Conservatives have been crowing this week over the big story out of California, the
decision to stay out of California's health insurance exchange created under the Affordable Care Act. That would doom the system, they said, because the lack of competition would make rates unaffordable. They had to stop their crowing, though, when the other big story about Obamcare in California came out. The proposed rates for the California exchange were just released, and it turns out there's
plenty of competition among the insurers who are in the exchange, and that they will make insurance affordable for most customers.
Based on the premiums that insurers have submitted for final regulatory approval, the majority of Californians buying coverage on the state's new insurance exchange will be paying less—in many cases, far less—than they would pay for equivalent coverage today. And while a minority will still end up writing bigger premium checks than they do now, even they won't be paying outrageous amounts. [...]
[Y]ou can get a sense of the prices by looking at what a 40-year-old single person would pay, on average, for the second cheapest “silver” plan on the new market. Such a plan, which would cover about 70 percent of a typical person’s medical expenses, would go for about $300 a month or around $3,600 a year. That compares favorably with what insurance costs today. The typical employer plan, for example, presently costs about $5,500 a year. Employer plans are generally more generous than the silver plans would be, so you’d expect them to be more expensive—but not by such a large margin.
Somebody with an income at 250 percent of the poverty line, or around $29,000 a year, would on average pay just $2400 a year in premiums for that same silver plan. Somebody with an income of 150 percent of the poverty line, or about $17,000 a year, would pay just around $700 a year. This person could also get a “bronze” policy, which comes with higher out-of-pocket expenses, for essentially no premiums at all.
About 2.6 million Californians are going to qualify for subsidies. Sarah Kliff
compiled some handy graphics on what premiums could be (depending on individual circumstances, plan selection, and region) for a 21-year-old and for a 40-year-old. The top number is the amount the individual will be expected to pay and the bottom number, in green, is how much they are saving with the subsidy.
It's hard to overstate the significance of California, which has 7.1 million uninsured residents, the most in any state, coming in with such reasonable numbers. Like Oregon before it, where
insurers actually asked to revise their proposed rates downward when they saw they were overpriced, competition is actually going to work to drive rates downward in California. That means that this whole complex system could very well work, and work well. Which puts the country one step closer to the next stage in health care reform.
