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March 22, 2013, 11:54 AM

Q&A: How Will the New Health Law Affect Your Premiums?

By Anna Wilde Mathews

Today’s WSJ report shows health insurers warning some premiums could double following the healthcare overhaul. But there has been plenty of debate over exactly what effect the law will have on costs once its major provisions kick in next year. Here are some questions and answers for consumers.

1) Why is there so much debate about what the law will do to premiums?

The law is complex and its effects will vary, and the issue is highly charged. Insurers have said that premiums could go up significantly for many people.

Jonathan Gruber, an MIT professor who supports the health law, said that in work for state regulators looking at the law’s impact, he has projected a range of average premium increases for small business from 0 to 4%. In the individual market, which is consumers buying their own plans, he said the average boosts ranged from 20% to 40%. But once subsidies were factored in, consumers’ payments actually went down between 5% and 40%. He also said the health plans got richer — meaning they likely covered more benefits and had smaller out-of-pocket charges, but also became pricier.

2) I buy my own insurance — what’s going to happen to my premiums?

The bottom line is that it depends on who you are and where you live. The biggest effects will be felt by people who buy their own plans, but they will vary a lot. In general, people who are older and in worse health may see their rates potentially go down, insurance experts say, at least in states where insurers can currently charge them more based on their age and pre-existing conditions. But some younger, healthy folks could see increases, according to the insurance industry and other analysts. Some people may also pay more because their current plans have bigger out-of-pocket charges or more limited benefits than the law allows, so they may have to move to richer, but more expensive, coverage. A lot of lower-income people will qualify for federal subsidies that defray a lot of the cost.

Here is a tool from the Kaiser Family Foundation that may give a very rough sense of what you might expect to pay, including possible subsidies.

3) Can I get a subsidy to help pay for my plan? How much will it be?

Subsidies will be available on a sliding scale for people with incomes of up to four times the federal poverty level—currently $45,960 for a single person and $94,200 a year for a family of four. More than half of the 35 million people expected to be in the individual market by 2016 are likely to qualify for credits, according to the Congressional Budget Office. People whose incomes are around the poverty level could see almost all of the cost of their insurance subsidized.

4) Will my company have to pay more for coverage?

As with individual insurance, the answer will vary. Big companies won’t be affected as much – though some may have to cover more employees or pay penalties under the law. Insurers say some smaller firms could see rates go up, particularly those that may have gotten lower premiums in the past because they had healthier and younger workforces. Those with older, sicker employees might potentially see rates curbed by the law. The Congressional Budget Office, in 2009, projected that on average, premiums for small businesses would be little affected by the law. Here is the CBO analysis.

5) Will the law force me to change health plans?

The law allows people to keep so-called “grandfathered” plans that they haven’t changed substantially since it passed in 2010. Starting in 2014, other health coverage will need to meet requirements of the law that include covering a list of “essential” health benefits, limiting out-of-pocket charges, and not capping benefit payouts. Many plans already meet these requirements, but some with features such as very high deductibles, lack of certain benefits such as maternity, or annual dollar limits on coverage will likely have to change – which would also affect premiums.

See the entire article on the Wall Street Journal:
http://blogs.wsj.com/corporate-intelligence/2013/03/22/qa-how-will-the-health-law-affect-your-premiums/#?mod=wsj_valettop_email