Posted: 3:04 p.m. Wednesday, July 10, 2013
By Kathleen Doheny, Reviewed by Katherine Swartz, PhD
Both the insurance plan selection and rates are subject to final approval by state regulators.
Since the plans were picked in late May, some experts have praised the progress in California while others have predicted ''rate shock." On a swing through the state to promote the sweeping health care reform law, President Barack Obama lauded California's efforts at creating a state-operated Marketplace (also called an Exchange) and urged the uninsured to sign up for the new insurance options starting Oct. 1.
About 5.3 million of the state’s 38 million residents are expected to be eligible for coverage through the Marketplace, known as Covered California. Of those, 2.6 million are expected to be eligible for subsidies to help cover the cost.
The 13 companies that will participate in the health insurance Exchange for individual plans include a mix of large and small companies:
Most companies will offer four “metal” levels of plans: bronze, silver, gold, and platinum. The platinum plans cover the largest share of expected medical costs, and they also cost the most, according to Anne Gonzales of Covered California.
Platinum plans are expected to pay about 90% of costs, with the consumer’s share about 10%. Under the gold plans, the ratio is 80% to 20%. For silver, it’s 70%/30%. And for bronze plans, which are the least expensive, it's 60%/40%. Not every company offers all four tiers in all of the 19 rating regions of the state.
Catastrophic coverage, for people younger than 30, also will be available.
In the more populated areas, people will have as many as five or six insurance companies to choose from, according to Covered California. In rural areas, people will have a choice of two or three companies.
The number of companies offering plans creates sufficient choice, said Linda Blumberg, PhD, senior fellow at the Urban Institute's Health Policy Center. It’s important to have a range of options, she said, adding that, "I think that's clearly what has happened in California."
The average premium for a California consumer, regardless of location, plan level, or family size, is $321, according to Covered California.
Rates vary by the region of the state, the plan selected, the age of the insured, and family size.
The statewide average premium for a 40-year-old will be $219 a month for the lowest-cost bronze plan. For the lowest-cost silver plan, it will be $304 a month.
Here are examples of some expected monthly rates.
Subsidies for people with lower incomes will bring costs down further. For example, a 40-year-old in that region with a yearly income of up to $17,235 would pay only $53 a month out-of-pocket, and federal premium assistance would cover $231 for the Blue Shield PPO silver-level plan. A person making between $22,981 and $28,725 a year would pay $188 a month and subsidies would cover $96 each month.
Even with subsidies, some experts say some people will find the cost of insurance in the state’s Marketplace too high.
"There is going to be sticker shock for some people," says Paul Fronstin, PhD, director of the Health Research & Education Program at the Employee Benefit Research Institute in Washington, D.C. But he adds that the Marketplace plans offer more coverage and more features than insurance currently available in the individual insurance market.
Fronstin agrees that some people may have been happier with the less comprehensive plan and the lower costs.
Blumberg, however, says some of the higher rates may be temporary. "As it becomes clearer to the insurers who are participating in the Exchange, and how the system is working, I think you will see some of those higher rates coming down," she says.