Tuesday, September 3, 2013

OCI Releases Marketplace Rate Information: Improved Coverage in 2014 Will Have Higher Premiums -- for Those Ineligible for Subsidies

Advocates Seek Additional Detail and Raise Questions about the Cost Comparisons

We learned Tuesday that the average premiums for the improved individual insurance plans available through the new Marketplace next year will be higher than those for some of the individual plans available for 2013 – at least for the minority of Wisconsinites who have income above 400% of the poverty level and aren’t eligible for federal subsidies for the new coverage.

Based on a brief and incomplete summary released today by the Office of the Commissioner of Insurance (OCI), the increase in the premiums appears to be substantial in some markets; however, the sketchy information in the OCI press release doesn’t provide enough detail to allow me to decide if OCI was trying to make even-handed comparisons of the new insurance options and reasonably comparable coverage now in the Marketplace. I want to give them the benefit of the doubt, but many health care advocates are skeptical of their motives. That skepticism is fueled by the fact that some of the other insurance commissioners who oppose the ACA have made very slanted cost comparisons, and the short analysis released by OCI today withholds information needed to remove questions about whether they are doing the same thing.

In fairness to OCI, they do make it quite clear in their press release that they weren’t accounting for the effects of federal premium subsidies. Nevertheless, offering specific dollar comparisons that omit a substantial source of cost reductions for most Wisconsinites creates a misleading picture. The ACA creates a sliding scale cap on premiums (ranging from 2% to 9.5% of family income) for people below 400% of the federal poverty level.

The OCI figures are based just on the monthly premiums, rather than total annualized costs. Keep in mind that the new plans available in the Marketplace will generally have lower co-payments and deductibles, especially for the majority of uninsured people who qualify for the federal subsidies that hold down those aspects of cost-sharing. As a result, the annualized costs of coverage through the new Marketplace may be lower than the cost of comparable or lesser quality coverage available in the individual marketplace now, particularly for people below 250% of the poverty level.

An overarching issue is that it’s impossible to make apples-to-apples comparisons between current individual plans and the coverage available next year, because the new plans will typically cover more services, provide much better access to preventive care, and cover preexisting conditions. In light of that inherent problem, it’s difficult to avoid making misleading comparisons, even if you’re trying to be fair and transparent. However, the OCI release falls short on at least one of those standards – transparency – since it neglects to even mention the federal subsidies for co-pays and deductibles, doesn’t tell us what the new monthly premiums will be (only the percentage increase in costs relative to a “pre-reform” plan), and doesn’t make it clear how those pre-reform plans compare in scope and quality to the new Marketplace plans.

The bottom line is that the incomplete information OCI provided today underscores the need for consumers interested in individual coverage to go online or call next month to see specifically how they will be affected – based on what services will be covered each option, their particular needs, and how the subsidies will affect their total annualized costs.

Read more in this Associated Press story and in the press release from the Community Advocates Public Policy Institute about their unsuccessful effort to get more information from OCI.

Jon Peacock

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