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Federal officials project lower premiums under health insurance marketplace in Missouri

This article first appeared in the St. Louis Beacon, Sept. 25, 2013 - Health policy analysts differ sharply on the conclusions of Wednesday's federal report, which says premiums in Missouri will be about 16 percent lower than previously projected for consumers eligible to buy their health insurance through the government-run marketplace or exchange on Oct. 1.  

Among those taking issue with this projection is Patrick Ishmael, a Show-Me Institute policy analyst who focuses on health care.  He says the report’s conclusions are flawed because they are based on an arbitrary cost projection.

“They have to use a highly processed number to claim costs are ‘lower than projected,’ when that’s not what people are asking. They’re asking whether they’ll be better off now than they were before, and the answer for many individuals, small businesses, unions and others is simply ‘no.’ “

Ishmael argues the cost will be higher partly because people will now be required to have health insurance. He says some consumers who have been satisfied with a less expensive plan or weren’t insured because they were healthy will now face rising health insurance rates.

“That’s a new cost on them. On average, we are looking at $200 a month for individuals. If folks are used to paying $100 a month or less for health insurance, then they end up with sticker shock of paying a whole lot more than that.”

He says, “Folks don’t want to talk about that. What they want to talk about is some number in the future that they created and say ‘look it’s lower than this number,’ which is a projection. There are serious consequences about how much this law is going to cost us.”

At the other end are scholars like Sidney Watson, law professor at Saint Louis University, who say what’s being planned bodes well for affordable health care for the uninsured.

“We finally have hard numbers instead of estimates,” Watson says. “The real numbers are coming in lower and that’s very good news.”

She says opponents have options. “The law doesn’t literally require anybody to purchase insurance. There is a penalty if you are not insured. In the first year, it’s $95 a person. That comes out to about $8 a month. What this law offers is much more choice, better coverage if that is what they want, and a much richer range of options.”

Ismael argues that some consumers won’t necessarily get what they were promised, including access to the providers they now use. He cites the report that BJC HealthCare, the region’s largest health system, might not be available for some policies in the marketplace because of a dispute with Anthem Blue Cross Blue Shield. If BJC is left out, Ismael says it would mean denying consumers medical providers that some of them like and normally use.

Watson interprets the issue in a different manner. She says consumers now using certain providers can to continue to “keep the health insurance you have if  you are happy with it.”

She said “Anthem has committed to the good premium pricing that we are seeing. Now they are negotiating to get equally good prices from the hospital for services. That’s what we wanted to generate with this plan, better competition to bring down health insurance premiums and medical cost. It appears to be headed in the right direction.”

As for critics of the exchange, Watson says she has heard no alternative. “We continue to hear ‘no, no, no,’ but what else is there on the table? This is a very conservative plan. What we are seeing is competition in the marketplace at work. Insurance companies are pricing their premiums to be very competitive. We are going to have 17 plans competing for about 500,000 uninsured Missourians who are going to be using the exchange.”

Timothy McBride, a professor at Washington University’s Brown School, says there are still some important pieces of information that are unknown.

“We don’t know what all the out-of-pocket costs will be" under various plans, he said. “For instance, they (haven't released) information yet on each plan's deductibles." Nor, he notes, has it been revealed what the provider networks will look like. In addition, he points out that federal officials have yet to release costs in the small group market. 

But, like Watson, McBride says what we have seen so far "is very encouraging because it appears that health insurance plans will be very affordable."

While federal officials have yet to release which companies will write insurance in Missouri and other states, they say the emerging picture shows that eligible consumers will come out ahead when they buy insurance through an exchange.

The data was released by the Department of Health and Human Services. It says the exchange will spur more competition among insurers and result in new and affordable choices for consumers. Many individuals and families seeking insurance through the marketplace will be eligible for tax credits, depending on their income.

According to the report, consumers in Missouri will have an average of 17 health plans, categorized as gold, silver or bronze. The report said the average premium for the lowest-cost silver plan across all incomes and ages in Missouri will be $318 a month, and $245 a month for the lowest cost bronze plan.

"We are excited to see that rates in the Missouri Marketplace are even lower than originally projected," HHS Secretary Kathleen Sebelius said in a statement. “In the past, consumers were too often denied or priced-out of quality health insurance options, but thanks to the Affordable Care Act consumers will be able to choose from a number of new coverage options at a price that is affordable.”

While the sticker price on the various plans is one thing, what a person pays will vary significantly based on income because of tax subsidies. For example, the report says on average a 27-year-old Missouri resident earning $25,000 a year would pay $87 a month for the lowest cost bronze plan and $145 a month for the second lowest cost silver plan, taking into account tax credits. For a family of four in Missouri with an income of $50,000 a year, the lowest bronze plan would cost, on average, only $72 a month, according to the report.

Rates will vary across the state. In St. Louis, the report projects that the same 27-year-old with the same $25,000 a year income would pay $76 a month for the lowest cost bronze plan and $144 a month for the second lowest cost silver plan, taking into account tax credits.

According to HHS, 60 percent of uninsured individuals nationwide will be able to find coverage for $100 a month or less in the marketplace after tax credits and Medicaid coverage is taken into account.

The report noted that consumers may access the marketplace in several ways. These include using the computer and going to HealthCare.gov or cuidadodesalud.gov websites. They also have the option of calling 1-800-318-2596 toll free (TTY: 1-855-889-4325) to speak with an expert.

Robert Joiner has carved a niche in providing informed reporting about a range of medical issues. He won a Dennis A. Hunt Journalism Award for the Beacon’s "Worlds Apart" series on health-care disparities. His journalism experience includes working at the St. Louis American and the St. Louis Post-Dispatch, where he was a beat reporter, wire editor, editorial writer, columnist, and member of the Washington bureau.

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