State’s marketplace for health insurance to cost 5% less than fed’s
Buying health insurance through the government marketplace will cost less in the fall for Pennsylvanians as the state creates its own online platform for selling policies, ending the federal government’s role.
Saying goodbye to healthcare.gov means that premium rates are expected to be about 5% lower for health insurance coverage that goes into effect Jan. 1 when compared to 2020, according to the state
Department of Insurance.
The average lowest cost silver plan premium this year is $449 a month in Pennsylvania, according to the Kaiser Family Foundation, a San Francisco-based policy and research organization.
A switch to state control of the health insurance exchange will allow Pennsylvania to better reach people who have lost insurance along with their jobs as the result of the COVID-19 outbreak, Insurance Commissioner Jessica Altman said.
Pennsylvania’s unemployment rate jumped to 13% in June, up from 4.7% in January, due to COVID-19 related business closings that began in spring.
“The places that people go when they don’t have coverage is Medicaid and the marketplace,” Ms. Altman said. “This is such an unbelievable opportunity to do things to reach people who are unfortunately experiencing transitions in coverage.”
Passage of the Affordable Care Act in 2010 created online health insurance marketplaces, where consumers could buy coverage starting in 2014. About 400,000 Pennsylvanians use the online marketplace to buy insurance, with about 80% receiving subsidies based on income.
Despite efforts in recent years to weaken the Affordable Care Act, the ACA has worked: More than 1.25 million or 12.1% of Pennsylvanians did not have health insurance in 2010, which fell to 674,739 people or 6.6% who were uninsured in 2017, according to the U.S. Census Bureau. During that period, Gov. Tom Wolf expanded Medicaid eligibility criteria, which also cut the number of uninsured.
In addition to expanding outreach to boost enrollment, the state also will be able to extend the sign-up period and create special open enrollment periods for sudden economic downturns and other unexpected events when jobless rates soar. The sign-up period last year started Nov. 1 and ended Dec. 15, which was 45 days — shortened from a 92day enrollment period in 2017.
Enrollment for Affordable Care Act health insurance opens in November for coverage that goes into effect Jan. 1. Premium subsidies are available, based on income.
What makes the lower premiums possible is the creation of a state re-insurance program that will reimburse commercial insurers operating in the marketplace for big claims, reducing the carriers’ risk and need to increase rates. Marketplace carriers pay fees totaling $90 million annually to sell coverage on the exchange, which the state will now collect instead of forwarding it to the federal government.
“We can run our own exchange in the way we think is best for Pennsylvania and at a lower cost than we were paying to the federal government,” Ms. Altman said.
The fees are based on 3% of premiums for marketplace policies, and the re-insurance program, called PA Re, will pay 60% of individual claims that range between $60,000 and $100,000 to reduce carriers’ risk and costs.
“It’s a smart business model, said Antoinette Kraus, consumer representative on the Pennsylvania Health Insurance Exchange Authority and founding director of Pennsylvania Health Access Network, a Philadelphia education and advocacy group. “It helps mitigate some of the risk of high-cost, high-risk consumers, which otherwise often get passed onto consumers.”
Pennsylvania joins California and 13 other states in running their own health insurance marketplace, allowing Pennsylvania to learn from existing programs, said Zachary Sherman, executive director of the Pennsylvania Health Insurance Authority, which will oversee the new marketplace.
“We’re seeing real life examples playing out in other states” with special open enrollment periods, outreach to consumers and other programs, he said.
Pennsylvania’s new health insurance marketplace will be managed by Vimo Inc., which does business as GetInsured. The state Health Insurance Exchange Authority inked a seven-year contract with Palo Alto, Calif.-based Vimo in 2019.