Less than a week before the Affordable Care Act insurance marketplaces open for business, the federal government announced that average costs in Florida and other states will be lower than it once projected.
The federal government says the national average monthly premium for a single person's midtier "silver" plan is $328 before tax credits. That's 16 percent lower than the Congressional Budget Office had originally estimated.
"The bottom line is that Jan. 1 will be a new day for millions of Americans," said U.S. Department of Health and Human Services Secretary Kathleen Sebelius Tuesday in a call with reporters. "Coverage will be more available and accessible than ever before."
In the Tampa-St. Petersburg-Clearwater metropolitan area, the federal government estimates that a family of four with an income of $50,000 a year could purchase a "silver" plan for $282 a month after tax credits are factored in.
The uninsured, people who purchase their own policies and workers who can't get affordable coverage through their employers can pick a plan on the marketplace and also learn if they qualify for a tax credit subsidy to offset the monthly premium costs. The credits are available to individuals and families who earn between one and four times the federal poverty level, about $24,000 to $94,000 for a family of four.
The premiums released this week apply only to plans sold on the government-run marketplaces. People who buy individual coverage elsewhere or are covered through their employers are not subject to these figures. People insured through Medicare and Medicaid also are not part of the marketplace system.
Officials said the report, which presented averages without details on specific plans or insurers, is the last bit of information it will release before Tuesday when the Web-based marketplaces go live.
Many Floridians will have about 100 health plans from which to choose, nearly twice the national average.
"Florida does have a competitive market for health insurance, and you'll see the Florida rates come in quite well," said Gary Cohen, deputy administrator and director of the Center for Consumer Information and Insurance Oversight at the Centers for Medicare & Medicaid Services.
The Legislature's decision to prevent the state from regulating health insurance rates for two years doesn't seem to have had a negative effect on premiums at least immediately, Cohen said, though the federal government still believes the decision was "unfortunate."
A catastrophic plan — only available to people under 30 —would cost a 27-year-old Floridian $132 a month, but subsidies cannot be applied to these plans. The lowest cost "gold" plan, the second-highest in the four tiers of coverage, would be around $229 a month without a subsidy.
Mitch Lubitz, a Tampa-based spokesman for Humana, declined to provide additional details about plans it is selling on the marketplace. But he said Humana has been confident that it could offer competitive coverage in Florida, where it has an established network and a wide presence. "Certainly in a state like Florida, we've always expected … that we'd be able to offer access and affordability," said Lubitz.
The premiums reported for a 27-year-old Floridian are in line with those that Tampa-based independent agent Greg James recently sought for a 26-year-old customer. Agents have been getting sneak peeks at what will be offered on the exchange. James said insurers appear to be developing niches, with some companies aiming at the lower-priced plans and others going for the higher-priced plans with very good benefits.
James said he worries people, lured by low premiums, could pick a plan that's not right for them.
"The problem is that individuals are going out there without any instruction," he said. "We are struggling as agents to figure out how to help our clients get the best bang for their buck. It's going to be based on how much they can pay, just like it's always been."
Comparing the new plans to ones on the market today is misleading. The new plans must come with better benefits, including services that are now optional, such as maternity. Plus, annual out-of-pocket costs are capped at $6,350 for an individual, or $12,700 for a family.
Even more importantly, insurers are no longer allowed to charge more to people with pre-existing conditions. Cancer survivors and people with heart stents, for instance, often found themselves priced out of the market or denied coverage altogether. Now they will be charged the same rate as others their age in their area.
But younger and healthier people will pick up some of that difference in their premiums.
Wences Troncoso, Florida's deputy commissioner for life and health insurance, said the state's analysis shows that individual policy premiums are increasing 30 to 40 percent under the new law because of these requirements. However, that analysis did not consider that the new plans are far more comprehensive. The state's estimates also did not factor in the tax subsidies, Troncoso said.
Because of the way the tax credits are calculated, in fact, some lower-income families of four may pay less for coverage than will younger people.
But premiums, of course, aren't the only cost to consider. Lowest-premium bronze plans come with the highest out-of-pocket costs when seeking medical treatment.
Bill Newton, executive director of Florida Consumer Action Network, said any news about premiums being cheaper than expected advances the goal of getting more people insured.
"I think the feds are trying hard, and we hope its going to work," he said, noting that no policies take effect until Jan. 1.
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