Florida insurance regulators unveiled for the first time Wednesday the prices proposed by private insurers for individual health plans to be sold on the state’s federally-run exchange, which is scheduled to launch Oct. 1.
But the proposed health plans and prices — and the state’s analysis that federal healthcare reform would cause premiums to rise — were hardly definitive of the actual costs that Floridians are likely to pay for health insurance next year.
That’s because the U.S. Department of Health and Human Services has yet to approve the proposed health plans for Florida’s exchange, and those plans, including the prices, may change as they have in other states.
And while Florida insurance regulators said this week that the Affordable Care Act will cause the price of individual health plans sold in 2014 to rise 30 to 40 percent higher than similar plans sold today, and small group plan premiums could rise by 5 to 20 percent, they also conceded that those projections were based on a “hypothetical” health plan that does not exist anywhere in the state.
What’s more, the price projections released by the state do not factor in substantial government subsidies that will be available to many consumers based on household income, which will offset their actual out-of-pocket expenses.
Speaking to the Florida Health Insurance Advisory Board on Tuesday, Florida’s insurance commissioner Kevin McCarty said that the federal mandate for insurers to provide coverage to everyone regardless of pre-existing conditions was “the most profound reason” for the projected dramatic increase.
Echoing his remarks, Wences Troncoso, the state’s deputy commissioner for health and life insurance, said the fact that insurers must cover everyone regardless of pre-existing health conditions — a provision called “guarantee issue’’ — “will by far have the most effect on rates.”
Troncoso also attributed rate hikes to the federal requirement that insurers no longer charge women of child-bearing age higher premiums than men. Nor will they be able to charge older policy holders more than three times the price of their least expensive plan.
But federal officials balked at Florida’s projections late Wednesday, and said that the state’s experience should reflect what has occurred in other states.
Citing an HHS study of 11 states where insurance plans have won federal approval for sale on the government exchanges, an Obama administration official said premiums were on average almost 20 percent lower in those states than what the Congressional Budget Office had projected.
“We are confident that Florida’s premiums will be affordable, and that consumers will have multiple options in a competitive and transparent marketplace,’’ a senior administration official said. “When the marketplaces open Oct. 1, consumers will be able to shop for the plan that best fits their budget and needs. Without releasing the premiums, the statistics released Tuesday don’t provide consumers with any information on what they will actually pay in the marketplace.”
Yet there’s also a limit to the federal government’s power to affect health insurance pricing.
Federal officials do not have authority to approve a plan based on rates. They can only evaluate plans to determine whether they meet the standards of the Affordable Care Act, not whether the premiums are reasonable.