Expert: Premiums for Individual Health Plans in Exchange Will Be High

Next year, premiums for individual health plans offered through the state health insurance exchange will grow significantly from current rates, according to a health insurance expert, the Sacramento Business Journal reports.

Last week, Garry Maisel -- CEO of Sacramento-based Western Health Advantage -- discussed the issue at a Drexel University-sponsored event on health care costs (Robertson, Sacramento Business Journal, 5/10).

Details of Exchange

The exchange -- named Covered California-- primarily will serve individuals and small businesses.

Supporters hope that the exchange will function similar to websites like Amazon and Expedia so that users will be able to choose between various health plans through an easily navigable online store.

The exchange is expected to open for registration in October (California Healthline, 5/10).

On May 23, the exchange is scheduled to name the health insurers that it has selected to offer plans through the online marketplace.

The insurers then will file proposed rates with state regulators.

Details of High Premiums

Maisel said that he thinks premiums for individual health plans "will go up 40% to 70% … and this will cause a national furor."

He said a variety of factors could boost premiums for individual health plans in the exchange, including that:

  • Policies will offer more choice and more closely resemble employer-sponsored health insurance;
  • Health plans will be paying a greater percentage of health care costs;
  • Insurers will not be able to deny coverage for individuals based on pre-existing conditions or charge more for poor health status;
  • Health plans will be required to charge younger beneficiaries a higher percentage of what older people pay for insurance;
  • Higher enrollment of older individuals will mean higher health care costs; and
  • Many individuals will be eligible for health plan subsidies (Sacramento Business Journal, 5/10).
Katherine Smith-Brooks
Son with disability now pays $8000 per year for indiv plan--whhhooaa! HELP!!
Albert Lowey-Ball
The critical variables here are the ability of Covered California to negotiate solid cost-effective agreements with Qualified Health Plans (QHPs) and the soundness and effectiveness of its reaching out to and enrolling large numbers of relatively young people heretofore not insured. Garry Maisel may well be right if Covered California falters on either of these fronts.
David Dickinson
The President and Democrats made it clear that their preference is single payer, govt. run healthcare. No surprise there, because that further binds people to government dependency, and the govt. can abuse funds as they do with those of medicare, medicaid and social security. The ACA mandates penalize employers and insurance companies, forcing them to accept unsound business models and restrict employment. This will drive more and more people towards the exchanges. The govt. is spending millions drawing people into the exchanges, most of whom will be subsidizing, and has developed a taxpayer-backed "public option" to compete with private insurers. It doesn't take a conspiracy theorist to work out what's happning here. The Administration is out to destroy private health insurance companies and undermine employer provided insurance benefits, which will leave only the government to pick up the pieces. Unchecked, this country will have European style national health within 10 years
Hrant Kouyoumdjian
Wagner"s first post: per the inquiries yet to be fully clarified by Covered California, the same rules apply ONLY to "standardized" individuals in/outside exchange. No changes to benefits (the standardized sets both a floor and a ceiling on benefits) and same premium floor in/outside. This eliminates competition to what the exchange is offering and makes the exchange's individual subsidy market pretty much the only game; but this may be essential for its initial viability. The same rules do not apply SHOP, and to alternative benefit design (meeting ACA criteria) for individuals outside the exchange which can have lower premiums than the silver option. At least this is what I have been able to surmise so far from probing Covered California.
Hatti Hamlin
The so-called "savings" from the ACA is going to evaporate when government starts picking up the promised subsidies for those who qualify. As someone mentioned, only two types of persons will be added to the system; those who qualify for subsidies, and those with pre-existing conditions. ACA supporters have practiced wishful thinking as to the effect this will have on national healthcare costs. I'm glad that people will have access to care, but to think it will bring down costs is simply ridiculous! And for those of us who don't qualify for subsidies in the individual market, premiums are going to soar.

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