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State By State: How Health Law Will Affect Premiums
Originally published on Thu July 18, 2013 6:31 pm
AUDIE CORNISH, HOST:
In that speech today on the health care law, President Obama made a point of highlighting some good news the administration got yesterday.
PRESIDENT BARACK OBAMA: State officials in New York announced that average premiums for consumers who buy insurance in their new marketplace will be at least 50 percent lower next year than they are today. Think about that, 50 percent lower.
CORNISH: And New York's not alone, the administration says. A report it released today found nearly a dozen states coming in with lower than expected premiums that will be available in the new marketplaces next year. That's a vivid contrast to Republican claims of skyrocketing rates. Now, with us to try to sort some of this out is NPR health policy correspondent Julie Rovner. Hey there, Julie.
JULIE ROVNER, BYLINE: Hey, Audie.
CORNISH: So bottom line, premiums next year, are they going to be higher or are they going to be lower?
ROVNER: Well, I'm sure this won't come as much of a surprise, but the answer is both. In some states, and it may even be different in different parts of states, premiums will go up compared to what they are now. And in other states or parts of states, premiums will go down. As usual, it's going to depend on a lot of different factors.
And I'm sure this won't come as a surprise either, but both Republicans and the Obama administration are doing some cherry-picking here to make their side look as strong as possible.
CORNISH: All right. So let's break this down. The administration's claims about premiums going down, where and why would premiums fall?
ROVNER: Well, as we've heard, in New York premiums are largely going to be lower, and that's, remember, just in the individual market, where people buy their own health insurance. That's the part of the market that's been the most dysfunctional and the part that this part of the law is aimed at fixing. There's some other states where premiums are reportedly going to be lower than expected. That includes Colorado, Oregon, Washington and Vermont.
Now, there's one thing that all of these states have in common and that's they have something called community rating. That means insurers already had to sell insurance to sick people. That means there won't be an influx of new people with preexisting conditions next year in those states, plus there should be more healthy people buying insurance when there's a requirement for everybody to have coverage.
So, not much of a surprise to the experts that premiums in those states would go down.
CORNISH: Okay. So then help us understand where Republicans are coming from. I mean, they say that premiums are going to go up.
ROVNER: Yes. And they've mostly been looking at states where insurance companies have been allowed not to sell to sick people before and now, of course, they'll be required to. And also, to make their point, sometimes critics have been looking at specific premiums for specific types of people. One example is that for years insurance companies have been able to sell at very cut rates to healthy young men.
That's because they've been able to charge women more 'cause they use more services, things like maternity care, and they've been able to charge older and sicker people more. Well, the law doesn't any longer let them give men this kind of advantage, so critics keep pointing out how much higher premiums are going to be for those young men. And to some extent that's true.
But the people who wrote the law decided that risk in the market should be spread more evenly and that people with lower incomes would be given financial help if they need it.
CORNISH: And the idea is that people will also be getting more in the way of benefits?
ROVNER: That's right, which is also the subject of debate. The law requires a minimum set of benefits called essential benefits. Until now, particularly in this individual market, people could buy very inexpensive insurance, but didn't cover very much. Sometimes it would have these huge deductibles, like $10,000 or more, or it would only cover a couple of thousand dollars worth of care.
So if you had serious problem, you might be seriously up a creek. That kind of coverage is now going to be outlawed, but more comprehensive coverage costs some more money.
CORNISH: So how long till we know, like, who is right here?
ROVNER: Well, probably not until September. The federal government, remember, is operating about two-thirds of these exchanges. We keep asking them when they're gonna tell us how much the premiums are going to be and they keep telling us probably not until they have to.
CORNISH: Julie, thank you.
ROVNER: Thank you.
CORNISH: NPR's health policy correspondent Julie Rovner. Transcript provided by NPR, Copyright NPR.