Individuals and families who buy health insurance on their own will pay significantly lower premiums next year in New York and many other states. It is the most impressive evidence yet that the Affordable Care Act, through its mandates and competition-promoting health insurance exchanges, can hold previously rising premiums in check.
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The encouraging news underscores the vital importance of the health law’s “individual mandate,” which requires most people to buy health insurance next year or pay a penalty. The provision is designed to bring in a flood of young, healthy people into insurance pools, which helps reduce the cost of coverage for older and sicker enrollees.
In a symbolic vote designed purely for the campaign trail,Republican leaders pushed a bill through the House on Wednesday to repeal the individual mandate. Fortunately, Democratic control of the Senate and the White House will block that folly before it can harm the very people whose interests the Republicans claim to champion.
Before the House vote, officials in New York State said they had approved premium rates for 2014 that are at least 50 percent lower on average than those currently available. In New York City, individuals who now pay $1,000 a month or more will be able to find policies on the health exchanges — online marketplaces where they can comparison shop for plans — for as little as $308 a month.
The Obama administration followed with an analysis on Thursday showing that individual premiums in 10 states — including California, New York, Ohio, Colorado, Virginia and Washington — and the District of Columbia will be 10 percent to 18 percent less, on average, than projections the administration derived from estimates by the nonpartisan Congressional Budget Office. (Because these are averages, some people in these may pay more.) The costs for most individuals buying coverage on the new exchanges will be reduced even further by federal premium subsidies available on a sliding scale, for those with incomes up to $94,200 for a family of four.
Premiums will be held down by several elements of the Affordable Care Act. Competition among insurers to sign up customers in the exchanges is expected to keep premiums as low as possible. The administration is counting on the mandate, the subsidies, vigorous marketing, the ease of comparing policies and demand for good coverage to bring in young people to make the system work.
In New York, the expected decreases in individual premiums are the result largely of two factors: lots of competition among a slew of insurance companies that decided to sell on the exchanges and current premiums that are abnormally high because of a blunder in regulating its insurance markets.
The state required insurers to accept virtually all applicants, even those with pre-existing conditions, yet did not require all residents to buy health insurance. As a result, sicker people flocked to buy coverage, while the younger and healthier people stayed away, causing rates to rise for the sick people to cover the very high cost of their care. Anyone tempted to repeal the federal individual mandate should take note.