressional budget math: If a program originally expecting a 7% budget increase only received a 4% increase, it's called a "budget cut".

 

[M Paquette]

I wonder if this news will garner more, less, or the same amount of attention as the speculation that PPACA was going to cause rates to skyrocket.

Less, or, if mentioned at all, are evidence of the conspiracy to rope us all into ObamaCare before going after us with a huge rate hike the next year. Never mind that California has a review process for health insurance policy changes and rate hikes that such a stunt wouldn't pass. Mediots can't be troubled by such details.

For what it's worth, the numbers came out pretty much what I was expecting. DD has a huge percentage rate hike that works out to $60/month more, from the 3::1 cap on age related rate variation. The cost for DW and I goes down a bit percentage-wise, or roughly $100/month for us, so in total we see a small reduction for our Bronze-class plans (moderately high deductible/HSA eligible plans).

 

[bUU]

It's like Congressional budget math

I disagree. Rates (in general) weren't expected to be "lower than [they are] now" because that wasn't the objective of the ACA.

 

[ziggy29]

I disagree. Rates (in general) weren't expected to be "lower than [they are] now" because that wasn't the objective of the ACA.

It sounds like you don't *disagree*, you misunderstand what I said.

I said that many observers EXPECTED rates to be considerably higher in 2014 because of PPACA, but they seem "less than expected" because the rates didn't rise to the level many expected.

I thought I was very clear on that point, but I could be wrong.

Was this not clear?

Well, "lower than expected" doesn't necessarily mean lower than it is now if the conventional wisdom was that premiums would rise considerably.

 

[bUU]

It sounds like you don't *disagree*, you misunderstand what I said.

Could be!

I said that many observers EXPECTED rates to be considerably higher in 2014 because of PPACA, but they seem "less than expected" because the rates didn't rise to the level many expected.

Okay, I guess it was the comment about it being Congressional math that threw me.

 

[ziggy29]

Okay, I guess it was the comment about it being Congressional math that threw me.

My point was that in Congressional budgeting, reducing the originally planned increase is seen as a "cut", much as these rates rising "less than expected" is seen as somehow reducing the cost of health insurance. Because the expectation was for rates to rise even more, seeing published rates less than expected *feels* like a reduction to many in some sense.

 

[footenote]

Maybe I'm reading this wrong, but it doesn't look "cheaper" than any of the calculators have proposed. Perhaps its lower than something or another that was applicable to CA only.

According to the Kaiser site an unsubsized 40 year old non smoker should pay $3,857 per year ($321 / month). That amount is exactly the average on page 6 of the booklet linked in the report.

http://coveredca.com/news/PDFs/CC_Health_Plans_Booklet.pdf

The Kaiser calculator is for illustration purposes only. It is meant to show the size of the subsidy, not the coverage to-the-dollar. Actual rates will vary by region and as insurers get experience with uptake and usage.

"Cheaper" is lower than analysts forecasted California's rates would be.

 

[Big_Hitter]

OP - many thanks for posting this!

 

[joe8012]

Seems there are always two sides to a coin.

Rate Shock: In California, Obamacare to Increase Individual Insurance Premiums by 64-146% - Forbes

 

[Mulligan]

Seems there are always two sides to a coin.

Rate Shock: In California, Obamacare to Increase Individual Insurance Premiums by 64-146% - Forbes

I read this in Bogleheads and extracted it below. I had read about this a long time ago and it really hasn't been mentioned too much. Is it possible rates were set "relatively low" because of this temporary reinsurance money from the federal government?

It is impossible to be impressed with Obamacare yet. Obamacare has programs such as Transitional Reinsurance Program and Risk Corridors that provide incentive for insurance companies to offer low premiums. These two programs are not long term answers and only last till 2016. We will know whether Obamacare works when these programs end.

In brief, the Transitional Reinsurance Program supports reinsurance payments to individual market issuers that cover individuals with high medical costs. Risk corridors protects against uncertainty in rate-setting in the first several years of the Exchanges by creating a mechanism for sharing risk between the federal government and qualified health plan issuers.

 

[bUU]

We will know whether Obamacare works when these programs end.

We will know whether ACA works when the first person stops short-changing their health because a preexisting condition that previously precluded affordable healthcare.

 

[Mulligan]

We will know whether ACA works when the first person stops short-changing their health because a preexisting condition that previously precluded affordable healthcare.

I should have deleted that first sentence out, but I just extracted the whole paragraph. Once again I was only referring to the cost factor in relations to the question on premium concerns, not the value or worth of the Act itself. But hey, thanks for the comment anyways!

