Costs to rise as state health insurance exchange plan kicks in

14 companies vie for Ohio’s private insurance market

The insurers planning to sell individual policies to Ohioans next year on a new state health exchange could see the average cost to provide coverage rise as much as 88 percent, the state announced Thursday.

Fourteen companies have submitted 214 different plans to sell health insurance to Ohioans on the exchange, an online marketplace established under the Affordable Care Act for individuals and small businesses.

Plans submitted by the companies, including Aetna and Medical Mutual of Ohio, show the average cost to cover individual medical expenses ranged from $282.51 to $577.40 per month on the exchange.

“We have warned of these increases since a state-specific study in 2011 indicated Ohio would be significantly impacted by the ACA,” Lt. Governor and Ohio Department of Insurance Director Mary Taylor said. “The department’s initial analysis of the proposed rates show consumers will have fewer choices and pay much higher premiums for their health insurance starting in 2014.”

On average, current medical costs for individual health insurance plans are about $223 a month in Ohio, based on estimates from a Society of Actuaries study released in March. The average cost would climb to more than $420 a month in 2014 to meet the essential benefits standards required under the health care law, Taylor said based on the preliminary analysis.

“Benefits covered by ACA are much richer than the benefits previously available to Ohio consumers,” she said.

More than 500,000 Ohioans are expected to enroll in the exchange, based on the 2011 study commissioned by the state insurance department, and open enrollment begins Oct. 1. The exchange will open for business on Jan. 1, 2014, and be run by the federal government.

Ohio is among 27 states that have decided to let the federal government operate the exchange rather than setting up their own exchanges, according the Kaiser Family Foundation.

The Department of Insurance’s report said it expects increases in costs to translate to significant premium increases for many Ohioans. But it does not reflect the actual cost to consumers, because it does not include premium estimates or the impact of premium subsidies offered under the health care law to poor and middle-income residents.

“This information provides a partial look at what the cost of insurance coverage may look like in 2014, but doesn’t equate to the premiums that will be charged as market competition may influence rates and subsidies will be provided to those under 400 percent of the federal poverty level,” said Amy Rohling McGee, president of the nonpartisan Health Policy Institute of Ohio.

Rohling McGee noted the cost projections also do not reflect the impact of competition in the marketplace — a basic premise of the health care law.

“It behoves companies to price their products competitively to draw in more people,” Rohling McGee said. “We still don’t know what the end result of competition will be, but people wanting to gain market share in this new competitive environment are likely to drive premiums down.”

The Department of Insurance has until July 31 to review the plans before submitting them to the federal government.

The state insurance department can reject any proposals they deem unfair or overly costly, Taylor said.

“Our role at the department is to protect consumers,” she said. “We will review the rates over the next several weeks to determine whether the rates are justifiable and non-discriminatory.”

She said it was highly unlikely than any new proposals would be submitted for review before the July deadline.

“If the plan is not in now, it is very unlikely that we would have the time necessary to do a thorough review and get it to the federal government,” Taylor said.

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