After weeks of talk about implementation “train wreck” for the Affordable Care Act, supporters of the law finally got some good news Thursday.
Insurance premiums in California’s health care exchange will provide plans that range from a 2 per cent increase and 29 per cent decrease in premiums, compared to current insurance rates.
Covered California, the state agency in charge of the state’s health insurance exchange, announced on Thursday that the state will provide 13 insurance plans next year. Medium-level “bronze” and “silver” health insurance plans came in nearly $200 lower a month than predicted, according to the Washington Post’s Sarah Kliff.
For those who have been closely following the law and its implementation, these are good signs for overall implementation.
Linda Blumberg, a senior fellow at the Urban Institute, said the news was positive for a number of key reasons.
First, it’s a good sign that the 13 plans have created legitimate competition, which has always been the central goal of the law. And that competition comes in the nation’s largest state actively working to implement Obamacare, which supporters hope will create a model for other states.
“It’s the most important state,” Blumberg told Business Insider. “It’s huge. And it has a large number of uninsured.”
The most important part to Blumberg, however, is that premiums will cost much lower than was expected. In 2009, the Congressional Budget Office estimated that a “silver plan” would cost an average of $5,200 per year. In reality, at least in California, it will cost approximately $3,312, or $276 per month.
For Blumberg, it’s a sign that insurers are not trying to “game the system.”
“It’s a signal to other states and carriers in other states that, listen, you know, there are plenty of insurers out here who want this business, and not everybody is trying to game the system by pricing high out of the blocks.
“Because that’s one thing you worry about. Without implicitly colluding, they all get in there and say, ‘Let’s all bid high and see what happens.’ This is a sign that, listen, there are plenty of carriers out there who are going to try to price this smartly and carefully.”
Obviously, California’s smooth start does not mean implementation will be easy for the rest of the country. In some states — including Alabama, Hawaii, Michigan, Delaware, Alaska, North Dakota, South Carolina, Rhode Island, Wyoming, and Nebraska — there is the problem of a lack of competition and monopolies.
Some states, including Florida and Texas, are not working as hard as California is to implement the law. But for Blumberg, California is the blueprint.
“It’s going to continue to be a mix that’s going to continue to play out across the states,” Blumberg said. “We’re going to see some that are pricing too well, and some that are pricing too high. But I think the dynamics in the market will then lead to changes after that, as you see in California.”
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