Health insurance plans in Obamacare’s state exchanges will cost less than initially projected, according to a study released Thursday that the administration and its allies said is proof that the law is working as intended.
Analysts said the low prices are attractive but could come with an unintended consequence of enticing consumers to buy plans with less coverage than they need, which could leave them with bigger bills if they do need major care.
The Kaiser Family Foundation said the lowest-cost plans will be affordable — $111 a month for a 25-year-old making less than $29,000 a year in New York City or $57 a month for a 60-year-old in Denver, once taxpayer subsidies are factored into the equation.
“While premiums will vary significantly across the country, they are generally lower than expected,” Kaiser said in its brief.
The exchanges are insurance marketplaces where the uninsured can buy plans, often with the help of income-based taxpayer subsidies. The exchange program is considered a key to making sure the Affordable Care Act works as intended.
Broadly speaking, the study supports the Obama administration’s positive outlook for the reforms with less than a month before the exchanges open for enrollment.
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But analysts warned that affordability comes with the risk that enrollees might be drawn to cheaper plans with high deductibles. Young adults and other consumers might jump at the chance to spend less at the time of purchase only to shell out thousands of dollars in out-of-pocket costs if something goes wrong.
“If you really get sick, you’re going to have protection that’s not too great for the first $2,000,” said Timothy Jost, a health care reform scholar at Washington and Lee University School of Law.
Also, the study is unlikely to persuade Republican critics of the law who say the government overstepped its bounds by forcing Americans to purchase health care coverage. Insurers no longer can reject consumers with pre-existing conditions and must cover maternity and mental health services, causing fears that premiums could soar if risk pools are not balanced with young and healthy enrollees.
Indeed, conservatives rely on this point to criticize Obamacare. They note that young and healthy people essentially are needed to subsidize benefits for others, whether it is in their interests or not.
Democrats seized on the Kaiser findings, which generally came in lower than the Congressional Budget Office’s most recent projections.
“We’re seeing in the states that competition and transparency in the marketplaces are consistently leading to premiums that are lower than expected, and for those who qualify for a tax credit, costs will be even lower,” said Joanne Peters, a spokeswoman for the Health and Human Services Department.
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Congressional Republicans point to states where studies suggest premiums will rise, including Georgia, Indiana, Ohio and Wisconsin. A breakaway group of conservative lawmakers plans to use an upcoming budget showdown to defund the law before it takes hold.
Kaiser looked at what insurance will cost for people ages 25, 40 or 60 who live in major cities in 17 states and in the District of Columbia. Eleven are setting up their own exchanges, and seven have let the federal government do it for them. The exchanges open Oct. 1.
Kaiser did not attempt to compare premium costs with pre-Obamacare rates because of significant changes in who and what the plans must cover under the law.
Starting next year, coverage sold on and outside of the exchanges must cover a minimum set of services and be organized into five levels of cost-sharing, from catastrophic at the low end to platinum, the most protective, according to the foundation.
A family of four in Baltimore would pay $164 for the lowest-cost bronze plan after subsidies kick in, or $409 for the second-lowest silver plan.
The silver plan, with the second-lowest cost, is significant because it will serve as a benchmark for calculating the premium tax credits for enrollees, Kaiser’s brief said.
The Obama administration says Republican critics are letting politics stand in the way of health care benefits for low-income Americans. Yet the White House has delayed certain provisions of the law and faces a mutiny from union leaders who supported the law in its infancy.
Against this backdrop, a Congress divided between a Republican-led House and a Democrat-controlled Senate is unlikely to pass any legislation to fix coverage gaps or other glitches in the sweeping law, which Democratic majorities muscled through Congress in 2010.
Another study published Thursday said two in five adults who were uninsured at some point in the past two years and live in states that opted not to expand their Medicaid enrollment under Obamacare next year will not be eligible for coverage options under the sweeping reforms.
The Commonwealth Fund said this is because the Supreme Court allowed states to decline to expand the federal-state entitlement to those making up to 138 percent of the federal poverty level without risking existing federal funds for the program.
Fewer than half of the states have decided to expand enrollment next year, leaving a quandary for those in the remaining states who do not qualify for subsidies on the exchanges by making 100 percent to 400 percent of the federal poverty level.
The fund’s researchers said the law’s authors “assumed they would be eligible for the Medicaid expansion; they did not anticipate the Supreme Court decision.”
• Tom Howell Jr. can be reached at thowell@washingtontimes.com.
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