By M.D. Kittle | Wisconsin Reporter
Ask Ohio how affordable the Affordable Care Act will be.
Buckeye State insurers expect to see the cost of essential health care benefits for individual coverage in Ohio’s exchange to soar on average 88 percent next year, according to a new analysis from the Ohio Department of Insurance.
The department analyzed individual market plan proposals from insurers against a Society of Actuaries report earlier this year that found Ohio and Wisconsin hold the dubious honor of ranking No. 1 and No. 2, respectively, on the list of states expected to be hardest hit by claims cost increases under Obamacare.
Badger State insurance rates are predicted to climb as high as 80 percent by 2017, while Ohio could see an 80.9 percent hike in insurance costs, according to the Actuaries.
A total of 14 insurance companies filed proposed rates for 214 different plans with the department, according to the Ohio Depaertment of Insurance. Projected costs from the companies for providing coverage for the required essential health benefits ranged from $282.51 to $577.40 for individual health insurance plans.
“We have warned of these increases since a state-specific study in 2011 indicated Ohio would be significantly impacted by the ACA,” Lt. Gov. Mary Taylor said in a statement.
Ohio’s current average cost to cover medical expenses for an individual health insurance plan is $223, according to the Society of Actuaries study. Based on the proposals submitted to the Department of Insurance, the average to cover those costs in 2014 would be $420 — representing an increase of 88 percent when compared to the Society of Actuaries study, according to the department.
The proposed rates still are subject to the department’s review process.
“During this process, rates may change before becoming effective,” the regulator said in its news release.
Wisconsin, like many states, still is taking filings for insurance rate proposals under what will be a federally run health care exchange in the Badger State. The Wisconsin Office of the Commissioner of Insurance won’t release details on the rate cases until they have been updated.
J.P Wieske, public information officer and legislative liaison for the office, told Wisconsin Reporter the commissioner hopes to have an analysis of the costs by late July.
Wieske said Wisconsin is starting to get more answers from the federal government, but, “We’re not so sure they are all the answers we would have expected.”
“The proof of the pudding is in the eating,” he said. “The question is going to be administratively, how is this going to work? We still think there are going to be a lot of complications going forward. This is large, fundamental change for a lot of people.”
America’s Health Insurance Plans, the national trade association representing the health insurance industry, points to a report by actuarial services giant Milliman Inc., which examines the multitude of changes that will affect health insurance consumers. As the report notes, Obamacare’s scope of covering pre-existing conditions, requiring broader benefit packages and covering uninsured Americans who have gone without medical care will benefit millions of people, but it also will increase the cost of health care coverage. Obamacare’s health insurance tax and other fees also will increase premiums, Milliman notes.
Other provisions of the law, however, will ease costs, including premium and cost-sharing subsidies, according to the study, although taxpayers will pick up the tab for federal insurance assistance.
Cost impacts of individuals are expected to vary, in some cases significantly, depending on the individual’s age, gender, location, health status, income level and the kind of coverage the consumer has today.
“(Y)oung, healthy males could see substantial increases due to the combination of the overall rate change and the age/gender rating requirements,” while “older, less healthy individuals could see rate reductions,” according to the Milliman study.
In most states, there is a a 5-to-1 age ratio built in to health insurance, meaning the older and less healthy in the insurance pool typically pay five times more for coverage than younger, healthier consumers. That age scale under Obamacare moves to 3-to-1, meaning older health care consumers save, while rates go up for many younger insurance holders.
ACA advocates say studies like the one from the Society of Actuaries omit or ignore key expectations that will help drive down costs, such as improved health care delivery, tax credits and increased competition among insurers.
“The health care law will bring down costs and save money for your people and families. It’s misleading to look at only some of the provisions of the law because, taken together, the law will reduce costs,” U.S. Department of Health and Human Services spokesman Fabien Levy has repeatedly told Wisconsin Reporter.
California last month issued a news release trumpeting the cost savings coming from Covered California — the name of the Golden State’s version of Obamacare’s health insurance exchange.
“These rates are way below the worst-case gloom-and-doom scenarios we have heard,” Peter Lee, executive director of the nation’s largest exchange, proudly declared in a statement.
The problem is, Covered California’s triumphant release compared the individual market to small business health insurance.
In a piece contesting the sunny California outlook, Forbes contributor Avik Roy does some comparison shopping and finds Covered California’s assumptions of significant rate savings in the individual market don’t add up.
“… (T)he ‘bronze’ comprehensive plan (the second cheapest plan in Obamacare), costs $205 a month. But in 2013, on eHealthInsurance.com …, the median cost of the five cheapest plans was only $92,” Roy writes.
“In other words, for the typical 25-year-old male non-smoking Californian, Obamacare will drive premiums up by between 100 and 123 percent.”
The price rises for older health care consumers.
“In California, the median price of a bronze plan for a 40-year-old male non-smoker will be $261. But on eHealthInsurance, the median cost of the five cheapest plans was $121. That is, Obamacare will increase individual-market premiums by an average of 116 percent,” Roy notes.
Same goes apparently for Ohio, where the lieutenant governor predicts trouble ahead for businesses and individuals under the Obamacare exchange.
“The Department’s initial analysis of the proposed rates show consumers will have fewer choices and pay much higher premiums for their health insurance starting in 2014,” Taylor said.
Contact M.D. Kittle at [email protected]