Up And Down For Exchange Enrollees

A new actuarial report has determined that tax subsidies will be the deciding factor in whether consumers enjoy a price break when purchasing coverage through the Covered California health insurance exchange.

The report by Milliman, Inc. projects that premiums will increase an average of 9% between 2013 and 2014, driven primarily by changes linked to the Affordable Care Act, including mandates for increased benefits.

The report indicates that those Californians purchasing coverage through the exchange will almost certainly pay more for than they did in the past if they do not qualify for a tax subsidy.

The subsidies are available to households earnings about 400% of the federal poverty level, or $92,400 for a family of four. The report estimates that households earning too much to qualify for the subsidy could pay as much as 30% more for their healthcare coverage.

Covered California will begin enrolling individuals and families beginning Oct. 1, with coverage purchased via the exchange to take effect on Jan. 1, 2014.

Those in the higher income brackets who qualify for tax subsidies should not expect to see much of break, but those families earning about $60,000 a year could save as much as 84% on premiums and around 75% on their healthcare costs depending on what kind of plan they purchase, according to the study. Those in the age bracket between 39 and 64 could also expected to see some price relief.

Peter Lee, Covered California’s executive director, said a combination of the subsidies offered to many of the state’s residents and the enhanced coverage offered as a result of the ACA would save many of them from financial duress should they become ill or are injured.

“This report echoes other studies about potential premium increases that will affect a very small segment of the state's population because 6% of Californians buy coverage for themselves and their families," said Patrick Johnston, president of the California Association of Health Plans. “A small percentage of Californians will purchase their insurance through the exchange, and most will have the benefit of more predictable and comprehensive coverage, as well as subsidies to help pay for that coverage.  But this report shows that lower cost sharing, richer benefits and more predictable coverage will come at a cost for some.”