 

[ERhoosier]

Agree 100% that individuals with pre-existing conditions should benefit under ACA, but some will claim ACA DOESN'T 'work' because (according to nonpartisan GAO analysis) some employers are likely to DROP current HI coverage for net loss of HI for 2-6 million employees AND retirees.
U.S. GAO - Patient Protection and Affordable Care Act: Estimates of the Effect on the Prevalence of Employer-Sponsored Health Coverage

But this thread is about individual HI costs under ACA, not who eventually wins or loses under its provisions.

Agree that the preliminary rate news so far from CA & other few states is positive, but still no reliable rate info for most states. I'm a few yrs from Medicare so I sure hope final rates for my state are as 'reasonable' as CA.

 

[fh2000]

I entered the below criteria in Covered California Calculator:

Number of People in the household: 4
Annual household income: 72,000
Age of first adult: 58
Age of Spouse: 52
Number of children under age 21: 2

I got $570 for monthly silver plan premium.

If I entered 2 people in household, no children, I got $1,328.
I tried adding one child or 2 either under 21 or above, the result is all the same: $570.

Looks like having child(ren) in ACA would produce lower monthly premium, than 2 adults.

 

[Big_Hitter]

I entered the below criteria in Covered California Calculator:

Number of People in the household: 4
Annual household income: 72,000
Age of first adult: 58
Age of Spouse: 52
Number of children under age 21: 2

I got $570 for monthly silver plan premium.

If I entered 2 people in household, no children, I got $1,328.
I tried adding one child or 2 either under 21 or above, the result is all the same: $570.

Looks like having child(ren) in ACA would produce lower monthly premium, than 2 adults.

the number in household affects the FPL threshold which affects the premium tax credit

 

[MichaelB]

I read this in Bogleheads and extracted it below. I had read about this a long time ago and it really hasn't been mentioned too much. Is it possible rates were set "relatively low" because of this temporary reinsurance money from the federal government?

It is impossible to be impressed with Obamacare yet. Obamacare has programs such as Transitional Reinsurance Program and Risk Corridors that provide incentive for insurance companies to offer low premiums. These two programs are not long term answers and only last till 2016. We will know whether Obamacare works when these programs end.

In brief, the Transitional Reinsurance Program supports reinsurance payments to individual market issuers that cover individuals with high medical costs. Risk corridors protects against uncertainty in rate-setting in the first several years of the Exchanges by creating a mechanism for sharing risk between the federal government and qualified health plan issuers.

The transitional reinsurance should have a modest, positive impact, but probably does less to lower rates and more to help an insurer enter a market while avoiding an extremely risky outcome.

What the program does is charge all the insurers a fee which is then used to compensate any insurers that suffers excessive payouts due to adverse selection, determined when their insured base has a risk profile that is substantially worse than the average of the region.

Anyone interested in more detail can read good summaries by Health reform GPS here Final Rule: Notice of Benefit and Payment Parameters for 2014 – Health Reform GPS: Navigating the Implementation Process and here Interim Final Rule: Alternative Approaches to Cost-Sharing Reduction Payment and Risk Corridor Calculations – Health Reform GPS: Navigating the Implementation Process

 

[Mulligan]

The transitional reinsurance should have a modest, positive impact, but probably does less to lower rates and more to help an insurer enter a market while avoiding an extremely risky outcome.

What the program does is charge all the insurers a fee which is then used to compensate any insurers that suffers excessive payouts due to adverse selection, determined when their insured base has a risk profile that is substantially worse than the average of the region.

Anyone interested in more detail can read good summaries by Health reform GPS here Final Rule: Notice of Benefit and Payment Parameters for 2014 – Health Reform GPS: Navigating the Implementation Process and here Interim Final Rule: Alternative Approaches to Cost-Sharing Reduction Payment and Risk Corridor Calculations – Health Reform GPS: Navigating the Implementation Process

Sounds like a necessary program. Lets say for simplicity that there are only 2 insurance companies in the exchange with same price scheme. By a quirk, all the unhealthy people sign up with "A", and all healthy people sign up with "B". For the first couple years in essence, Company "B" will have to contribute money back to "A"?

 

[wildcat]

MSN reports today that the cost of a Silver plan sold in the California health exchange have come in lower than estimated.

Obamacare prices roll in lower than forecast- MSN Money

I do wonder if the lower the than expected rate has more to do with CA being an active buyer in their state exchange rather than Obamacare itself. I think the plan rates vs one's expectations will vary a lot by state. MA & NY (also a GI market) residents, for ex, will probably be pleased w/rates & could see a break in price. At the same time, I've seen models forecasting avg 30%+ increases across markets.

 

[M Paquette]

Seems there are always two sides to a coin.

