Health Exchange Premiums Being Published

The long-awaited first step toward evaluating the true impact of health exchanges has finally been taken in several states, including Oregon, Washington, and Colorado. For those of you keeping track, the eagerly anticipated health exchange open enrollment period begins on October 1, 2013. Hospitals, physicians, employers, and patients have been preparing for this date. However, there has been one major missing piece to the puzzle; the premium rates that payers will charge for the health exchange products. The wait is now over for states that have started to publish preliminary rate information.

Publication of the rates will likely cause several responses:

• Employers can begin to evaluate the financial implications of continuing or declining coverage of employees
• Individuals without employer-sponsored coverage can consider the costs and subsidies associated with the various products
• Brokers can provide clarity for individuals and small groups seeking insurance coverage
• Providers can finalize outstanding network contract negotiations and provide clear guidance to patients and employers that may turn to them for advice in making coverage decisions

Providers, particularly hospitals and systems in regions with high levels of uninsured patients, have started to conduct outreach within their communities. Several of our health system clients are functioning as extensions of the state health exchange navigators by educating individuals and small employers about the exchanges to alleviate confusion and encourage expanded insurance coverage among the uninsured. The publication of these rates provides a critical piece of information for these efforts about the cost of insurance on the exchanges compared to other options.

While the premium rates are not as high as predicted, they are consistently higher than plans available outside of the exchanges, as summarized in the table below. All three of the states examined to date exhibit premiums between 24% and 27% higher than those outside of the exchange. Because the premium at a given metal level differs by family size, age, and region, the corresponding rate variance will vary depending on those factors. The average rates in Table 1 below are based on an individual plan – with similar characteristics to a silver plan – for a 40-year-old nonsmoker.

Table 1 - Health Exchange Plan Monthly Premium Variance

Note that these rates are subject to review by the state insurance commissioners and may change.

In addition to the premium variance, the consumer will also consider the subsidy provided when buying a plan on the health exchanges ^[6]. For example, buying on the exchange in Oregon could result in a significant savings to the low-income consumer if the subsidy is factored into the cost, as shown in Table 2.

Table 2 - Monthly Premium Variance with Premium Subsidy - Oregon

Although premiums may change before October, this first glimpse into the financial implications of enrolling in plans on the exchanges will allow the interested parties across the nation to make key decisions for 2014. Many more states will follow over the summer months. Check back here for updates as additional states publish and finalize premiums.

Although premiums may change before October, this first glimpse into the financial implications of enrolling in plans on the exchanges will allow the interested parties across the nation to make key decisions for 2014. Many more states will follow over the summer months. Check back here for updates as additional states publish and finalize premiums.

Published June 17, 2013