In a step toward the full enactment of President Obama's Affordable Care Act, enactors of the law in California announced prices of health plans to be offered on the health insurance exchange, which were priced low enough to cause some celebration, according to NPR.
Practically anyone who lives in the U.S. lawfully can participate in the state-run health insurance exchanges, one of the hallmark pieces of the health reform act. Exchange officials appointed by state lawmakers negotiated with insurance companies to set the group rates, which are intended to appeal to consumers who couldn't afford health insurance in the past or aren't offered it through their jobs.
A 25 year old could choose a Health Net catastrophic plan for $117 a month or a more comprehensive plan for $147 a month from LA Care, the nation's largest public health plan. Furthermore, anyone making less than $45,600 per year would be eligible for government subsidies that would lower the prices more.
Many Californians looking for insurance through the exchange will be eligible for federal income tax credits, which will offset the cost of insurance. A 40 year old living in Los Angeles earning $1,915 a month would pay a monthly premium of $90 for a Health Net HMO Silver plan.
Young adults who have incomes below a certain threshhold, could be eligible to pay nothing, as they are generally less expensive to cover, Reuters reported.
"It's a revolutionary improvement to move from a broken market where people are charged by how sick they are, to a competitive market where people pay what they can afford, based on percentage of their income, on a sliding scale," Anthony Wright, executive director of advocacy group Health Access, told Reuters. "Most consumers buying coverage in the individual market will get financial help and see their premiums go down."
Almost three dozen health plans submitted bids to the exchange officials, but only 13 were selected. Officials rejected bids that were either too expensive or failed to include enough choices of doctors and hospitals. The low prices of the health plans come as a surprise to many, since the new law prohibits health plans from rejecting people with pre-existing conditions and from charging women and sicker people more.
"We've hit a home run for consumers," Peter V. Lee, executive director of the California insurance exchange program Covered California, told NPR.
The Affordable Care Act has had its share of skeptics.
California Republican Assemblyman Dan Logue, who opposes the law, said that the modest rates don't guarantee the program will work.
"This is like a shell game to me," he said. "They're not going to tell you that you're going to pay for it in your gas or your food or going to the show."
The actuarial firm Millman also predicted monthly premiums to rise 30 percent for individuals, which didn't happen according to Lee. Instead, he says that while those rates without subsidies might see a small increase, the majority of consumers will pay less.
About a dozen states have set up similar exchanges and some have announced their rates as well. Exchange officials from other states agree that the costs will not go up as high as skeptics have feared.
According to the Kaiser Family Foundation, there are currently 40.3 million adults uninsured people in the United States.