Early Reports Suggest State Health Exchange (HIX) Rates are Lower Than Expected

by Patrick Riley 29 Jul 2013
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As states contiue to prepare for a looming October 1st deadline for establishing an online portal for qualified citizens to buy health insurance, payers are publishing anticipated rates, and so far, it appears to be good news. Several factors will come into play:

  • A state's regulations
  • How many insurers will participate (size of the insurance risk pool)
  • And what kind of risk insurance companies are prepared to take

Historically, when a health insurance carrier enters an unknown market or does not have every possible cost variable or structure understood, premiums are high as a means to minimize risk. But, early hard evidence in Maryland shows that HIX premiums will be 33% lower than had been expected. A 21 year old, non-smoker could get health insurance for as low as $93 a month.

An early Health and Human Services report released this month shows that the silver health insuranc plan monthly premiums, which is the option most folks are expected to choose, are an average 18% lower than anticipated. The gauge for comparison is a Congressional Budget Office (CBO) report issued earlier this year.

But these numbers are for people who DO NOT have health insurance and for folks who already have coverage, little change in premiums can be expected.

ACA will offer four levels of coverage in the HIX option, Platinum, Gold, Silver, and Bronze. Evidence from Massachusetts which instituted a very similar plan in 2006 reveals that the majority will choose the silver and bronze options. Bronze is the lowest premiums and offers fewer benefits and Platinum is the other end of the spectrum offering elite coverage with a higher price tag per month.

So, the economic outlook is not completely clear, but by all accounts, HHS, the GAO and Society of Actuaries report that rates are lower than expected for folks wanting to get health insurance for the first time in their lives. For a lot of Americans who get their coverage from their employer, the news is also good. HHS statistics show premiums for employer based coverage rose by only 3% from 2011 to 2012, the lowest increase since 1996.

Please anticipate more from me on this topic and look for up-to-date information from Frost & Sullivan about HIX. I welcome your comments and feedback below.

Find more from me on this topic and other Connected Health areas on Twitter @Patrick_FrostHC

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