By Phil Galewitz, Kaiser Health News
After years of anticipation, Vermont became the first state Monday to publish proposed 2014 individual health insurance rates under the federal health law. Despite Republican and insurers’ predictions, there was no “rate shock” in the new premiums, according to the Vermont governor’s office and insurance representatives.
That state may not be the best barometer of the impact of the heath overhaul on premiums, however, because it already prohibits insurers from using health status to determine an individual’s premiums. It is one of only seven states in the country which have so-called community rating regulations.
California does not currently have community rating regulations. A major study last week concluded that individual premiums will likely go down substantially for many Californians and up for others on the individual market, once the new online marketplace for health insurance opens later this year. Premiums are expected to be announced for California in several weeks.
Vermont also requires prices to be the same regardless of person’s age. Two of the health law’s biggest changes include prohibiting insurers from using health status to determine premiums and prohibiting insurers from charging older people more than three times the rates of younger people.
California is expected to implement both these provisions.
Blue Cross and Blue Shield of Vermont and MVP Health Care submitted plans to state regulators with monthly premiums that range from an average of $265 for catastrophic coverage for young adults to $609 for platinum coverage, which has the lowest cost-sharing among four categories of plans.
“We think this is a positive development for folks who were worried about what rates would look like in 2014,” said Kevin Goddard, spokesman for Blue Cross and Blue Shield of Vermont, which is the state’s dominant commercial carrier, controlling about two-thirds of the market. He confirmed rates are similar to what the company now offers.
“These rates are comparable to what’s on the market today and that’s good news,” said Robin Lunge, director of health reform in the Vermont governor’s office. She said it’s difficult to do an apples-to-apples comparison because of the many benefit changes required under President Barack Obama’s health overhaul. These changes, which take effect Jan. 1, include an end to annual lifetime limits in policies and a prohibition on denying coverage to people with medical problems.
Insurance industry predictions of rate shock are more likely in the majority of states that currently allow insurers to set premiums based on an individual’s health status, Goddard said.
Starting Oct. 1, individual and small group coverage in the state will be sold on a new online health insurance marketplace as required under the Affordable Care Act. Health insurers nationwide have just begun submitting their pricing and benefit information to states and the federal government for policies which will be sold in the marketplaces, or exchanges. Most people who buy on the new marketplaces are expected to be eligible for government subsidies.
Vermont insurance regulators still must approve the insurers’ proposed rates. In January 2013, the state approved about a 10 percent rate increase on the individual market after carriers asked for about a 13 percent increase, Lunge said.
All the health plans in the new marketplaces are standardized into platinum, gold, silver and bronze categories depending on their actuarial value so consumers have an easier time comparing.
The Vermont 2014 annual premiums for bronze plans range from $4,200 to $4,440, compared to a Congressional Budget Office estimate of $4,500 for an individual, according to Carolyn Pearson of consulting firm Avalere Health.
Mary Eversole, executive director of the Vermont Insurance Agents Association, said she was surprised the rate increases were not higher. At first blush, she said the 2014 proposed rates appear to be about 10 percent higher than this year. Premiums for the gold and platinum policies appear lower than similar products, but silver and bronze policies are higher.
Officials from MVP were not available for immediate comment.
The Confused Debate Over Obamacare and Insurance Premiums (Ezra Klein, Washington Post)