Federal insurance exchange subsidies cut premiums by average of 76%, HHS reports


The Department of Health and Human Services released an analysis of the first open enrollment period of the heatlh insurance marketplace, and the subsidies for coverage. (Karen Bleier/AFP/Getty Images)

The Americans who qualify for tax credits through the new federal insurance exchange are paying an average of $82 a month in premiums for their coverage — about one-fourth the bill they would have faced without such financial help, according to a new government analysis.

But the analysis shows wide variations among states in the premiums that people are paying for their new insurance, the amount the government is picking up and the proportion who qualify for the subsidies.

The 28-page report, by the Department of Health and Human Services, is the government’s first effort to gauge the affordability and availability of health plans under the Affordable Care Act, now that the first insurance sign-up period has ended.

Federal health officials, who insisted on briefing reporters on the condition of anonymity, acknowledged that analyzing what has happened remains a work in progress. Still, they said the report’s results buttress the Obama administration’s contention that the new insurance marketplaces are working.

Under the 2010 health-care law, the government this year began for the first time to help pay for private insurance coverage in the new marketplaces for people whose incomes reach into the middle class. The lower the income, the higher the tax credit.

Now, nearly 3.3 million people have enrolled in a health plan between Oct. 1 and Feb. 1.

The government has previously reported that 87 percent of the 5.4 million Americans who chose a health plan through the federal health exchange qualified for some financial help.

The health officials said they have not yet analyzed the incomes of people who qualified for the subsidies. But overall, the report shows, the average monthly tax credit this year is $264. Without the federal help, the average premium chosen by people eligible for a tax credit would have been $346 per month, and the subsidy lowered the consumers’ premiums, on average, by 76 percent. The result is that four out of five people with subsidies are paying premiums of no more than $100 a month — although that does not include money they might need to spend for insurance deductibles and other out-of-pocket costs.

The report does not include a tally of the total amount the government is spending this year on the tax credits, and the health officials declined to provide one.

The report indicates that many people tried to stretch their financial help by choosing health plans whose premiums are at the low end of the insurance alternatives available in their area. Nearly half chose the very-lowest-cost plan in their marketplace, and nearly two-thirds chose one of the two least-expensive plans.

On average, the analysis found, people buying in the federal exchange had a choice of 47 health plans, offered by an average of five different insurance companies. The level of competition is slightly below what was found in late September, days before the federal insurance exchange opened, when HHS issued a report saying that the typical American would have a choice of 53 health plans from eight different insurance companies.

Still, the new report says that four people in five live somewhere in which they have a choice of at least three health plans in their marketplace.

As expected, the report found that more competition among health plans tends to lower prices; each insurance company available in an area translated into a 4 percent decline in the tier of plan to which the subsidies are pegged.

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In addition to competition, a senior health official said that differences in prices among states was due to differences in their hospital industries and to how many of the health plans were lower-price HMOs.

The report spans the three dozen states in which new health plans are available through a federal insurance exchange. It does not assess the experience in the 14 states that are running their own insurance marketplaces, including California, which had by far the most people sign up. Health officials said they would include those once data become available.

Amy Goldstein is a national reporter for The Washington Post focused on health-care policy.
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