California just unveiled a wide array of choices for the 5.3 million people expected to qualify to purchase coverage through its online marketplace established by federal health overhaul.
It's the first disclosure of prices in the nation's most populous state for individual health insurance that complies with the Affordable Care Act, and the menu of affordable options surprised some consumer advocates and analysts who had been expecting premiums to be much higher.
"I'm impressed," said Betsy Imholz, director of special projects for Consumers Union. "I actually think they are good prices," she said, especially for those who will receive federal insurance subsidies.
The worry had been that shoppers in the individual insurance market would face sticker shock when the sweeping changes of the health law take effect beginning in January 2014. The law prohibits health plans from rejecting people with pre-existing conditions and doesn't allow insurers to charge women and sicker people more.
Nearly three dozen health plans submitted bids to sell their products in the competitive marketplace, and 13 were selected. But California exchange officials, authorized by state lawmakers to negotiate on behalf of consumers, rejected bids that were too expensive, they said, or failed to include enough choices of doctors and hospitals.
The companies approved to sell individual insurance on the exchange include the state's dominant commercial players, such as Anthem Blue Cross, Kaiser Permanente, HealthNet and Blue Shield of California. A number of regional and quasi-public health plans that rely on public and university hospitals and community health centers to deliver medical care to low-wage workers were also approved.
The proposed premiums still get the OK of state insurance regulators. Three of the nation's largest players in the employer-sponsored insurance market — UnitedHealthCare, Cigna, and Aetna — aren't going to be selling on the California exchange.
The proposed premium prices vary depending on where in California the buyer lives. Other factors that affect pricing include the consumer's age and the richness of benefits.
Under the premiums unveiled Thursday, a 25-year-old in Los Angeles could choose a Health Net catastrophic plan for $117 a month or a more comprehensive plan for $147 a month from L.A. Care, the nation's largest public health plan.
People making less than about $45,600 per year would qualify for a subsidy that would lower the premiums further.
More than half of Californians shopping for insurance through the state-run marketplace will be eligible for federal income tax credits. Those credits will help offset the price of private insurance: a 40-year-old individual in Los Angeles, for example, who earns $1,915 a month, or 200-percent of the federal poverty level, would pay a monthly premium of $90 for a Health Net HMO "Silver" plan in 2014, according to the rates released by Covered California.
At a media briefing in Sacramento, which had a celebratory air, exchange officials said the restrained premiums largely reflected deft negotiating by the health plans with thousands of doctors and hospitals, including powerful hospital chains whose market clout has been blamed for rising health care costs in California.
"We made the pitch that we can't sustain the current system with 7 million Californians not being insured," said Paul Markovich, president of Blue Shield of California. "We felt there was a rate at which they could still be financially viable, but it would make rates much more affordable for this population."
The rate for an individual plan offered by Blue Shield of California will increase an average of 13 percent for existing customers, said Markovich. But the benefits, he said, as mandated by federal and state regulators and uniform across all health insurance packages, will look more like the comprehensive insurance workers receive from employers.
Health care analysts said simply calculating how much an individual's premium might increase next year was an incomplete — and faulty — assessment of the competitive marketplaces the federal health law was meant to unleash in each state. Caroline Pearson, a vice president at Avalere Health, a consulting firm Washington, said she judged California's performance by whether residents would have access to insurance products priced around $5,200 a year, the Congressional Budget Office's estimate for an average individual market premium.
And every region in California, based on her analysis, will offer plans below $4,000 a year. The offerings "strike me as very competitive," said Pearson. "It speaks to the number of carriers that were attracted to the market, and that the exchange created competition to drive down prices."