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People have been speculating for years how much health insurance will cost when the federal requirement to have it kicks in in 2014. Well, Colorado just got that answer. State regulators Friday released which health plans they’ve OK’d for sale next year, and the prices for them, which regulators can also approve or deny.

How the rates look depends on who you talk to. Here are early answers to questions many people have about the new rates.

So, everybody wants to know - will health insurance be more or less expensive under Obamacare?

It’s actually impossible to do a direct comparison of prices before and after the Affordable Care Act, but what we can say for now is that prices next year generally aren’t a whole lot higher or lower than they are this year. We’re not seeing the so-called “rate shock” that some opponents of the health care law warned was coming.

So prices aren’t a lot higher, but you say its impossible to directly compare health insurance prices now to those next year. Why?

Deborah Judy, a consumer advocate in Denver explains, "Right now, insurers can set their rates based on a person’s health, but in 2014, that is no longer allowed, so for those people who do have a health condition, that will no longer be taken into account for the rates they pay for their health insurance."

So right now, a healthy 27 year old is going to pay a lot less for the same coverage, than, say, a 55 year old who’s had two heart attacks, and that’ll be different next year under Obamacare?

Right. Insurance companies can still charge some people more than others next year , but not nearly as much more as they could before, and they can only charge more based on a person’s age, where they live and whether they use tobacco. But again, how much more they can charge is far less than before.

So, if we’re asking whether coverage available now will cost more or less in 2014, it sounds like it’s going to cost that 55-year-old with the bad heart a lot less?

Yes. A person like that may not have even been offered a policy by a commercial carrier before, or they would have only been offered one at such a high prices that it would have been totally unaffordable. So, for that person, health insurance under Obamacare is going to cost a lot less.

Does it also hold that that healthy 27 year old is going to pay a lot more under Obamacare, then?

Strictly speaking, no. Prices for policies in 2014 don’t look that much different than those now. Right now, the average health insurance premium in Colorado is about $200 a month, there are policies in that price range being offered in 2014, too, some for more, some for a little less.

A lot of critics of the health care law complain that it contains a lot more mandates, and that means people won’t be able to buy the very bare-bones policies available on the market now. To some people, that means less choice in the market, and that they’ll have to buy more coverage than they feel they need, and they don’t like that.

But, there will be an option in Colorado next year for a minimal coverage, so-called “C-Y-A,” plan, that’s an acronym for “cover young adults,” that’s aimed at people who don’t plan on using much health care but want a backstop in case of a catastrophic event like a car accident or really expensive diagnosis.

It’s also true that one choice people have in the marketplace now will go away next year, the choice to not have coverage at all, right? The federal health care law says almost all Americans have to have health insurance starting next year or pay a tax penalty.

That’s true.

And if a person chooses not to have coverage now, and they have to buy a policy next year, it seems like that means they are going to be paying more.

Maybe, and that’s certainly how opponents  of the law are spinning it. Bob Gardner, a Republican state representative from El Paso County who’s no fan of Obamacare, says, "There are an awful lot of people who are not going to insure, because they’re healthy, and the penalty for not being insured is a lot lower than the cost of a penalty."

Seems like he’s got a point, the penalty is only, what, $95?

Yes, the first year. It’s $95 or 1% of a person’s income, whichever is more, but it goes up the next couple of years to 2.5%, which is quite a bit more.

But here’s the argument that people who like the health law make: A lot of people won’t be paying the full list price of a policy anyway, because they’ll qualify for a subsidy, so the difference between paying the  penalty versus what they’d have to pay for coverage is going to be smaller than at first glance. And, a lot of people who don’t have coverage now want it, but they just can’t afford it. So even if a policy does cost more than paying the penalty, if they’re getting enough subsidy to make it affordable, a lot of people are going to choose buying health insurance and feel like it’s money well spent.

It sounds like the takeaway from this announcement the state just made of how much health insurance is going to cost next year is that people need to look beyond just the list prices to figure out what the financial impact is going to be for them?

Yes, and again, we’re talking about a relatively small slice of the Colorado population. If you already get health insurance through your job, chances are, very little will change for you. You don’t have to go out and shop for a new policy, you’re already covered.

But are you allowed to decline your employer’s coverage and shop -- say, if your employer doesn’t kick in much assistance or you don’t like the policy?

You can decline your employer’s health plan and shop on your own, but if the plan your employer offers is deemed “affordable,” then you won’t be eligible for a subsidy, even if you’re pretty low income.

And “affordable” is?

Nine and a half percent of your annual household income. So if your employer plan costs less than that and you don’t accept it, you can still shop on your own, but you won’t be able to get a subsidy to help you afford coverage.

Right now if I decline my employer’s plan and take a financial contribution instead, they essentially give me money instead of what they would contribute towards a health plan -- is that still possible?

It is, but that financial contribution your employer makes to shop for your own coverage is taxable income. If you stick with a company health plan, the employer’s contribution towards your premium is NOT taxable - so you need to think carefully about which way to go there.

The consumer advocate I talked to, Deborah Judy at the Colorado Consumer Health Initiative gives the new plans and rates a thumbs-up at this point. "I think we see more options across the state now generally in 2014 with these plans than probably we do now," she says.

But she warns that her organization and other consumer advocates are still sifting through the details. They’re looking at stuff like, what is the difference in how many plans will be available in rural areas versus cities, how big are the price differences and, very importantly, what do the provider networks for all the health plans look like? It’s one thing to pay for a policy and get an insurance card, but if there aren’t clinics in your area that take it, or you have to wait a long time for an appointment, that's a problem.  There are already a lot of places in the state that are considered “health professional shortage areas,” in both rural and urban locations, so that concern about being able to find a doctor or clinic are legitimate. We’ll be keeping an eye on that and reporting more on it as things move along.

And October 1 is when people can actually start signing up for these plans, which will take effect as early as January 1, right?

Right, people are being given from October 1 to the end of February to sign up.

 

For more information:

State of Colorado Division of Insurance

Connect for Health Colorado