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But the U.S. government has the final say on which plans will compete and what they can charge.
Thursday, August 1, 2013
RICHMOND — Virginia is poised to approve 15 health plans to compete in a new insurance benefit exchange the federal government will begin operating in the state on Jan. 1.
But the final rates that eligible Virginians will pay for insurance in the new electronic marketplace will remain unknown until the federal government decides which plans will compete on the exchange and what they can charge.
“This is simply our recommendation,” said Jacqueline Cunning ham, insurance commissioner at the State Corporation Commission. “The federal government will have the final say.”
The SCC Bureau of Insurance had approved five of the nine proposed plans for individual insurance coverage and all six plans proposed for small businesses as the deadline approached for state action late Wednesday. The remaining four individual market plans were still under review at the close of business.
Insurers have amended some of the plans since filing them with the state in late spring, but Cunningham said the bureau has not made any changes to the plans since a presentation of rate scenarios to the SCC on July 16.
The rates in the proposed plans do not reflect federal premium tax credits and subsidies that an estimated 775,000 Virginians will be eligible to receive under the Affordable Care Act to make coverage more affordable.
“The only place you can get the subsidy is the exchange,” Cunningham said.
Four plans propose to compete on the exchange for consumers from Richmond and the counties of Henrico and Chesterfield. Five plans seek to compete in Hanover County. Consumers from other localities in the Richmond region and Tri-Cities area will have three plans to select from on the exchange.
While most localities in Virginia will have three or four plans available, several localities in Southwest Virginia will have only one plan offered.
The Bureau of Insurance does not have rate sheets or a side-by-side comparison of premiums proposed by health plans for the exchange.
Regulators and insurers say the rates in the recommended plans defy easy comparisons with current premiums in Virginia health plans or rates that will be charged in other states because they reflect a complete transformation of the way insurers set a price on risk.
Insurers no longer will be able to deny coverage to people with pre-existing health conditions or base premium rates on health status, gender (women generally pay more than men now), or, to a lesser degree, on differences in age. They can consider tobacco use and where the insured person lives.
As a result, younger, healthier people, especially men, who get a premium discount, will pay more — in some plans twice as much — while others, including people who are older, will face increases that are much less steep, according to the rate scenarios presented by Virginia insurers.
Similarly, small businesses that employ a young, male workforce could see a significantly higher percentage increase in premiums, while rates could fall substantially for small businesses that employ a higher percentage of women.
“It’s a market reset,” said David Shea, chief actuary in the Bureau of Insurance, in the presentation to the SCC. “Prior history is not indicative of the future.”
The new marketplace also will reflect a package of 10 essential health benefits that all plans must provide, including maternity benefits that are optional now, as well as new taxes and fees to finance the system and offsetting adjustments to help insurers with high-cost consumers.
Each plan will offer four levels of coverage — bronze, silver, gold, and platinum — that Shea said will act as “indicators of a plan’s relative generosity” in much the same way federal vehicle mileage standards gauge fuel efficiency. Consumers will have to consider more than just monthly cost for the plans, which also will vary widely in the deductibles and cost-sharing they will require.
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