With the release of premium rates by the Department of Health and Human Services (HHS), we now have a more complete picture of the costs of coverage in the marketplaces. While further analysis will continue to shed more light on the value of the coverage in the marketplaces, it appears that premium rates in most states will be below the Congressional Budget Office’s (CBO) initially projected costs. That is good news for enrollees.
Also, the HHS report provides encouraging information about the number of issuers and health plans in addition to the cost of premiums before and after the tax credit. Further questions, however, still remain regarding the effects of competition and affordability—especially in states with only one issuer.
For the good news, in the 36 states that will have a federally-run marketplace, 95% of consumers will have a choice of 2 or more health insurance issuers. The number of participating issuers range from a low of 1 to a high of 13. In addition, there is an average of 53 qualified health plan choices available, which range from a low of 6 to a high of 169 plans that include the bronze, silver, gold, and platinum options. The weighted average of the second lowest cost silver plan is 16% lower than the original CBO estimates in 48 states. After applying the tax credit, HHS reports that an average young Texan with an income of $25,000 could pay $145 per month in the second lowest cost silver plan, $133 for the lowest cost silver plan, or $83 for the lowest cost bronze plan.
For the bad news—or a lingering question: the report doesn’t indicate how many states have only 1 issuer and further, how the lack of competition in some states will affect the number of enrollees or the value of the coverage. It does, however, note that states with lowest average premium tend to have higher number of issuers offering qualified health plans (QHPs).
Nevertheless, this is an important moment in the life cycle of the marketplace roll-out as it now appears that plan options will be available in every state across the country. Moreover, it appears that competition in the individual market in many states is working. However, the story does not end there (see my earlier article).
Eligible enrollees must now go to the marketplaces and begin shopping for a plan. We know precious little about how the marketplaces will work to assure seamless enrollment or if the process will provide the right subsidy and identify a plan that meets enrollee needs. If enrollees are not happy with the shopping experience, they may not complete the enrollment process. Even before that, those eligible for the new benefit must be driven to the marketplaces to select a plan. One recent poll shows that 76% of respondents have very limited awareness about the marketplaces and only 32% of the uninsured were likely to purchase insurance through the marketplaces; moreover, we still don’t know much about how these eligible uninsured are going to respond to the marketing and outreach efforts currently underway, particularly in light of the strong negative impressions that are already formed.
Assuming initial enrollment glitches are manageable and enrollments are processed relatively smoothly with the correct subsidy (perhaps an optimistic assumption during early enrollment), the defining moment for all plans and enrollees is at the end of the enrollment process—when the beneficiary must make payment. An enrollment in the marketplace is not effectuated until payment is made to the plan for the first month’s coverage and it is not clear at this point how many of these new enrollees will voluntarily make that first premium payment, and then continue to make that payment throughout the year (see my earlier article).
Many of these new enrollees are low-income and many have not been confronted with a compelling health event – i.e., illness or accident—to demonstrate the value of health insurance. Some low-cost plans may not have a sufficient provider network to keep new enrollees happy; others may require high deductibles and co-pays that will lead some enrollees to question plan value. If enrollees, especially young and healthy enrollees, don’t see the value of paying a monthly premium for the entire year, then premiums for others could subsequently skyrocket and the marketplaces could face an uncertain future.
The HHS report provides some good news for today, but anyone declaring victory should be reminded that the game is just beginning.