The premiums for low cost and midprice plans that will be offered on Arkansas’ health-insurance exchange are higher than the average of Washington, D.C., and 47 states for which rate information is available, a report by the U.S. Department of Health and Human Services found.
The report, released Wednesday, found that the average consumer in Arkansas would pay a premium of $275 a month for the cheapest available bronze plan - a plan designed to cover 60 percent of a typical patient’s expenses.
Among all 47 states and the District of Columbia, the average price of the cheapest bronze plan was $249.
Similarly, the average Arkansas consumer would pay a monthly premium of $351 for the cheapest available midlevel, or silver, plan, designed to cover 70 percent of medical expenses. The average price among the states was $310.
The report’s release comes six days before enrollment will start on the exchanges being set up in every state and the District of Columbia under the 2010 Patient Protection and Affordable Care Act.
Arkansas’ exchange is expected to make subsidized coverage available to about 500,000 people, meaning that few people will pay the full premiums.
The report also comes two days after Arkansas Insurance Department spokesman Heather Haywood said the premiums offered in the state were 25 percent lower than the prices originally proposed by the companies that will offer the plans.
On Wednesday, however, she said only one company’s final rates, those of QualChoice Health Insurance, were reduced by that amount during a review by the state Insurance Department and U.S. Department of Health and Human Services.
The rates proposed by Centene Insurance Co.’s Arkansas Health and Wellness Solutions were reduced by an average of 5.3 percent. The rates submitted by Arkansas Blue Cross and Blue Shield and the national Blue Cross and Blue Shield Association were not lowered during the state-federal review.
The original proposals were not available Wednesday.
On Tuesday, eligible individuals and families can begin enrolling and shopping for health coverage on the exchanges.
Adults with incomes below 138 percent of the poverty level - $15,860 for an individual or $32,500 for a family of four - will have their premiums paid by Medicaid.
Those who don’t qualify for Medicaid, but have incomes of up to 400 percent of the poverty level, will be eligible for tax credits to help them buy coverage. The income threshold for the tax-credit subsidies is $45,960 for an individual or $94,200 for a family of four.
The Insurance Department hopes to pay a Little Rock advertising firm $4.5 million for a marketing campaign aimed at encouraging people to sign up for coverage, but the Legislative Council declined to review the contract last week, with some legislators saying they wanted to see the rates for the insurance plans first.
The Legislative Council is to take up the contract Monday, a day before enrollment on the exchange begins.
Premiums on the exchange will vary on the basis of age and regions within states. Wednesday’s Health and Human Services report calculated the weighted averages of all prices and populations by age in each region.
The rate for the lowest-cost bronze plan in Arkansas was the 18th-highest of the states examined for the report.
Arkansas’ cheapest silver plan rate was the 13th-highest premium among the states included in the report.
Rate information was not available for Hawaii, Kentucky and Massachusetts, according to the report.
In all but seven of the states examined, the report noted, the premium for the second-lowest-price silver plan will be less than the $392 per month that the government had estimated.
The price of the second-lowest-price silver plan is used to calculate the amount of the tax-credit subsidy.
For instance, a consumer with an income of 139 percent of the poverty level would be eligible for a subsidy that reduces the price of the second-lowest-priced silver plan to no more than 3.4 percent of his income.
For a consumer with an income of up to 400 percent of the poverty level, the subsidy would ensure that the consumer does not have to pay more than 9.5 percent of his income for the second-lowest-cost silver plan.
In Arkansas, the average price of the second-lowest-cost silver plan will be $366 a month, according to the federal report. The average price of that plan among the 47 states and the District of Columbia was $328 a month.
The tax credit also can be used to buy a cheaper plan. For instance, after the subsidy is applied, a 27-year-old with an income of $25,000 would pay $145 for the second-lowest-cost silver plan in Arkansas, but an average of just $85 for the cheapest bronze plan, according to the report.
The tax credits will be paid directly to the insurance companies at the time the premiums are due, with the consumer responsible for the remaining amount of the premiums.
The average subsidized price of the cheapest bronze plan for consumers of the same ages and income levels was $93 among 36 states for which the federal report examined the subsidy’s effect.
Arkansas consumers also will be able to choose among gold plans, designed to cover 80 percent of medical expenses, and catastrophic coverage plans, which are available to those who are age 30 or younger or who would otherwise have to pay more than 8 percent of their incomes to buy insurance.
Arkansas Surgeon General Joe Thompson said it isn’t surprising that the average rates in Arkansas would be high compared with other states.
Compared with other states, the population of Arkansas is older and less healthy - factors that insurance companies took into account in setting their rates, he said.
He noted that, in a report last month by the Trust for America’s Health and the Robert Wood Johnson Foundation, Arkansas ranked No. 3, behind Louisiana and Mississippi, in the number of adults who are considered obese, and was No. 1 in the percentage of adults who reported that they had not exercised in the previous 30 days.
“If we don’t get our population healthier, we’re always going to be paying more for insurance than states with a healthier population - that’s just the way insurance works,” Thompson said.
According to the report, the average monthly premium for Mississippi’s cheapest bronze plan was $342, the third-highest among the states.
The state with the most expensive low-cost premium was Wyoming, where the cheapest bronze plan averaged $425 a month. It was followed by Alaska, where the average premium for the cheapest bronze plan was $385.
The average premium for the cheapest bronze plan in Louisiana was $265.
The average premium for the cheapest bronze plan was lowest in Minnesota, where it cost $144.
Sabrina Corlette, a senior research fellow at the Georgetown University Health Policy Institute’s Center on Health Insurance Reforms, also pointed to another possible reason Arkansas’ premiums are higher than average.
The Arkansas Insurance Department gave insurance companies the option of renewing plans that do not meet the requirements of the Affordable Care Act on Dec. 31 for coverage that will extend until Dec. 30, 2014.
The insurance companies may have assumed that those who keep their current individual policies will be younger and healthier than those who are uninsured, Corlette said.
“That’s going to drive up prices in the exchange,” she said.
Former state Supreme Court Justice Annabelle Imber Tuck, a chairman of the steering committee planning Arkansas’ exchange, said that comparing the rates in different states can be misleading because each state has a different benchmark plan that was used in setting the requirements for what plans on the exchange must cover.
In Arkansas, Insurance Commissioner Jay Bradford chose Arkansas Blue Cross and Blue Shield’s Health Advantage plan as the benchmark for most of the state’s required benefits.
Those benefits were supplemented with the mental-health benefits in the QualChoice Federal Mental Health Benefit Plan, pediatric vision and dental benefits included in the state ARKids B program and coverage of habilitative services, which include therapies for the developmentally disabled.
“The devil is in the details,” Tuck said. “When you’re comparing price, you’d better be comparing the same product.”
Front Section, Pages 1 on 09/26/2013