Competition Among Health Plans Suppressing Rate Hikes
The concept of "rate shock" was a hot topic after the passage of the Affordable Care Act. But so far, a dramatic surge in health insurance premiums hasn't materialized.
It’s difficult to compare the new plans with ones currently offered, because the 2014 plans include many elements that weren’t required before, says Northern Colorado Business Report publisher Jeff Nuttall.
"But health care industry-watchers say the prices are in line with what consumers are paying now," Nuttall says. "There’s a wide range of choices and increased competition is likely to result in downward pressure on Colorado premiums in coming years."
Tim Gaudette, Denver-based outreach manager for the Small Business Majority, an advocacy group for independent businesses, says competition among plans is helping suppress rate hikes.
The rates "were much more reasonable than people expected," Gaudette told NCBR, "and that has to do with competition."
Many of the new plans for individuals and small groups will be available both on and off the new health insurance exchange, called Connect for Health Colorado. They contain four levels of coverage, says Nuttall -- ranging from Bronze, which covers 60 percent of costs, up to platinum, which will cover 90 percent of costs.
Young people can stay on their parents’ plan until the age of 26, and adults up to age 30 can buy bare-bones catastrophic plans.
The exchange is set to launch in October. Starting Jan. 1, 2014, most individuals will be required to have health insurance.
What will insurance rates look like in 2014?
"There will be a lot of variation, depending on how plans are purchased and at what level of coverage. Under the final set of premiums approved by the Colorado Division of Insurance last month, depending on the insurer, a 40-year-old will pay $280 to $549 per month in the private market for a plan that covers 80 percent of health-care costs.
Those who chose to buy insurance through the government exchange will pay $273 to $585 for the same level of coverage, again depending on the insurer."
What about new requirements that must be included in new plans?
"Well, there are the mandates that say that no patient can be denied coverage because of a pre-existing condition and that dependent children up to the age of 26 can remain on a parent’s plan. Also, a set of 10 requirements called 'essential health benefits' must be covered. These include prescription drug coverage, maternity and newborn care and rehabilitative services.
Some plans had to include these benefits for the first time, creating challenges for carriers and threatening to increase costs."
But costs haven't really gone up after all, at least not yet. Why?
"In all, 541 plans by 18 different carriers were approved by the Division of Insurance for 2014. All those options help explain why Coloradans aren’t likely to experience the dramatic surge in premiums many had predicted. Consumer and business advocates are now saying the whole rate shock thing was a myth."
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