Much Ado about Rates
Lately, we’ve seen a flood of states announcing new health insurance rates for plans under the Affordable Care Act (ACA). So what do they all mean? To start, the new rates are mainly for the individual market, for people who buy insurance on their own. Most people who currently get insurance through their employers will not see significant changes at all. In order to make sense of the full picture of what individual coverage looks like under the ACA, there are a few things to remember:
1. You’ll get benefits with your health insurance. Health insurance is supposed to cover you when you get sick, right? But for years, many health plans in the individual market lacked basic benefits like maternity care and prescription drugs. And some plans had caps on benefits that plunged even insured people into medical debt. Now the ACA creates a floor of coverage by requiring all health plans to cover 10 categories of benefits and restricts out-of-pocket costs. This is important to remember when you hear a state insurance commissioner say rates are increasing under the ACA – people with these plans will now actually get what they pay for.
2. Your family member with a pre-existing condition can get coverage now, too. Many states allowed health plans to deny people from buying insurance if they had a chronic condition or even a past medical issue (like acne or pregnancy). This means that the health insurance costs some people on the individual market were paying were artificially low because they were only based on costs of the healthy people allowed to buy insurance. Thanks to the ACA, people with health conditions can now get the coverage they need. Because their care is more costly, the rates may reflect this change with increased costs for some. This is the price of a fairer system.
3. Many people will be eligible for financial assistance. Very few of the recent articles about insurance rates look at the actual amount people will pay. People who buy coverage on their own will be able to go through Marketplaces (formerly known as Exchanges), and if their income is below 400 percent of the federal poverty line (about $46,000/year for an individual), they might qualify for financial assistance to help pay for insurance. Since people buying insurance on their own typically have jobs that do not provide benefits, they are more likely to be lower income and eligible for this assistance.
Coming up: Part II: Why are the rates so different across states?