Paperwork filed by five major health insurers gives Arizona its first glimpse of how much the Affordable Care Act will cost consumers when they begin shopping for mandatory coverage next month.
Plans submitted to the Arizona Department of Insurance signal that average monthly rates will range from $225 to $334 when insurance marketplaces launch Oct. 1. Filing rate plans were Aetna, Blue Cross Blue Shield of Arizona, Cigna, Health Net and Meritus, formerly called Compass Health Cooperative.
The documents suggest Arizona consumers will be able to choose from a variety of plans and rates during the six-month enrollment period, with monthly premiums that will range from less than $100 to more than $1,700. Those rates are before federal, sliding-scale subsidies kick in for consumers who earn up to 400 percent of the federal poverty level.
Some states that will operate their own exchanges have released comparisons of existing and new rates for individuals and small businesses. But health insurers said a similar comparison was problematic for Arizona because the federal government will operate the state’s marketplace and the new plans have different benefits and requirements.
Beyond the monthly rates, consumers must decide how much they are willing to pay for such items as co-payments, deductibles and co-insurance. Plans with lower monthly premiums will require consumers to pay a larger share of bills from doctors and hospitals and for prescription drugs.
Meritus, a nonprofit cooperative health-insurance plan, filed to sell plans on the individual marketplace and the Small Business Health Options Program, or SHOP.
“We heard from consumers and what they thought affordable was,” said Kathleen Oestreich, CEO of Meritus. “We tried to position our (rates) in the lower third or the middle third of the market.”
In all, more than 1 million Arizonans will be eligible to shop for plans on the federal exchange or get covered by Medicaid, the government-funded health-insurance plan for low-income residents. Most people without health insurance must obtain coverage or pay a fine under the new law.
The five companies submitted plans that included information such as average monthly rates, the most- and least-expensive plans, and the total in premiums that insurers expect to collect. Health Choice, Humana and University of Arizona Health Plan also filed plans to join the exchanges but did not file rates with the state.
Health insurers that plan to sell health maintenance organization-style plans over the marketplaces are not required to disclose rates to Arizona regulators, according to Erin Klug, a state Insurance Department spokeswoman.
All plans sold over the online marketplaces — both for individuals and small businesses — still must be approved by Medicare’s Center for Consumer Information and Insurance Oversight. Those plans have been reviewed, and Medicare is finalizing contracts with those insurance companies, said David Sayen, regional administrator for the Centers for Medicare and Medicaid Services.
Sayen said the federal government won’t make information about the plans and rates available before Oct. 1, the day consumers will be able to start shopping for the offerings on HealthCare.gov
Sayen said he is confident the rates — when offset by federal subsidies — will be affordable for Arizona consumers and that enrollment will start Oct. 1, citing favorable results last week from a key test of the marketplaces’ data backbone.
“What I see is something that is attractive, and it’s going to work,” Sayen said. “I am very confident that people in the insurance industry will put out products that work at a competitive price.”
Sayen said CMS has no plans to calculate how the Affordable Care Act may have influenced rates in Arizona and other states that will sell plans through the federal marketplace. But he cited information released by states such as California that will run their own marketplaces as evidence that “the picture looks better for consumers.”
Consumers will shop for plans across four tiers that will include bronze, silver, gold and platinum coverage. The bronze plans will be the least expensive and will cover about 60 percent of a person’s health costs. Platinum plans will be the most expensive and robust, covering about 90 percent of costs.
Avalere Health, a private firm that analyzes health information, studied 12 states and found the average premium for a bronze plan is $274 and the average silver plan cost $336.
Arizona was not included in the study.
Avalere CEO Dan Mendelson said he expects monthly premiums will be the top concern among many consumers, particularly those who haven’t had coverage before.
“You will have shoppers looking for a plan, and they will generally gravitate toward lower prices,” Mendelson said.
Blue Cross Blue Shield of Arizona, the state’s largest insurer for the individual market, will offer more than a dozen plans across all tiers with individual monthly premiums that range from $71 to $1,489. The average plans will cost Blue Cross consumers $264 before subsidies are calculated.
Blue Cross Vice President Jeff Stelnik said the company tailored its plans to appeal to a wide selection of residents, from cost-conscious consumers to those accustomed to a richer selection of benefits.
Stelnik said it is difficult to compare new rates with existing plans because the health-care law requires a basic set of benefits that do not exist in all current plans, such as maternity coverage. Also, the law prevents insurers from denying coverage based on existing conditions and limits how much rates can vary based on age.
Insurers can charge rates based on the type of plan and a person’s age, location and whether they smoke.
“It’s so hard to compare apples to apples,” Stelnik said. “It is so specific to the individual.”
Health Net spokesman Brad Kieffer said the insurer anticipates “most of the consumers shopping for coverage on the exchange will be value-conscious.” Health Net’s individual plans will range from $82 to $897 per month.
“We are looking at the silver and bronze tiers as where we will see most of our enrollment,” Kieffer said.
Diane Brown, executive director of Arizona Public Interest Research Group, said consumers should be careful not to rush into a plan. Arizona PIRG will encourage consumers to evaluate how deductibles and co-payments may impact how much they spend on health care.
“Consumers may not be aware of how these extra costs add up,” Brown said.
One way that insurers in Arizona will seek to limit costs is by narrowing a consumer’s choice among doctors and hospitals in exchange for lower monthly rates.
People will not be able to check how robust a health insurer’s network is on the federal government’s website. Rather, consumers will be referred to the insurer’s website and informational brochures to learn which doctors and hospitals a consumer could use.
The enrollment deadline is March 31. Once consumers make a selection, they will be locked in until the next enrollment period in fall 2014.
“We’re (encouraging) people to take their time and make their decision wisely,” Sayen said.