The U.S. Department of Health and Human Services for the first time Wednesday unveiled some premiums and plan choices for the 36 states, including Alabama, that have opted for federally managed insurance marketplaces as part of 2010 Affordable Care Act. Some health industry experts say Alabama, despite being dominated by one health insurance provider, will still see affordable plans, many of which will cost about the same as or less than national averages.
The marketplaces, set to begin open enrollment Tuesday and start offering coverage Jan. 1, are designed to provide health coverage to millions of Americans who previously could not afford it. To achieve that goal, the federal government will offer tax credits based on income to help residents pay for the plans, while the marketplaces will encourage more competition among insurance providers, thereby lowering costs.
Sara Collins, vice president of health care coverage and access for the Commonwealth Fund, said premiums in the marketplaces appear to be lower than what the Congressional Budget Office predicted when the legislation was still under debate. The Commonwealth Fund is a New York-based nonprofit health care policy analysis and advocacy organization.
"Premiums are coming in lower than what they were projected to be, before even the premium subsidies are accounted for," Collins said. "This is a major change for people who are uninsured or are buying insurance on their own."
According to the report, residents who enter the marketplace will have the choice of lowest-tier “bronze” plans, mid-tier “silver” plans and upper-tier “gold” plans. Where residents live in the state, their income, family size, age and whether they use tobacco will all affect the plan prices and the amount of tax credit they receive to supplement costs. Residents who are already offered insurance by their employers can opt out of that and enroll in the marketplace, but they might not be eligible for the tax credits.
All the plans are required by law to offer at least the same 10 services, including newborn care, mental health, prescription drugs, hospitalization and ambulance trips. Federal law prohibits insurers from denying coverage based on pre-existing conditions or gender.
"The only thing that varies among the plans is the deductibles," Collins said. "If you buy a cheaper policy, you'll have a lower premium but a higher deductible."
Despite the different variables involved, the report shows that the average costs for the plans in Alabama will be comparable to or below national averages. For example, the lowest cost bronze plan will cost $247 per month, before tax credits, for Alabama residents younger than 65. The national average, however, will be $249 per month.
To give an idea of the kind of tax credits residents might receive, the report shows that an Alabama family of four with a $50,000 annual income would pay $757 per month for a mid-tier plan. After the tax credit, that same plan would cost $282 per month. If the same family decided to switch to the lowest bronze plan, the cost would be $112 per month.
"That's lower than what a lot of people are paying now for private policies," Collins said.
Rachel Dolan, policy specialist for the National Academy for State Health Policy, a Washington D.C.-based organization of state health policy makers, said Alabama's rates are comparable to those in other states, even though Alabama has fewer insurance providers competing. Blue Cross Blue Shield dominates about 90 percent of the health insurance market in the state.
"But for maybe having one or two insurers, rates in Alabama don't look that out of line," Dolan said.
The report shows insurance market regions in Alabama will offer seven different health care plans on average. In contrast, Tennessee market regions will offer 59 different plans on average. Still, prices do not differ much between the two states. For example, a 27-year-old Alabama resident would be required to pay $162 per month, before tax credits, for the lowest tier insurance plan through the marketplace. His counterpart in Tennessee, however, would be required to pay $119 per month, before tax credits, for the same plan.
HHS did not provide a list Wednesday of which insurance providers will participate in the marketplaces.
However, Koko Mackin, spokeswoman for Blue Cross, said her company will offer plans for all coverage levels in Alabama's insurance marketplace. Mackin said the plans will be offered in all 67 counties and have broad physician and hospital networks.
"We are awaiting final approval from the Alabama Department of Insurance, which will occur by Oct. 1," Mackin said.
Mitchell Lubitz, spokesman for insurer Humana, said his company also will participate in Alabama's insurance marketplace.
"Humana does plan to offer a variety of individual health plans on and off the health insurance marketplaces in Alabama starting in October, including catastrophic and high-deductible insurance plans," Lubitz said.
Lubitz said he could not yet divulge how many Alabama counties will be included in Humana's marketplace plan coverage, since the company is still finalizing agreements with HHS. Lubitz said Humana has based its decisions on where to offer marketplace health plans in Alabama and 13 other states, based on where the company has an established business presence and health care provider network.
Jim Carnes, spokesman for Alabama Arise, a nonpartisan group that advocates for low-income residents, said it appears marketplace premium rates will benefit many state residents.
"It will be great for moderate-income and some low-income folks," Carnes said. "The numbers are very positive, right where we wanted them to be and very comparable to other states."
Carnes noted, however, that the marketplaces will be useless for potentially thousands of low-income residents who still do not have enough income to afford them, even with the subsidies.
"If we really wanted to help low-income people, we'd be expanding Medicaid," Carnes said.
To provide health care to more low-income residents, the Affordable Care Act offered free federal money for three years for states to expand and include more residents in their Medicaid programs, which provide insurance for people who can't afford it. However, Alabama opted out of the money in favor of reforming its Medicaid program instead, meaning thousands of Alabamians will remain uninsured.
"There will be a number of adults, especially if their income is under 100 percent of the poverty level, who won't be eligible for Medicaid or the marketplace in Alabama," Dolan said. "I think that's definitely a big issue."
Staff Writer Patrick McCreless: 256-235-3561. On Twitter @PMcCreless_Star.