I was greeted yesterday by the following press release in my email: ” Health Insurance Costs to Increase Significantly Under Affordable Care Act.” It came straight from the Ohio Department of Insurance.
My first thought was (after the cursing was over), “Well isn’t THAT ironic?” Since when does “increase significantly” and “Affordable” belong in the same sentence?
Ohio consumers now have the first prediction of premium costs when the Affordable Care Act goes into effect January 1
Ohio consumers have been anxiously waiting to get any indication of health insurance premium estimates beginning in 2014. As a health insurance agent, to say I’ve been anxiously waiting would be an understatement. I KNEW that premiums had to increase. It’s only logical- when you mandate guarantees to coverage and services, there’s a cost associated with it. I’m not being political, I’m being realistic. There ain’t no free lunch, folks.
I knew they would increase. But by HOW much? That was always just a guess.
That appears to no longer be the case.
Ohio Department of Insurance (ODI) projects 88% increase
In a recent press release by the Department, the 88% was calculated from the 14 companies who have submitted 214 plans to be sold in the Ohio public marketplace (FKA exchange). As stated in the ACA Proposed Rates Fact Sheet:
Based on the information filed with ODI by the 14 companies, the average proposed index rate (the projected costs from the companies for providing coverage for the required essential health benefits) for individual plans to be sold on the federal exchange is $420. The Society of Actuaries study released earlier this year estimated Ohio’s current rate in today’s market is $223. When compared to the Society of Actuaries study, the $420 average index rate represents an increase of 88 percent.
What does this mean in English? And what in the world is an actuary?
In my opinion, it means that all 214 plans premiums were tallied and an average taken. The cost of the insurance averaged $420. The Society of Actuaries forecasted the cost would be $223. From $223 to $420 is an 88 percent increase. The Actuaries seem to have underestimated the premium impact. FYI: Actuaries determine what premiums company charge. In other words, they make the rate. Yep- pretty important people.
We finally have real numbers as to the impact of the Affordable Care Act on Ohio health insurance costs
We’re no longer guessing at premiums. These are not “pie-in-the-sky”, hypothetical situations. To quote a popular saying, “Shit just got real.”
All plans are being carefully reviewed by the Department, who can request changes to submissions that result in rate adjustments.
ODI did offer a range of premiums as well:
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. *My Note- a family rate was not offered in the press release- however, based on my experience, if it’s not double the individual rate, I’d be surprised.
So, although the proposed premiums are not the final word, it seems likely they’ll be pretty close.
What does this mean to you?
I think the biggest takeaway from this announcement is that the Affordable Care Act may not be as “affordable” as previously thought. If you were paying $500 per month before and your new premium is 2014 is $500, the facts are clear- the numbers are still the same.
What may be the saving grace is the availability of tax credits and subsidies to either discount premiums or reduce your out-of-pocket costs.
Ohio consumers may qualify for help with increased health insurance costs via tax credits and subsidies
The most significant carrot with the Affordable Care Act is the availability of tax credits and subsidies based on your income. Specifically- your income as a percentage of the Federal Poverty Level (FPL). The chart below illustrates the 2013 FPL for both an individual and a family of 4:
The Affordable Care Act law states subsidies are available to those between 138-400% of the FPL. The next chart gives you an income range where the subsidies would apply:
What would be most interesting to me is what percentage of Ohio’s population falls between the ranges shown above. I have a feeling it’s a decent majority. And if so, then a large portion of the population would receive some sort of assistance to pay premiums or reduce out of pocket expenses. Those at the lower end of the spectrum will get more assistance and it decreases as income rises.
My next post will share a tool that can be used to estimate your health insurance premium (regardless of state) based on the above information. I think you’ll find it very valuable and useful as you budget for 2014.
Sound off- what do you have to add to the above? What did I miss? What does the news from the Department mean to you?
P.S. You can read more about the Affordable Care Act (AKA Obamacare) in my previous posts- Obamacare Basics Part 1-What It Means For You and Obamacare Basics Part 2: Individual Health Insurance Options