Barack Obama

Obamacare to cost Americans an average of US$328 per month

Figure finally put on plan amid debate over whether cost is low enough to attract uninsured

PUBLISHED : Friday, 27 September, 2013, 12:00am
UPDATED : Friday, 27 September, 2013, 4:36am

Americans will pay an average of US$328 a month for a mid-tier health insurance plan when the Obamacare health exchanges open next week and most will qualify for government subsidies to lower that price, the government says.

The figure, based on data for approved insurance plans in 48 states, is the broadest national estimate for the cost of coverage when President Barack Obama's health care reform law takes full effect next year. The prices of the new plans are at the heart of a political debate over whether they will be affordable enough to attract millions of uninsured Americans when enrolment begins on October 1.

Obama, who is facing a Republican threat to eliminate funding for the law or shut down the federal government next week, said the fierce opposition stemmed from the fear that Americans would embrace the programme.

"Essentially they're saying people will like this thing too much and then it will be really hard to roll back," Obama said. "What we're saying is, just look for yourself. Take a look at it, and you will discover that this is a good deal for you."

The Obama administration is counting on signing up seven million Americans, including 2.7 million younger and healthier consumers who are needed to offset the costs of sicker members, in the first full year of reform through the state exchanges.

A major factor in determining the price was the level of competition among insurance companies, with rates significantly higher in states with fewer players.

The new health plans are organised in five tiers with different monthly premiums and out-of-pocket costs: catastrophic coverage, bronze, silver, gold and, in some areas, platinum.

The national average cited by the health department refers to the second-cheapest among silver plans on the market - which many health care economists expect to be the most popular for their balance of coverage and out-of-pocket costs.

On average, the least expensive plans in this group were reported in Minnesota, where it costs US$192 a month, and Tennessee, US$245.

At the high end of pricing are states with large rural populations, where it can be more expensive to deliver health care: Mississippi at US$448 a month; Alaska, US$474; and Wyoming, US$516. Florida came in right at the national average at US$328.

Senate Republican leader Mitch McConnell said the prices were still a costlier proposition for Americans, based on what they may have paid for individual plans in the past.

Under the Affordable Care Act, insurance plans must cover a wider range of preventive and other services and cannot turn away applicants based on prior illnesses.

"Even the administration is having a terrible time spinning this law," McConnell said. "About the best they could claim was that some premiums would be lower than projected. Note that I didn't say lower, but lower than projected."

The health department said the average price was 16 per cent lower than its own projections on premiums. In addition, consumers who earn up to 400 per cent of the federal poverty level, or US$62,040 for a couple, will qualify for subsidies that will lower the price further.

The data is mostly based on 36 states where the federal government will operate the insurance exchange. About 14 other states and the District of Columbia are running their own exchanges.

Pricing varies widely, not only by state but by community. For instance, Florida has 67 different geographical rating areas and their prices for the second-lowest-cost silver plan for a 40-year- old range from US$239 to US$352.