Prices Set for New Health-Care Exchanges

Younger Buyers May Face Higher Insurance Premiums

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An activist talked about the benefits of the new health-care plans created by the Affordable Care Act with a woman outside a grocery store in Miami earlier this month.

U.S. officials for the first time disclosed insurance prices that will be offered through new federally run health-care exchanges starting Oct. 1, showing that young, healthy buyers likely will pay more than they do currently while older, sicker consumers should get a break. The plans, offered under the health-care overhaul to people who don't get insurance through an employer or government program, in many cases provide broader coverage than current policies. Costs will vary widely from state to state and for different types of consumers. Government subsidies will cut costs for some lower-income consumers.

Exchange Rates
Compare insurance premiums for the lowest-cost 'bronze' plan for a 27-year-old single person with the current lowest-cost option for a man in a metro area in 36 states where the federal government will oversee exchanges.
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Across the country, the average premium for a 27-year-old nonsmoker, regardless of gender, will start at $163 a month for the lowest-cost "bronze" plan; $203 for the "silver" plan, which provides more benefits than bronze; and $240 for the morecomprehensive "gold" plan. But for some buyers, prices will rise from today's less-comprehensive policies. In Nashville, Tenn., a 27-year-old male nonsmoker could pay as little as $41 a month now for a bare-bones policy, but would pay $114 a month for the lowest-cost bronze option in the new federal health exchanges. Likewise, the least-expensive bronze policy would rise to $195 a month in Philadelphia for that same 27-year-old, from $73 today. In Cheyenne, Wyo., the lowest-cost option would be $271 a month, up from $82 today. The Affordable Care Act marks a fundamental shift in the way insurers price their products. Carriers won't be allowed to charge higher premiums for consumers who have medical histories suggesting they might be more expensive to cover because they need more care. They will have to treat customers equally, with limited variation in premiums based on buyers' ages or whether they smoke.

Insurers also will have to offer a more generous benefits package that includes hospital care, preventive services, prescription drugs and maternity coverage. For consumers used to skimpier plansor young, healthy people who previously enjoyed attractive ratesthat could mean significantly higher premiums. The benefits are greater for people who previously were rejected for coverage because they were ill, or who were charged higher premiums. They are expected to find better coverage through the exchanges for the first time. The concern for supporters of the law, and the administration, is whether enough healthy people sign up to balance the likely higher costs incurred by the sick and newly covered. The data, which the administration was set to release Wednesday, cover 36 states where the federal government is operating insurance exchanges because state officials have declined to do so themselves. Fourteen states are operating exchanges on their own. The Obama administration called the rates a good deal for consumers. "The prices are affordable," said Gary Cohen, a top regulator at the Department of Health and Human Services. "Because of the Affordable Care Act, the health insurance that people will be buying will actually cover them in the case of them getting sick. It doesn't make sense to compare just the number the person was paying, you have to compare the value people are getting," Mr. Cohen added. Critics of the health law long have argued that the price changes represent a dramatic increase in premiums, and Senate Republicans repeated those arguments during a floor debate Tuesday. "Obamacare hasn't even been fully implemented yet, but we can already see the train wreck headed our way. Premiums are skyrocketing," said Senate Minority Leader Mitch McConnell (R., Ky.). Republicans are trying to repeal the law and have tied the issue to a bill to extend government funding beyond the Sept 30 end of the fiscal year. Sen. Ted Cruz (R.,

Texas) spoke on the Senate floor for hours into Tuesday night in what he said was a battle to block the law from taking effect. The administration has pointed to new federal subsidies that many lower-income Americans will be able to use to help offset the cost of premiums. The data released by the administration indicated that for younger single people, the value of the subsidies would be generous for someone with an annual income of up to about $25,000, though it could tail off after that. The exchanges are set to open nationwide on Oct. 1, offering coverage that begins Jan. 1. Washington is scrambling to fix a host of technical hurdles on the federally run exchanges, including ensuring the government's software can reliably determine the exact amount of subsidies for eligible people. In another sign of the technical challenges, federal officials confirmed this week that if a person signing up online in the federal exchanges is found to be eligible for Medicaid, the system won't immediately be able to transfer the application to the person's state of residence. States traditionally handle enrollment for Medicaid, a federal-state health-insurance program for the poor. The Medicaid computer handoff won't happen until Nov. 1, but people who are newly eligible for Medicaid should still be able to get coverage starting Jan. 1, officials said. Meantime, Colorado became the second state, after Oregon, to limit the ability of residents to enroll online in its state-run exchange in the first weeks, saying some people will have to enroll by phone or in person for about a month until glitches are ironed out. The plans on the federal exchanges are being labeled as gold, silver or bronze depending on what proportion of expected medical costs they cover. Younger people may be able to buy "catastrophic plans"ones that cover a lower proportion of costs than a bronze optionbut they cannot use subsidies toward those premiums. The administration's data indicated that catastrophic-plan rates won't cost much less than the bronze option.

The Obama administration said most people will have a choice of at least two carriers, but a few people will have just one choice. It said competition helped keep prices down from what some projections had initially estimated. "I think there is an anticipation of a lot of new entrants coming into the market, so insurers are competing for all the new businessand insurers know people are going to be able to easily compare plans side-by-side," said Mr. Cohen. One potential drawback of the plans on the exchanges: They often feature narrower networks of doctors and hospitals, meaning people might not be able to see the doctor of their choice. Kristina Peterson, Christopher Weaver and Scott Thurm contributed to this article. Write to Louise Radnofsky at louise.radnofsky@wsj.com A version of this article appeared September 25, 2013, on page A1 in the U.S. edition of The Wall Street Journal, with the headline: Prices Set For New Health-Care Exchanges.