News Column

Hawaii Insurance Exchange Offers Lower Rates

September 23, 2013

Kristen Consillio

Hawaii residents could pay as little as $120 per month for medical coverage on the new state-based health insurance exchange set up as part of the federal health care reform law known as Obama­care.

The state Insurance Division released for the first time Thursday average premiums for individuals purchasing plans on the Hawaii Health Connector, the online marketplace designed to match qualified individuals with health plans.

The Insurance Division estimates roughly 51,000 individuals may be eligible for subsidies, in the form of tax credits, that will further reduce costs.

The lowest-priced option, an average $120 "bronze" plan, covers 60 percent of health costs for a 21-year-old nonsmoker before tax credits. If that enrollee makes $20,000 a year, he or she could qualify for a $102 tax credit, paying just $18 a month for insurance, according to Kaiser Family Foundation estimates.

The highest-priced option, a $650-per-month "platinum" plan that covers 90 percent of medical costs for a 60-year-old nonsmoker making $50,000 a year, could be reduced by $65, bringing monthly premiums to $585.

The Patient Protection and Affordable Care Act requires all Americans to get health insurance by Jan. 1 or face tax penalties of up to $95 per person. Penalties grow to $325 in 2015 and $695 in 2016. The mandate that all Americans buy health coverage is the hallmark provision of President Barack Obama's health reform law.

"We are working together toward our shared goal of universal healthcare and ensuring access to quality healthcare for everyone in our state," said Gov. Neil Abercrombie in a news release detailing the new rates.

Hawaii's rates are among the lowest of the states that have announced average premiums, said state Insurance Commissioner Gordon Ito. An average plan for a 40-year-old in Hawaii will cost $216 a month. A similar plan would cost $260 in Maryland, $299 in Virginia and Washington state, and $444 in New York.

"Hawaii consistently ranks first or second as the healthiest state," which is one factor contributing to its low rates, Ito said.

Hawaii's Prepaid Healthcare Act of 1974, which requires employers to provide medical coverage for full-time workers, also has been a major contributor in keeping a large portion of the population insured with greater access to medical services, he added.

"This allows for prevention of chronic diseases and early intervention of health problems," he said.

Hawaii residents will be able to choose from 95 health plans offered by Hawaii Medical Service Association and Kaiser Permanente Hawaii when open enrollment begins Oct. 1 for coverage that starts Jan. 1.

Those with pre-existing medical conditions can no longer be denied coverage.

Individuals making $52,920 a year or less can qualify for subsidized insurance. The subsidies are available for a family of four making less than $108,360.

Plans on the exchange include prescription drug coverage, pediatric dental, pediatric vision and habilitation services for individuals with disabilities.

Enrollees should look at all plan options. A higher-level plan could actually cost less than a lower-priced one because of the way subsidies work, the Insurance Division said.

Small business with 25 or fewer employees may qualify for a tax credit of up to 50 percent of the cost of health insurance for their employees. The tax credit, dependent on the size of the business and the average wage of employees, is up to 35 percent.

The Insurance Division didn't release average rates for small businesses.

Many small businesses are concerned the new rating model -- based in part on age -- will result in increases in premiums for companies with older employees.

Insurers previously used an employer's history of medical utilization, rather than age, to establish insurance rates for small businesses.

HMSA executives have warned consumers of "rate shock" as the law rolls out next year because of the unfavorable age-rating for some groups, anticipated pent-up demand for medical services among people who haven't had insurance, as well as fees for operating on the exchange -- costs that will be passed on in consumers' health plan rates.

Credit: Kristen Consillio

(c) 2013 Oahu Publications Inc.

Original headline: State unveils plans' premiums

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Source: (c) 2013 Oahu Publications Inc.

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