But according to health industry observers, several factors could drive up health insurance costs and decrease participation in the exchanges:
-- A new federal tax on health insurance beginning next year will add to the cost of coverage for individuals, families and small employers.
-- Federal tax credits may be insufficient for many small employers, individuals and families to purchase health insurance on the exchanges.
-- The law's new "age rating" restrictions will make health insurance more costly for young adults than in previous years. And many healthy young adults in their late 20s and 30s might choose to ignore the law's "individual mandate" that anyone without insurance must purchase it.
-- New rules for health plans such as free preventive care may cause some small business owners to drop out of the market, deciding it's too expensive to offer health insurance to employees, even with the aid of subsidies. Firms with fewer than 50 employees are encouraged yet not required by the law to offer insurance.
Next year, insurance carriers will begin paying a new federal tax on health coverage. Critics say it will cost $8 billion in 2014 and be largely passed through to consumers and employers in the form of higher premiums. In the next 10 years, this tax -- whose funds will help pay for implementation of the Affordable Care Act -- will total $100 billion.
"An average family of four is going to pay $300 more for health insurance next year because of the tax alone," Zirkelbach said. "And the benefit package is going to be more comprehensive but more expensive than what many people have today. The impact that it will have on a person's premium will depend on the type and the amount of coverage they have today."
Millions of consumers will be aided by new federal tax credits to help pay for health insurance. According to the CBO, the average premium subsidy for 2014 on an individual policy will be $5,510.
But the office also found that 43 percent of people in the individual health insurance market today will not be eligible for subsidies. And for those people who are eligible for a subsidy, the tax credit's dollar amount declines significantly as a person's income rises.
Under the law's age rating rules, an older individual can be charged only three times as much as a young adult for the same health insurance policy. Currently, older people are often charged five times the cost of younger adults, or more.
"The young are going to have significant rate increases, but older people may receive reductions. The concept is to level the playing field," said Paul Flotken, managing partner at St. Louis-based Caravus, a group health benefit consulting firm.
Many individuals, especially younger and healthier adults, may be tempted to take a "free ride" -- forgo buying insurance and pay a federal penalty, rather than purchase a policy whose higher cost is designed to offset the medical bills of older patients. If they are injured or become ill, a free rider can purchase a new insurance policy.
"Young adults may simply decide not to buy coverage at all, particularly if they don't need it," Zirkelbach said. "And if they choose not to buy coverage, that's going to drive up costs for everyone else."
In most cases, penalties for violating the "individual mandate" are likely to be far below the cost of purchasing insurance. In 2014, people without health insurance will face an IRS penalty of either $95 or 1 percent of household income over the filing threshold, whichever is greater. The penalty increases in 2015 to $325 per uninsured person or 2 percent of income. In 2016 and beyond, the penalty will be $695 per uninsured person or 2.5 percent of income.
PREPARING FOR STICKER SHOCK
Millions of consumers and small businesses are likely to face higher costs for new health insurance policies in 2014, regardless of whether those policies are bought on the exchanges or the traditional marketplace, according to insurance industry insiders and analysts.
Individual premiums are expected to rise significantly for young adults and also could increase for many small and medium-size companies.
A recent article in the trade journal Contingencies by actuaries at Oliver Wyman, the New York management consulting group, found that premiums are likely to rise for working single adults up to age 44 -- even after accounting for the aid of tax credits.
"Premiums for younger, healthier individuals could increase by more than 40 percent," the authors wrote.
Insurance carriers "are talking about significant rate increases for 2014," Caravus' Flotken said. "It's not a situation where they're going to gouge people, but they're expecting claims to go up significantly next year. It will vary greatly, depending on the size of the group and demographic composition."
A small firm with a history of costly premiums due to high medical expenses, he added, could actually see the cost of its premiums decline in 2014 when the firm is placed in a larger pool with other small businesses.
Yet that's likely to be an exception.
"A lot of the smaller employers are preparing for sticker shock. We feel it's going to be a huge blow to small employers," said Doug Simms, an independent health insurance broker with offices in Crestwood. "We think the rates are going to skyrocket."
Robin Gladwill, a regional manager for Nurses to Go, which is based in Town and Country, has been advised by her broker that the cost of health coverage for her 110 full-time employees could increase by 20 percent to 30 percent this year.
"How can I make the decision to grow the number of employees when I'm continuing to look at the mandated health insurance demands?" she said.
Still, the CBO has estimated that premiums on the individual health insurance market in 2016 will cost 14 percent to 20 percent less than they would have cost had the Affordable Care Act not been enacted.
Georgetown's Dash said the level of participation in the exchanges will depend on "a multiplicity of factors," including pricing and an exchange's "user interface" -- or how easy it is for consumers to navigate the Web portal or phone center to purchase a health plan.
"Number one, how affordable is the coverage?" she said. "We haven't seen the prices yet."
(c)2013 the St. Louis Post-Dispatch
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