“Massive rate hikes.’’
That’s how Georgia’s insurance commissioner has characterized the premiums in the upcoming state insurance exchange, being created under the federal Affordable Care Act.
Commissioner Ralph Hudgens received national attention earlier this month when he blasted the premiums in Georgia’s federally run exchange, or marketplace, which will begin enrollment Oct. 1.
Like many other top Georgia Republicans, Hudgens is a fierce opponent of the ACA, and he said he approved the rates July 31 only because the federal government failed to grant an extension on its approval deadline.
“Obamacare will inflict substantially higher health insurance costs on Georgia consumers,’’ Hudgens declared.
But Bill Custer, a Georgia State University insurance expert, has a much different take on the exchange premiums.
Custer, who analyzed the rates for Georgia Health News, said they are basically the same as the ones proposed by health insurers earlier this year.
“These are clearly not major rate increases for most people who currently have individual coverage,’’ Custer said. “They look like group coverage.’’
And many people will qualify for a subsidy that will make the cost of insurance similar or even lower than what they pay now for coverage, Custer said.
He compared the rates to the recent Kaiser Family Foundation survey that found employer-sponsored premiums for individual coverage averaged $5,884, or $490 a month.
Custer analyzed premiums for three Blue Cross and Blue Shield of Georgia plans for nonsmokers in metro Atlanta. The premium for a 40-year-old is $267 a month for a “bronze” plan, with a deductible of $5,550.
The rate would be $330 a month for a $2,000 deductible “silver” plan; and $446 per month for a $750 deductible “gold” plan.
Custer also used a Georgia State simulation tool to estimate average subsidies for consumers.
These credits are available for an individual or family whose adjusted gross income is from 100 percent to 400 percent of the federal poverty level. That’s up to $45,960 for an individual, and $94,200 for a family of four.
For those Georgians qualifying for a subsidy, the average such discount is $289 per month –- and is even higher, $316, for people 19 to 26 years old, Custer said.
The publicized premiums for Maryland, California and New York individual exchanges also resemble rates that an employer would get, Custer said. And the coverage in the insurance marketplace will be much fuller than that in the individual market now, he added.
Custer said Hudgens, in making his remarks about premiums, was probably looking at specific examples of rate increases.
“Certainly some people will pay more because they can’t buy the same coverage,’’ Custer said. But overall he doesn’t see a surge in premiums.
The unknown factors
Currently, rates that Georgians are paying for individual policies are not publicly available. “Nobody knows what is the current average rate in the individual market because each policy is priced for the individual,’’ Custer said.
Earlier this month, Hudgens said that under the new rates, people under 35 will see increases of more than 100 percent. Middle-aged people will see hikes of up to 100 percent, and older residents will face increases of up to 40 percent, he said.
Hudgens said in a statement this week in response to Custer’s conclusions: “The Obamacare exchange rates, which were justified by independent actuaries, will substantially increase health insurance costs for many Georgians. Although not all Georgians will receive federal subsidies, one thing is certain: there is no such thing as a free lunch. All of us will pay for the Obamacare subsidies in the form of higher taxes in the years to come.’’
Georgia has about 600,000 people covered in the individual market now, Custer said. Roughly 372,000 are projected to enroll in the exchange and get a subsidy to make the cost more affordable, he said.
Graham Thompson of the Georgia Association of Health Plans said Hudgens is correct that the majority of Georgians with individual policies will see premiums increase. That’s due, Thompson said, to the ACA’s expanded benefits, such as the banning of pre-existing condition discrimination; rising medical costs; and other factors.
Comparing earlier premiums to those under the exchange “isn’t ‘apples to apples,’ ’’ Thompson said.
But Thompson said health insurers that are offering coverage in the exchange “think the subsidies will drive traffic and interest in these policies,’’ he said.
Some Georgia health plans, Thompson noted, have decided not to enter the exchange, concluding that “it’s too much of an unknown.’’ These plans include Aetna and UnitedHealthcare.
Amanda Ptashkin of the consumer group Georgians for a Healthy Future said she hopes that fears raised about Obamacare costs won’t deter people from at least checking out the exchange.
“There will be options for people that have never been available before,’’ she said.
For more from Georgia Health News, go to www.georgiahealthnews.com.