David Williams did an excellent job with the most recent edition of the Health Wonk Review – be sure to check it out. One post that everyone should read comes from Health Affairs Blog, and was written by Joel Ario, Adam Block and Ian Spatz. They dig into the details of Silver plan premiums in four major US cities, finding lots of variation in pricing in some areas, and surprisingly little variation in others. As premiums have been slowly publicized over the last several weeks, I’ve seen numerous articles describing rates for ACA-compliant plans and how they vary from one plan to another within the same metal designation. But the Health Affairs article is the most thorough and helpful that I’ve read. The authors not only explain the details, but they also provide five very well-reasoned explanations for rate variation. If you’re confused about premiums for ACA-compliant plans, this article is a must-read. It’s also helpful in terms of helping people understand how plans can differ – even at the same metal level – beyond the basic deductible/copay amounts.
Wide variation in health insurance rates is nothing new. When I run current quotes (not yet 2014 ACA-compliant) for my own family, I get 11 pages of results, with prices ranging from $238/month to $1889/month. Much of that is explained by the vast differences in deductibles ($10,000 for the lowest priced plan, $500 for the highest), but even if I focus on plans that all have the same deductible ($5000, just to pick a middle-of-the-road number), I still get rates that range from $325/month to $924/month. Plan designs can vary greatly from one carrier to another, and provider networks make a big difference in terms of explaining premium variation from one area to another within a state (as an example here in Colorado, the carriers that offer the best rates in the Denver metro area and along the front range are typically not the same carriers that offer the best rates in the mountains or even in nearby Boulder, and much of the variation has to do with provider networks).
So it’s not at all surprising that rates will be significantly different from one carrier to another next year, both in and out of the exchanges. In most states, carriers still have quite a bit of leeway in terms of plan design, as long as they include coverage for the minimum essential benefits and meet the actuarial values required for each metal level (ie, 60% of costs covered for a silver plan, 70% for a silver plan, 80% for a gold plan, and 90% for a platinum plan). Networks will play a large role, as will existing market share and marketing strategies that carriers use. If you’re confused about the details, read the Health Affairs article and you’ll have a much better understanding of the factors that are influencing initial rates for ACA-compliant plans.