WASHINGTON -- The cost of health coverage under Obamacare remains one the biggest mysteries of the nation’s health care overhaul.
But nagging cost questions will slowly be answered this summer as insurers and state officials set 2014 health plan rates for people who buy coverage outside of work or purchase it through small employers.
Those two coverage areas – the individual and small group markets – face the biggest rule and cost changes next year, when the main provisions of the Affordable Care Act finally kick in.
Early rate proposals around the country are a mix of steep hikes and modest increases. The numbers will change in coming months as state and federal regulators use their new authority under the health care law to review rate-hike requests of 10 percent or more and insurers vary their rate proposals based on competitors’ prices.
The new rates and rules for individual and small group coverage won’t directly affect roughly 84 percent of Americans with job-based health insurance – about 125 million people. But the changes will resonate throughout the health insurance universe and will go a long way toward shaping, and possibly changing, public opinion about Obamacare.
“This is a very, very big deal,” said Doug Holtz-Eakin, the president of the American Action Forum, a conservative research center. “The implications are enormous for the future of American health insurance, and its importance is not best measured by the fraction of people currently covered in the small group or individual markets.”
About 24.5 million people have small-group coverage through companies with 50 or fewer employees, according to federal estimates.
Just 15.4 million people purchase individual coverage, according to the nonpartisan Kaiser Family Foundation, a nonprofit health care research center. But that number will increase substantially next year, when premium tax credits become available to help people buy individual coverage through the new online insurance “exchanges” in October.
The individual, or "non-group," market is the most troubled sector. It’s known for high customer dissatisfaction and turnover, high coverage denial rates, lean benefits and premiums that are subject to frequent increases.
The health care law will engineer a complete makeover of individual coverage next year through a series of revisions that are designed to make newly issued policies more generous, accessible, affordable and transparent.
The new rules guarantee access to individual coverage regardless of current or past health problems, require each plan to cover at least 60 percent of costs and limit annual out-of-pocket costs such as co-payments and deductibles.
They also require beefed-up mandatory benefits, limit the amount that older plan members may be charged, outlaw annual benefit-spending limits and no longer allow insurers to vary rates based on a person’s gender, occupation or medical claims history.
Small group plans face the same changes, but they’re more likely to already meet some of the law’s new requirements, such as guaranteed access to coverage. So rate changes in small group plans won’t be as significant as those in the individual market, experts say.
The health law’s “individual mandate” requires all Americans to have health insurance beginning next year or face a fine. The law will bring insurers 25 million new customers over the next decade, according to federal estimates.