When uninsured Americans begin enrolling in Obamacare’s new health care exchanges on Oct. 1, the overwhelming majority — 95 percent — will face health care premiums that are 16 percent lower, on average, than the government had previously projected, according to a new report released on Wednesday by the Obama administration.
In the 36 states where the federal government supports or fully runs the Health Insurance Marketplace, a 27-year old who does not qualify for tax credits will pay, on average, $163 for a plan that covers approximately 60 percent of health care expenses (a so-called bronze-level plan), while a 27-year-old with an income of $25,000 could pay $83 dollars per-month after subsidies. Individuals up to 30 years old will also have the option of buying cheaper catastrophic coverage outside of the marketplaces, though they will not qualify for subsidies. A family of four in Texas with an income of $50,000 would pay as little as “$57 per month for the lowest bronze plan after tax credits,” the report finds.
Premiums vary across the country, however. While states like Wyoming and Indiana will experience some of the highest premiums, Tennessee and Kansas will see lower costs. The uninsured in Florida and Texas — two states where Republican lawmakers have staunchly refused to implement the law — will see premiums “roughly in line or lower than health insurance costs in many other exchanges across the nation.” The national average for a midlevel policy is $328 a month before subsidies.
Under the law, individuals and families with incomes between 100 and 400 percent of the Federal Poverty Level ($11,500 to $46,000 a year for an individual, or up to $94,000 for a family of four) could qualify for premium tax credits and cost-sharing subsidies. The Congressional Budget Office projected in May that out of the seven million who are expected to enroll in the exchanges in 2014, six million will qualify for subsidies.
Ninety-five percent of the eligible uninsured will have the choice of at least two insurers carriers, which will offer health care plans at various levels of coverage: bronze, silver, gold or platinum. In the 36 states surveyed by the report, the uninsured will have a choice of 53 different plans, on average, and 1 in 4 insurance companies offering insurance will be doing so for the very first time in 2014.
“The more choices you have, the lower the premiums,” a senior administration official said. “States with few insurance companies who didn’t get a lot of new competitors this coming year, still have higher premiums.” The report found that states with “the lowest premiums have more than twice the number of insurance companies offering plans than states with the highest premiums.”
While no single factor is responsible for the lower-than-expected premiums, a senior administration official told ThinkProgress that previous estimates conducted by Congressional Budget Office may have “underestimated the fact that we have robust competition in the marketplaces” and “we’ve done a pretty good job of slowing the health care cost growth, which has filtered through the marketplace, [and] through the employer-based health care system to Medicare and Medicaid.”
Health care costs are now growing at the same rate as the rest of the economy, while annual premiums for employer-sponsored family health coverage grew 4 percent in 2013, significantly lower than in years past. A report out earlier this month estimated that nearly 6 in 10 uninsured Americans will be able to purchase insurance for less than $100 each month.
This post was updated at 6:00 AM.