By Katie Kerwin McCrimmon
Rate shock. What rate shock?
That seems to be the initial reaction both in Colorado and in states like California as rates for new plans proposed under Obamacare begin to emerge.
Here in Colorado, while regular folks enjoyed Memorial Day, health policy geeks and insurance actuaries were mining a state website trying to find out how hundreds of proposed rates in Colorado look.
The news about Colorado rates has been very slow to emerge because Colorado’s Division of Insurance (DOI) had a computer snafu that prevented industry insiders and members of the public from easily analyzing the new rates.
Officials at both the DOI and Colorado’s new health exchange say that the computer problems that DOI has dealt with have nothing to do with how easily customers will be able to view plans and shop for health insurance once the exchange, known as Connect for Health, opens on Oct. 1. (To search for rates, click here. For FAQs on rates, click here.)
Vince Plymell, spokesman for the DOI, says 13 carriers are offering about 242 plans to be sold on the exchange. About 150 of those plans will cater to individuals.
While DOI officials still are working to improve their search engine and are hoping to release a definitive spreadsheet of proposed rates by next week, others are simply doing analyses of their own.
And, to Dede de Percin, executive director for the Colorado Consumer Health Initiative, the early findings look good for consumers.
“So far, we’re seeing some great rates, particularly from the co-op (Colorado’s new customer-owned nonprofit health insurance company cooperative called Colorado HealthOP),” de Percin said. “They look really competitive. We’re also seeing some decent rates from other insurers.”
For instance, a 21-year-old in Denver could buy a health plan for about $150 a month from Colorado HealthOP. A 40-year-old living in Denver would pay about $270 per month for a mid-level “silver” plan. Out-of-pocket costs for most people will be much less than that since many consumers will qualify for tax subsidies to defray the costs of health coverage.
Julia Hutchins, CEO of Colorado HealthOP, thinks the proposed rates in Colorado are an early sign that Obamacare will work.
“It’s great for consumers. They will have a lot of choice. Prices look good overall. People who have insurance now should consider other options,” Hutchins said. “There is not rate shock. Kaiser (Permanente) looks good. We look good. Overall, for consumers and small businesses, 2014 will be a good time to shop for health insurance.”
The new health co-op will be selling insurance statewide and as the new kid on the block, has rather modest plans to have about 25,000 customers in its first three years. In particular they’ll target 20-somethings such as graduate students.
“We believe everyone should have the option of choosing a co-op,” Hutchins said.
- All Savers
- Colorado Choice Health Plans
- Colorado Health Insurance Co-Op
- Denver Health
- HMO Colorado (Anthem)
- Humana Health Plan
- Kaiser Foundation Health Plan of Co.
- New Health Ventures
- Rocky Mountain Hospitals & Medical Services, DBA Anthem BCBS
- Rocky Mountain HMO
- Rocky Mountain Healthcare Options
- SeeChange Health Insurance Company
Source: Colorado Division of Insurance
She said the co-op’s low overhead allows it to offer less expensive plans. In addition, customers will own the health insurance company so they’ll get to decide what to do with any profits: return them to customers or invest in better quality.
“The only way we’re really going to address costs in the long run is by recognizing that it’s our money too,” Hutchins said. “It’s a powerful model for health insurance.”
Hutchins said Colorado HealthOP is partnering with local providers who will focus on keeping people healthy, not on providing “sick care.” There will be incentives for both patients and providers to commit to improving quality while reducing costs.
“This is a long-term investment that will pay off over time,” Hutchins said.
Created in concert with the Rocky Mountain Farmers Union, the co-op aims to serve people who haven’t gotten good health coverage in the past.
“Our ideal customer is someone who really share’s the co-op’s philosophy and really believes in improving their own health or the health of the community,” Hutchins said. “The biggest opportunity is for folks who haven’t had reliable health insurance in the past.”
Representatives for other health insurance providers did not respond to requests for comment on their rates or those of competitors. But a statement on the Colorado Association of Health Plans’ website http://www.colohealthplans.org/ said that the industry is pleased that “every member of our health insurance plan association…will be offering a product on the Connect for Health Colorado exchange.
“The number of insurers that have filed plans to be sold on the new exchange shows our industry’s commitment to quality, affordable health care for all,” the association’s executive director, Ben Price, said in the statement.
While objecting to new taxes under the Affordable Care Act that the industry is fighting to repeal, Price said consumers should be able to access new high quality health plans.
All plans are required to cover “essential benefits.” These include outpatient, emergency and hospital services; maternity and newborn care; mental health and substance use treatment; prescription drug coverage; rehabilitation; labs; preventive and wellness care; chronic disease management; and pediatric dental and vision care.
For de Percin of the Colorado Consumer Health Initiative, it’s important to note that many people will qualify for subsidies, that the plans they’ll get are entirely new and that even if some rates seem high, the existence of some lower bids will foster greater competition.
“You only need some of the insurers to have good rates because that’s going to drive people to them. As long as we have some competitive rates, then we have a competitive market,” she said.
“We’re still digging through all of it,” de Percin said. “We’re seeing some rates all over the place, but there is not rate shock.
“I really want to make the point that these are new rates for new products with new coverage.”
Caroline Pearson, an analyst who studies health exchanges as a vice president for the national consulting firm, Avalere Health, said the relatively high number of plans in Colorado is noteworthy.
“You had a lot of participation. What was most striking about Colorado is the remarkable multitude of plans that will be there,” she said.
While Colorado should have healthy competition, Pearson said having scores of choices could actually be confusing for consumers.
“Is it too much? Does it become an overwhelming shopping experience?”
While Colorado has a significant number of carriers choosing to participate in its exchange, it’s not the highest in the country. Oregon, for instance, will have 16 carriers selling plans in both its individual and group market, according to Pearson. And so far, rates are being unveiled in about eight states.
Some health advocates in Colorado have theorized that carriers want to do business in Colorado because the population is relatively healthy. But Pearson said the reasons companies have chosen particular markets are more complicated than that.
“It’s been a little hard to parse. We’re seeing more participation in larger states with larger populations. Bigger markets are drawing more (carriers),” Pearson said.
But that’s not true across the board.
For instance, in the northeast, regional health insurance companies dominate and states there will not have a high number of carriers offering multiple plans.
Other states should have a lot of competition, but don’t. For instance, Pearson said Illinois has just six carriers. Meanwhile, the District of Columbia has four carriers, but they’re offering a lot of choice: 259 plans.
Pearson said the jury is still out on rates. In California, she said a high degree of competition drove down rates.
In Oregon, some carriers asked for “do-overs,” wanting to reduce their rates after they saw what other companies proposed. That could happen in Colorado as well. DOI analysts are now reviewing each of the proposed plans. They will determine if each plan offers all the components that it must and if the proposed rates are reasonable. They will ensure that rates are “actuarily sound” and that they are neither too low nor too high. Final rates will be approved by July 31. Until then, Pearson said rates could change slightly.
“There are so many new moving parts. You could see a little flux,” she said. “I wouldn’t be surprised if states revise their numbers.”