A 25-year-old New Yorker earning $25,000 a year will pay as little as $62 a month for health insurance next year, and a peer living in Vermont may pay nothing, according to a 17-state survey of premiums under the U.S. health-care overhaul.
The Kaiser Family Foundation report is the broadest look yet at what consumers will pay for health insurance when the Affordable Care Act takes full effect next year. The cost issue has been a top concern for President Barack Obama’s administration, which is trying to persuade at least 7 million Americans who now lack insurance to sign up for coverage starting Oct. 1.
California and New York are among the states that have announced rates for the plans to be sold through marketplaces called exchanges. Republican officials in states including Ohio, Indiana and Georgia have released partial information on premiums, emphasizing big increases for some customers.
“There’s obviously intense interest in what the choices are going to look like for consumers and what they’re going to have to pay in 2014,” Larry Levitt, a senior vice president at Menlo Park, California-based Kaiser, said in a phone interview. “For the most part insurers seem to find this market attractive and they’re pricing accordingly.”
The health law sets up a system of state-based online and telephone exchanges that will sell insurance from companies including UnitedHealth Group Inc. to people who don’t have coverage at their jobs. The law makes government subsidies in the form of a tax credit available to discount monthly premiums for people with low- to moderate-incomes.
About 25 million people are expected to enroll in exchange plans by 2018, according to the Congressional Budget Office. Insurers are barred from denying coverage or raising premiums for people in poor health, or charging women more than men, common practices now. Under the law, they can charge their oldest customers a maximum of three times the price for their youngest ones, a narrower difference than in many states today.
Rand Corp. researchers, looking at 10 states, said in an Aug. 29 report that predictions of sharp increases in premiums were overstated. “Our analysis found no widespread trend toward sharply higher prices in the individual market,” Christine Eibner, a Rand senior economist, said in a statement with the report.
The lowest monthly premium for a 40-year-old in the 17 states surveyed by Kaiser would be $146 in Baltimore. If that 40-year-old had an annual income of $29,000, government subsidies would reduce the monthly cost to $111, according to the report from the nonprofit health-research group.
Those are the prices for the least-generous level of health coverage, called bronze. Bronze plans cover about 60 percent of medical costs and may cost a participant $6,350 out of pocket in deductibles and co-payments, in addition to premiums.
“What has surprised me is how inexpensive some of these bronze plans will be,” Levitt said. “They’ll come with high deductibles and significant out-of-pocket costs for consumers, but for those who are looking for catastrophic protection there will be some inexpensive options out there, particularly if you’re eligible for a tax credit.”
For $214 a month, the same Baltimore 40-year-old may upgrade to a “silver” plan that covers about 70 percent of medical costs and reduced out-of-pocket expenses. A $35 monthly subsidy would discount the premium to $179.
The highest premiums in the Kaiser survey are in Vermont and New York, where the states require insurers to charge the same amount to people of all ages. That helps older people, who get a break on their premiums, at the expense of younger people, who pay more.
A 40-year-old in New York City would pay at least $308 a month for a bronze plan and $336 in Burlington, Vermont. Those who qualify for subsidies will see greatly reduced costs. For the same person earning $29,000 a year, the premium is cut to $111 in New York and $116 in Burlington.