Rate Shock: In California, Obamacare to Increase Individual Insurance Premiums by 64-146% - Forbes

It's easy to get a spectacular rate increase. Pick someone young currently on a catastrophic-only plan with no well-care benefits, and caps on annual payouts. (those eHealthInsurance.com plans. Oh, and there's underwriting. Better be in perfect health...) Now compare the annual premiums for that against the cost for a 'catastrophic' PPACA plan which includes:

Essential Health Benefits Package
The Secretary will specify the “essential health benefits” included in the “essential health benefits package” that Qualified Health Plans (QHPs) will be required to cover (effective beginning in 2014). Essential health benefits, as defined in Section 1302(b) of the Patient Protection and Affordable Care Act,5 will include at least the following general categories:
Ambulatory patient services
Emergency services
Hospitalization
Maternity and newborn care
Mental health and substance use disorder services, including behavioral health treatment
Prescription drugs
Rehabilitative and habilitative services and devices
Laboratory services
Preventive and wellness and chronic disease management
Pediatric services, including oral and vision care.
Blood pressure tests
Childhood immunizations
Colonoscopies


Women's preventive health services were defined in detail via federal regulations published August 1, 2011, requiring broad coverage, without copayments or deductibles of:
Annual preventive-care medical visits and exams
Contraceptives (products approved by the FDA) - with exemptions for religious employers and a temporary enforcement safe harbor. [see recent developments and changes]
Domestic violence screenings for interpersonal and domestic violence should be provided for all women
H.I.V. screenings
Breast feeding counseling and equipment, including breast pumps at no charge.
Gestational diabetes in pregnant women screening
DNA tests for HPV as part of cervical cancer screening
Mammograms

The non-PPACA plans have a bit less coverage. For example, the Mega-Life plan that was pushed at DD's college, before the PPACA laws, offered:

• Outpatient surgery – not covered
• Outpatient facility charges – not covered
• Prescription drugs – not covered
• Chemotherapy – not covered
• Cat scans,EKG,Angiogram,MRI,Upper/Lower G.I. , etc. (1000 coverage per day)
• Hospitalization - pays up to 2,500 per year.

You get the idea. One hour in the ER, or one day in the hospital, and you are looking at a huge out of pocket expense. The Mega-life plans were called on the carpet by the state insurance commissioner because they only spent about 10% of the (admittedly low) premiums on medical care. They just didn't cover very much. That also kept the rates low.

For DD, we got a 'huge' rate increase for her individual insurance, one of those really scary percentages this editorial talks about. It's about $60 a month. Considering that unsubsidized individual insurance for the three of us is over $1000 a month, and the rates for DW and I dropped slightly, it's a wash for our budget.

For self-righteous indignation junkies jonesing for a fix, though, filtering out these big percentage numbers has to be a real mainline spike, because... "A 60% rate hike? Why, that's almost double! How can these people look at themselves in the mirror after doubling or tripling the cost of insurance for the poor working man?"

 

[Mulligan]

It's easy to get a spectacular rate increase. Pick someone young currently on a catastrophic-only plan with no well-care benefits, and caps on annual payouts. (those eHealthInsurance.com plans. Oh, and there's underwriting. Better be in perfect health...) Now compare the annual premiums for that against the cost for a 'catastrophic' PPACA plan which includes:

The non-PPACA plans have a bit less coverage. For example, the Mega-Life plan that was pushed at DD's college, before the PPACA laws, offered:

You get the idea. One hour in the ER, or one day in the hospital, and you are looking at a huge out of pocket expense. The Mega-life plans were called on the carpet by the state insurance commissioner because they only spent about 10% of the (admittedly low) premiums on medical care. They just didn't cover very much. That also kept the rates low.

For DD, we got a 'huge' rate increase for her individual insurance, one of those really scary percentages this editorial talks about. It's about $60 a month. Considering that unsubsidized individual insurance for the three of us is over $1000 a month, and the rates for DW and I dropped slightly, it's a wash for our budget.

For self-righteous indignation junkies jonesing for a fix, though, filtering out these big percentage numbers has to be a real mainline spike, because... "A 60% rate hike? Why, that's almost double! How can these people look at themselves in the mirror after doubling or tripling the cost of insurance for the poor working man?"

I personally have not minded a plan where I am responsible for the first $5500, but then 0% after that on everything in exchange for a lower premiums, but those college plans you mentioned are just plan shameful.

 

[nun]

I personally have not minded a plan where I am responsible for the first $5500, but then 0% after that on everything in exchange for a lower premiums, but those college plans you mentioned are just plan shameful.

MA is a good example of how exchanges can work. Premiums have only risen by a couple of percent over the last two years and they are now capped at the level of MA economic growth which was 3.6% last year. Absolute costs are high in MA, but not as a fraction of the median income, which is higher than many states. The great thing is I can easily shop around and I know what I'm getting. MA has a fairly high minimum level of coverage and the most inexpensive non-subsidized plan is for a 51 year old male is $350/month and has a $2k deductible, $5k out of pocket max, and 20% copay.