Buzz Aside... 2 Facts to Consider with the Health Insurance Marketplace Rates

For anyone following the new health insurance marketplaces and the highly anticipated rate announcements rolling in over the last couple of months, there's been a lot of buzz about whether the rates are high, low, or about what was expected. 

Many states, such as Washington, Montana, Maryland, and New York, have promoted their health insurance marketplace rates as lower than expected. Other states such as Florida and Ohio have received press about rate increases.

And then there's states receiving mixed analysis... rates appear higher and lower than current market rates, depending on which analysis you read.

Why the inconsistencies and confusion? All of the buzz aside, here are two facts to think about when comparing the health insurance marketplace rates to current market rates.

1. As much as we try, we can't compare "apples to apples"

First, the health insurance plans that will be sold to individuals and small businesses through the online marketplaces in 2014 will be different plans, and include different services than plans sold on the individual and small group markets today. Starting in 2014, individual and small group plans must cover a range of essential health benefits that were not always covered in the past.

Second, individual health plans become guaranteed-issue, meaning people cannot be denied coverage or charged more because of health problems (a "pre-existing condition"), as they can now in most states. Likewise, women cannot be charged more than men.

Third, premiums don't tell whole story; deductibles, co-insurance, and co-pays play a role in the cost of coverage for consumers. Starting in 2014, all plans will be categorized into metallic tiers of coverage (Platinum, Gold, Silver, and Bronze) to make this type of comparison easier. But for now, when looking at the rate comparison analysis, look at the type of plans they are using as a comparison (premium amounts as well as coverage levels), and what 2014 exchange plans they are being compared to (one level of plans, a combination of all, etc).

As you can see, when you factor in these changes and considerations, it's nearly impossible to get a true "apples to apples" look at health insurance plan rates.

2. Eligible for premium subsidies? "Sticker" rates won't matter much

Rates aside, most people purchasing an individual or family plan through the new health insurance marketplaces are expected to qualify for a premium subsidy to offset part their premium costs.

The subsidies will be on a sliding-scale, and will cap the cost of the premium at between 2% and 9.5%, depending on income. Individuals earning up to ~$46,000 a year in 2014 will be eligible. Therefore, with the subsidies acting as a cost cap, a 32-year old individual earning $32,000 in 2014 will pay a maximum of $236/month for a "Silver" rated plan, no matter what the "sticker" cost of the premium is.