Obamacare may be a national health law, but it has a different price tag in each state.
Americans under age 65 who buy insurance through the new health exchanges starting Oct. 1 will pay the most in Wyoming and the least in Minnesota, according to data released Wednesday by the Department of Health and Human Services officials.
The report analyzed rates in 47 states and Washington, D.C., including those already released by states running their own exchanges, as well as prices in 36 states where the federal government is running the marketplace. Hawaii, Kentucky and Massachusetts have yet to disclose their rates.
Minnesota has the lowest unsubsidized prices—and is the only state where middle-tier “silver” plans come in at under $200 a month. Monthly premiums for the state’s cheapest “bronze” plan (the lowest tier of coverage) average $144. In Wyoming, meanwhile, the cheapest bronze plans average $425, and silver plans start at $489. Across the country, bronze plans start on average at $249, and silver plans start at $310. (Among people eligible for subsidies, however, premiums will vary by income.)
Exchanges will also offer higher gold- and platinum-tier plans, but those will compete less on price than on quality, insurance consultants say. And government officials say 56% of the currently uninsured will be able to pay $100 or less per month after factoring in federal subsidies.
Excluding subsidies, a comparison of the premiums to the Congressional Budget Office’s earlier projections of $392 per month for the second-cheapest silver plan (on which government subsidies are based) shows that on average plans are costing 16% less. Indeed, the average price of the plan in Minnesota is only $192, or less than half of the projected amount. But the monthly cost is higher than the $392 estimate in seven states, topping $400 in Alaska, Connecticut, Indiana, Maine, Mississippi, Vermont and Wyoming. The latter’s $516 price tag on the second-lowest-priced silver plan is nearly 32% higher than the forecast (see chart below).
Proponents of the health-care law say the data show that this new insurance not only covers services individual plans currently don’t, but, in the words of Kevin Lucia, a research professor at the Georgetown University Health Policy Institute’s Center on Health Insurance Reforms, “the premiums are definitely coming out more reasonably than anyone thought.”
Prices will still vary significantly by age, though. The HHS report is based on average costs for a 27-year-old, which are lower than what older people will pay. The overall state averages include everyone under 65, so younger Americans will likely pay less. In Oklahoma, for example, average monthly premiums for the lowest-cost bronze plan is only $114 for a 27-year-old, but the state average for the same plan is $60 more.
In general, states where more insurers are competing have lower rates, says Gary Cohen, deputy administrator and director of the Center for Consumer Information and Insurance Oversight at the Centers for Medicare and Medicaid Services. States with average premiums in the lowest quartile had an average of eight insurance companies participating, while states with average premiums in the highest quartile only had three, according to the HHS report.
Exchanges in states with few insurers participating tend to be the most expensive. For example, Wyoming, the most expensive, and Alaska, the second-most expensive, each have just two insurance carriers competing for customers. New Jersey, which has four competing carriers, has prices slightly lower, followed by Delaware and South Dakota, where three insurance companies are participating in each state.
“The more vendors that are competing, the lower the rates are going to be,” says John Haslinger, vice president of ADP Strategic Advisory Services. But rates could also be higher in certain regions, he adds, because those areas have more people with pre-existing conditions and health risks, which in turn could deter insurers from competing.
Weighted average premiums in 48 states
|State||Lowest-cost silver||Second-lowest-cost silver||Lowest-cost bronze|
|District of Columbia||$293||$297||$204|
|Weighted Average, 48 States||$310||$328||$249|
Source: U.S. Department of Health and Human Services.
* New York premiums are the same for all ages.
** Vermont premiums are the same for all ages.
NOTE: Premiums shown above are a weighted average of the lowest-cost silver plan, the second lowest cost silver plan, and the lowest cost bronze plan in each rating area within the 36 Supported State-based Marketplaces, State Partnership Marketplaces and Federally Facilitated Marketplaces as of Sept. 18, as well as 12 State-based Marketplaces. The rating area weights are constructed based on county-level population under the age of 65. For State-based Marketplaces, premiums are a weighted average across all rating areas for California and New York, and are for the entire state in Rhode Island and Vermont and in D.C. For the remaining states, premiums are for the following rating areas: Denver, Colo.; Bridgeport, Hartford and New Haven, Conn.; Baltimore, Md.; Minneapolis and St. Paul, Minn.; Las Vegas, Nev.; Portland, Ore.; and Seattle, Wash. Age weighting for all states is based on expected age distribution in the marketplaces, estimated by the RAND Corporation.