Health Exchanges Behind Schedule Still May Be Affordable

By Alex Wayne and Alex NussbaumJun 19, 2013

The price for health coverage bought through the Affordable Care Act’s online exchanges appears to be cheaper than some of the most dire predictions. That’s assuming the U.S. government can get the new marketplaces ready in time.

Proposed monthly premiums in nine states for the benchmark level of medical coverage are less than congressional estimates, according to a study today from Avalere Health, a Washington-based consulting company. The analysis is muted by a Government Accountability Office report also released today that shows computer systems for the insurance marketplaces may not be ready on time and training for the people who will assist consumers is behind schedule.

“Much progress has been made, but much remains to be accomplished within a relatively short amount of time,” the GAO, the nonpartisan investigative arm of Congress, said.

Exchanges that are supposed to start enrolling 7 million customers Oct. 1 for subsidized private plans are the centerpiece of the 2010 health law’s efforts to expand coverage for the uninsured. While the cost to consumers appears to be avoiding the premium “rate shock” predicted by Aetna Inc. (AET) Chief Executive Officer Mark Bertolini, the Obama administration’s workload for creating the marketplaces has swelled beyond what was anticipated.

“This law has been unpopular and unwieldy every step of the way,” Representative Darrell Issa, a California Republican who heads the House Oversight and Government Reform Committee, said in a statement. “We are seeing a rollout marred by missed deadlines and incomplete programs.”

Rate Shock

Bertolini, who runs the third-largest U.S. health insurer by market value, said in December that premiums may as much as double for some small businesses and individual buyers when the law’s major provisions start in 2014. His prediction, which cited health-law policies that mandate better benefits and prohibit insurers from refusing to cover the sick, is at odds with Congressional Budget Office estimates and with today’s report from Avalere, which show more moderate increases.

Monthly premiums in nine states that have reported rates vary from $205 in Oregon to $413 in Vermont, before government assistance is included, Avalere’s report shows.

“It doesn’t completely rebuke rate shock but what it says is these competitive marketplaces are working and the plans are taking it seriously,” Dan Mendelson, the CEO of Avalere, said in a telephone interview.

Young, healthy people who now have insurance may see their premiums go up though the cost increase may be mitigated by the subsidies, for which about two-thirds of people under the age of 30 are expected to be eligible, Avalere said in an earlier report on June 6.

Republican Opposition

The reported premiums are the prices customers can expect to pay for plans that go on sale Oct. 1 and take effect Jan. 1, 2014. The CBO’s estimate is for premiums in 2016. Avalere said rates won’t rise dramatically by then, partly because large rate increases are subject to government review.

The budget office raised questions about whether the exchanges will be ready on time. The CBO report, requested by three Republican lawmakers who have been critical of the Affordable Care Act, showed the government has fallen behind on testing computer systems and other milestones that should have been reached ahead of the Oct. 1 rollout.

While the law envisioned most states building their own versions of the marketplaces, all but 16 have balked at doing the work, instead leaving it to the federal government. The Obama administration’s heavier workload has been compounded by a scarcity of resources, as congressional Republicans have blocked requests for money to build federal exchanges.

Small Businesses

In a response attached to the GAO report, the Obama administration cited progress made toward finishing the exchanges, including accepting applications from insurers who want to sell on the marketplaces and awarding grants and contracts for consumer-assistance programs.

The administration said it’s “extremely confident that on Oct. 1 the marketplace will open on schedule and millions of Americans will have access to affordable quality health insurance.”

In a second report also released today, the GAO found mixed success on creating exchanges meant to serve small employers. Seventeen states and Washington, D.C., are building such markets on their own and the agency said they had made “varying degrees of progress” by the end of March.

As of March 31, states still needed to complete 85 percent of key activities required for those exchanges, on average, the GAO said. States may have completed some of the steps since then, according to the report.

To contact the reporters on this story: Alex Wayne in Washington at [email protected]; Alex Nussbaum in New York at [email protected]

To contact the editor responsible for this story: Reg Gale at [email protected]