The state insurance exchange, one of the biggest changes wrought by the Affordable Care Act, will open in three and a half months for hundreds of thousands of Georgians who don’t get insurance where they work — the self-employed, the unemployed, students and workers whose employers don’t pay for benefits.
The exchange is a website where people will shop for health coverage. And though the site itself has not been unveiled, seven insurance companies that want to compete on the exchange have filed their game plans — including their proposed pricing sheets — with the state Department of Insurance.
Healthy consumers in their twenties will often face much higher prices than they pay today, and South Georgia residents will pay significantly more for the same coverage than people in metro Atlanta, according to an analysis of the insurance filings by The Atlanta Journal-Constitution. At the same time, the government will help many individuals pay for their insurance, and it will be illegal for insurers to shun applicants with less-than-perfect health.
For Bobby Mitchell, a Fayette County small-business owner, the opening of the insurance exchange means that he will no longer be turned down for coverage because he has diabetes.
But for Sarah Lucisano, a 23-year-old Atlantan who just bought an $86-a-month health plan, the requirements of the Affordable Care Act will likely mean that the cost of her coverage could more than double. Lucisano said she understands it's important for everyone to have insurance. Even though she doesn't like the idea of consumers being forced to buy a plan, she said she will pay more if she has to.
“I wish it didn’t have to come down to that,” she said. “I wish everyone could get a great price.”
An opportunity for insurance companies
Most Georgians who receive their insurance at work will continue to do so and won’t shop on the exchange. But the new marketplace is a big deal because it is so central to the Affordable Care Act’s promise to offer Americans a route to affordable insurance.
The detailed insurance filings revealed clues about how much of this promise will be kept once the law’s most significant changes take effect in 2014, when new coverage sold on the exchange will kick in and when most Americans must have insurance or face a penalty.
While seven insurance companies filed their proposals to sell on the exchange, most aren’t selling in every corner of the state. Some big players — including Cigna and UnitedHealthcare — did not file plans to sell on the exchange.
About one in five Georgians is uninsured, and the exchange does offer insurers a shot at a whole new set of customers, many of whom may have gone without insurance for years, if not their entire lives. Some companies see an opportunity on the exchange since the government has promised to help pay for the plans of many consumers who can’t get affordable coverage at work.
Blue Cross and Blue Shield of Georgia is the only insurer that plans to offer coverage in every region of the state, according to the filings.
“We cover a large number of folks here in the state of Georgia and they are counting on us to come up with solutions that make sense in this new world, and that’s exactly where we’re aligned,” said Morgan Kendrick, president of Blue Cross and Blue Shield of Georgia.
Sticker shock in store for young people
The Patient Protection and Affordable Care Act is touching virtually every health plan in one way or another. The law requires most health plans, for example, to allow workers to add children up to age 26 to their plans and to cover preventive care with no out-of-pocket costs. The biggest changes are coming to the segment of the market where people buy their own insurance because that’s where consumers faced the most difficulty finding coverage they could afford without an employer picking up part of the tab.
“One of the promises of the exchange was that it would offer individual coverage at similar rates to those offered to employees of large companies, and that appears to be the case,” said Bill Custer, a health insurance expert at Georgia State University. “What that means, though, is that some younger and healthier individuals who purchase insurance coverage now will face premium increases but many individuals who have been shut out of the insurance market will find coverage that is affordable.”
On top of banning insurers from refusing coverage to people in poor health, the Affordable Care Act also tries to help older consumers by setting limits on how much the companies can mark-up pricing based on age.
While that requirement will help make coverage more affordable for older consumers, it will pump up premiums for plans sold to young consumers.
Sarah Lucisano was happy with price of the $86-a-month from Aetna that she found recently by shopping on eHealthInsurance.com.
Lucisano is close to finishing her communications degree at Georgia State University and she works part-time at Chick-fil-A and as a nanny. The premium fit her budget and unlike many others her age, she did not want to risk going without coverage.
“I grew up playing soccer very competitively, so I had a fair share of little injuries,” she said. “Being young, I drive and I understand that just any minute an accident could happen and I just know that I don’t want to run into any situation where if there was an accident, if I was out hiking and slipped and fell — I do not want to have any issues getting care.”
While brokers say they can often find a policy for under $100 a month for a young healthy consumer today, that may not be true for long.
The insurance filings show that most insurers expect to charge consumers in their 20s about $175 to more than $300 a month, depending on the plan.
Income-based subsidies available on the exchange could help ease the sticker shock. Take the example of a 25-year-old nonsmoker making $20,000 a year. If her insurance costs about $3,000 a year, she could qualify for a subsidy that would cover about $2,000 of the cost.
‘It just strikes me as really unfair’
Mitchell, the Fayette County business owner, is counting down the days until Oct. 1.
