Cost to Rise 88 Percent for Ohio Insurers to Provide Required Benefits in the New Health Insurance Exchange

Ohio analysis of proposed insurance plans in health exchange shows higher costs for insurers, which would be passed on to consumers. According to a report by the Ohio Department of Insurance, a healthy young man in the individual marketplace created by President Barack Obama's health care law could experience a rate increase of between 90 percent and 130 percent, while a 60-year-old with chronic health conditions may see a significant premium decrease.

State: Health insurance costs to rise for Ohioans

June 7, 2013

AP - Insurers who plan to participate in the new health insurance exchange are projecting their costs to cover Ohioans to be significantly higher, according to an analysis released Thursday by the Ohio Department of Insurance.

That means individuals should also brace for potentially higher costs when purchasing coverage through the new insurance marketplace created by President Barack Obama's health care law, state officials said.

The state analysis did not look at insurance premiums — the prices individuals would pay. The review examined the cost to insurers to provide the required benefits in the exchange.

Republican Lt. Gov. Mary Taylor, who is also the director of the state's insurance department, said specific premiums will vary for consumers and could change as the state agency reviews the plans.

But, she told reporters in a conference call,

"The premiums will track very closely with the cost."

Consumers can get private health insurance, subsidized by the government, through the exchange. Open enrollment starts Oct. 1, and coverage takes effect Jan. 1, 2014.

Taylor said the department's analysis didn't take into account the impact that government subsidies may have on what Ohioans could pay, adding that the agency didn't have the information needed to quantify it.

Republican Gov. John Kasich chose to let the federal government operate the exchange, instead of the state setting up its own. However, the state says it has the authority to regulate health plans in and out of the exchange.

Fourteen companies, including Aetna and Medical Mutual of Ohio, have filed proposed rates for a total of 214 different plans. Projected costs to the companies for providing the required health benefits under the law ranged from roughly $283 to $577 for the individual health plans, the state said. The average cost was $420.

Citing data from a March study from the Society of Actuaries, state officials said the average cost of the proposals was 88 percent higher than the state's current average cost to cover an individual health insurance plan. 

Taylor, the state's most vocal critic of the federal Affordable Care Act, acknowledged the benefits required by the law are "much richer" than the benefits previously available to Ohio consumers.

The Obama administration has questioned the design of the Society of Actuaries' study, saying it focused only on one piece of the puzzle and ignored cost relief strategies in the law, such as tax credits to help people afford premiums and special payments to insurers who attract an outsize share of the sick. The study also doesn't take into account the potential price-cutting effect of competition in new state insurance markets, administration officials have said.

More than 1.5 million Ohio residents are uninsured, or about 14 percent. An estimated 524,000 Ohioans would be enrolled in the exchange designed for individuals by 2017, according to a report prepared for the state's insurance department by consulting firm Milliman Inc.

According to the Milliman report, a healthy young man in the individual market could experience a rate increase of between 90 percent and 130 percent, while a 60-year-old with chronic health conditions may see a significant premium decrease.