Concerns about the Affordable Care Act being unaffordable for those purchasing policies through health care exchanges were understandable, because the law didn’t do enough to contain costs. But the worry that people would be priced out of the market looks to be overblown.
Washington, Oregon and California have released the prices of policies on their exchanges, and the results are encouraging. Transparency and competition have served to keep prices below forecasted levels.
California’s prices, which were released Friday, beat the 2009 Congressional Budget Office’s projection by a fairly comfortable margin, according to the Washington Post. CBO pegged the monthly premiums for a silver plan (70 percent coverage) at $520. A more recent estimate from the consulting firm Milliman put the price at $450.
But the actual cost for a Los Angeles County resident ranges from $225 to $325, depending on which of the 13 insurance company plans are selected. Similarly, most of the premiums in Washington and Oregon came in under $300. Two insurers in Oregon asked to resubmit their bids when they saw the lower prices of their competitors.
Competition in health care coverage – imagine that.
We caution that these prices could possibly rise as insurers absorb customers previously outside the health care system. If insurers can’t lure enough healthy customers to offset those with expensive conditions, the prices could rise. Though the purchase of coverage is mandated, some people may choose to pay a fine instead.
The actions of health care providers are also critical. If enough of them dump the traditional fee-for-service model and adopt cost-containment strategies, premium prices could remain affordable.
It should be noted that means-tested federal subsidies can significantly reduce insurance prices. For instance, under the lowest-cost silver plan in California, a low-wage 21-year-old would pay only $44 a month, after getting a $172 subsidy. A bronze plan (60 percent coverage) is essentially free for young people earning $17,000 a year.
Clearly, the exchanges will be welcomed by millions of Americans who have gone without health care coverage. And these early price reports should put a damper on worries that insurance premiums will skyrocket. The best course for the country is to give this system a chance to work while still pressing for ways to lower health care costs overall.
The U.S. House of Representatives just took its 37th futile vote to repeal the law. Grandstanding and foot-dragging does not serve constituents. And linking idiotic and likely unlawful Internal Revenue Service vetting of conservative groups to the agency’s role of calculating individual or family premium subsidies is a red herring.
Washington state got right to work on its exchange, and unveiled the policies and prices on May 14. Because of its late start, Idaho will have to piggyback on the federal exchange for a while.
Like it or not, this is the health care framework the country will be dealing with. Critics are welcome to improve it, but failing to cooperate helps nobody.