Last fall, he dropped the group plan for his employees and family after his yearly premium soared to roughly $25,000. Mitchell bought individual insurance for his two daughters. But insurers have turned away the 53-year-old and his wife, who is 63, because of his Type 2 diabetes and her high blood pressure.
The exchange, Mitchell hoped, would finally put affordable insurance within reach and bring an end to the day-to-day anxiety of living without a medical safety net.
Now, he’s not so sure.
His first look at the prices insurers are proposing for the exchange struck Mitchell as surprisingly high.
A silver plan through Blue Cross would cost roughly $1,800 a month, or nearly $22,000 for the year to cover himself, his wife and two daughters. That price tag isn’t much better than the group plan, Mitchell said.
Federal subsidies are available on the exchange to anyone whose family income falls between 100 percent and 400 percent of the federal poverty line. For a family of four, subsidies would be available at incomes up to $94,000.
The subsidy amounts vary greatly according to income. For a family of four making $75,000 a year, for example, a typical subsidy could cover about $14,000 of the cost of a typical $22,000 annual premium.
Mitchell said he’s not sure federal subsidies will help him. He said his family’s income from his small business ebbs and flows, sometimes falling below the poverty line if he has a bad year.
The law originally intended that people with incomes below 100 percent of poverty would be covered by Medicaid, which was to expand by millions of people in the 50 states. Georgia, however, opted not to expand, leaving thousands of people ineligible for Medicaid or for federal subsidies.
But that doesn’t mean Mitchell thinks he should receive thousands of dollars in subsidies from the federal government. He lives in a nice home and has money in his savings account.
“I don’t deserve a subsidy,” Mitchell said, adding that there may be people who get subsidies who don’t necessarily need it. “It just strikes me as really unfair to all the people who have to subsidize that person’s insurance.”
‘Insurers can’t expect to hide’
The plans submitted by the insurance companies aren’t final. Like any new plan a Georgia insurer wants to sell, all of these plans will have to win approval by the state Department of Insurance.
State Insurance Commissioner Ralph Hudgens strongly opposes the federal health care law and said in a statement that he’s concerned the law will drive up the cost of insurance for many Georgians. He said his office is turning over the plans to independent actuaries for scrutiny.
“Insurers cannot expect to hide behind changes in federal law as a pretext for boosting their bottom line,” Hudgens said. “My first responsibility is to protect Georgia consumers and as Obamacare continues to unfold, I will do my best to fulfill that duty.”
But prices are likely to be higher for many consumers.
Health benefits that insurers will be required to offer, new taxes, rising medical pricing and expanding coverage to people with pre-existing conditions will affect rates inside and outside the exchanges, said Walt Cherniak said, a spokesman for the insurance giant Aetna, which plans to sell on the exchange.
With the law’s requirements pushing up some costs, insurers are looking for ways to design plans to compensate for some of those increases. Kendrick, president of Blue Cross and Blue Shield of Georgia, said consumers should expect many plans on the exchange to offer a tighter network of doctors and hospitals.
That’s how the companies will keep costs down: they can negotiate better rates from health care providers if they can promise them more patients. That means consumers might need to carefully compare plans based not just on the price, but on which hospitals and doctors are included in that plan’s network.
How much Georgians who shop on the exchange will pay will vary significantly depending on where they live, the filings show. Consumers who live in the South Georgia region around Valdosta and the southwest Georgia region around Albany may need to prepare for significant sticker shock. The new filings show that pricing in those regions will be 20 to 30 percent more costly than plans sold elsewhere, the AJC review found.
Russ Childers is an insurance broker from Americus, which is part of the insurance region that includes Albany.
He’s concerned about pricing for many of his clients in the individual market who had opted for affordable but stripped-down plans. Not only will they be paying more because of their high-cost region, they must also buy a plan with more robust coverage because the law only allows “qualified health plans” with a full buffet of benefits to be sold on the exchange.
“It could be argued that you have a lot better plan, but what if somebody doesn’t want to buy a lot better plan?” he said.
‘We have got to shop for insurance’
Nearly 900,000 Georgians are expected to shop on the exchange. With so many changes, many consumers may need help figuring out what makes the most sense for them. Local brokers, online health insurance sites and a new workforce of so-called “health insurance navigators” are all preparing to help guide consumers as they venture onto the exchange.
Navigators will be charged with helping consumers determine if they are eligible for commercial health insurance, federal tax subsidies, the state's Medicaid health program for the poor, and other services. Community nonprofits and other groups are expected to hire navigators, who will be paid with federal grant dollars.
Meanwhile brokers and online health sites are preparing to offer more in-depth guidance to consumers too. Even people who have bought their own plans for years might need some assistance because so much is changing.
Sam Gibbs, a senior vice president at eHealthInsurance.com, thinks the nation will be ready for the exchange.
“Americans love to shop – we invented eBay,” he said. “We have got to shop for insurance. It can be confusing but there’s going to be a ton of information. I think they’ll be able to figure it out.”
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