Low-cost insurance could lead to high medical bills

Study finds Obamacare exchanges easier on budgets

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Health insurance plans in Obamacare’s state exchanges will cost less than initially projected, according to a study released Thursday that the administration and its allies said is proof that the law is working as intended.

Analysts said the low prices are attractive but could come with an unintended consequence of enticing consumers to buy plans with less coverage than they need, which could leave them with bigger bills if they do need major care.


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The Kaiser Family Foundation said the lowest-cost plans will be affordable — $111 a month for a 25-year-old making less than $29,000 a year in New York City or $57 a month for a 60-year-old in Denver, once taxpayer subsidies are factored into the equation.

“While premiums will vary significantly across the country, they are generally lower than expected,” Kaiser said in its brief.

The exchanges are insurance marketplaces where the uninsured can buy plans, often with the help of income-based taxpayer subsidies. The exchange program is considered a key to making sure the Affordable Care Act works as intended.

Broadly speaking, the study supports the Obama administration’s positive outlook for the reforms with less than a month before the exchanges open for enrollment.

But analysts warned that affordability comes with the risk that enrollees might be drawn to cheaper plans with high deductibles. Young adults and other consumers might jump at the chance to spend less at the time of purchase only to shell out thousands of dollars in out-of-pocket costs if something goes wrong.

“If you really get sick, you’re going to have protection that’s not too great for the first $2,000,” said Timothy Jost, a health care reform scholar at Washington and Lee University School of Law.


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Also, the study is unlikely to persuade Republican critics of the law who say the government overstepped its bounds by forcing Americans to purchase health care coverage. Insurers no longer can reject consumers with pre-existing conditions and must cover maternity and mental health services, causing fears that premiums could soar if risk pools are not balanced with young and healthy enrollees.

Indeed, conservatives rely on this point to criticize Obamacare. They note that young and healthy people essentially are needed to subsidize benefits for others, whether it is in their interests or not.

Democrats seized on the Kaiser findings, which generally came in lower than the Congressional Budget Office’s most recent projections.

“We’re seeing in the states that competition and transparency in the marketplaces are consistently leading to premiums that are lower than expected, and for those who qualify for a tax credit, costs will be even lower,” said Joanne Peters, a spokeswoman for the Health and Human Services Department.

Congressional Republicans point to states where studies suggest premiums will rise, including Georgia, Indiana, Ohio and Wisconsin. A breakaway group of conservative lawmakers plans to use an upcoming budget showdown to defund the law before it takes hold.

Kaiser looked at what insurance will cost for people ages 25, 40 or 60 who live in major cities in 17 states and in the District of Columbia. Eleven are setting up their own exchanges, and seven have let the federal government do it for them. The exchanges open Oct. 1.

Kaiser did not attempt to compare premium costs with pre-Obamacare rates because of significant changes in who and what the plans must cover under the law.

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