When cheap is good: Obamacare exchange options

Obamacare exchanges have been doing a better job at giving customers access to the least-expensive health plans in their area—as well as more plans to choose from.

A new federal report finds that the cheapest individual health plans in counties around the United States became increasingly available on government-run exchanges in 2015, the second year of enrollment on those marketplaces.

Obamacare California
Allen J. Schaben | Los Angeles Times | Getty Images

The Government Accountability Office's report looked at the prices for plans for individual coverage in 1,886 counties in 28 states where sufficient data was available. The GAO examined plans sold both on the government exchanges, as well as those sold outside the marketplaces, either directly by the insurers themselves, or via Web-based and traditional brick-and-mortar brokers.

More plans are available outside Obamacare exchanges than on the exchanges.

However, people with incomes up to four times the federal poverty level can qualify for federal subsidies to help pay for their individual health plans only if they buy coverage through Obamacare exchanges that are run by the federal government or individual states. About 84 percent of the current 9.9 million Obamacare exchange customers pay reduced premiums because of those subsidies.

The GAO found that in 2014, the lowest-priced plan "was available on an exchange in most counties."

"For example, among the 1,886 counties analyzed, GAO found that the lowest-cost silver plan for a 30-year-old was available on an exchange in 63 percent of those counties in 2014," the report said.

This year, the lowest-cost silver plan for that hypothetical customer was available in 81 percent of those counties, an 18-percentage point jump, the GAO noted.

Obamacare plans are divided into tiers named after metals—bronze, silver, gold and platinum—which reflect the share of health services covered by a plan versus what customers pay out of pocket. Silver plans, which cover 70 percent of customers' benefits, are the most popular plans on exchanges, with the highest level of enrollments.

The GAO report also found an increase this year in the number of U.S. counties where customers had at least six Obamacare plans to choose from in each of the four major levels of coverage.

For example, in 38 states examined, the percentage of counties where six or more silver plans were available grew from 80 percent in 2014 to 94 percent this year, the GAO said.

For bronze plans, the second-most popular type of exchange plans, at least six plans were available in 80 percent of the counties in 2014. That increased to 88 percent of the counties this year, according to the report.

But the report also underscored that the amount customers end up paying for their Obamacare plans depends on where they live. And the prices of even the least-expensive plans can vary widely.

For example, an unsubsidized 30-year-old Arizona resident who bought the lower-priced "silver" plan on the federal exchange HealthCare.gov would have paid $147 per month for her coverage in either this year or in 2014. But if she moved to Maine and bought the lowest-cost silver option on HealthCare.gov available in that state this year, she would have to pay $237 per month in premiums, the GAO noted.

There was also wide variation in prices within individual states, the report noted. In Rhode Island, a 30-year-old customer shopping for silver plans would be presented with premiums ranging from $217 per month on the low end, to up to $285 per month on the high end—a 32 percent difference.

There was a 270 percent difference in the prices of silver plans available to a 30-year-old in Arizona, who would pay $147 per month on the low end for a silver plan, or $545 per month on the high end.

The report comes two months before open enrollment is set to begin in Obamacare plans for 2016 coverage. Prices have yet to be finalized for plans sold on government-run exchanges.

Insurers are proposing a broad range of price hikes next year, with some plans expected to rise only modestly in cost, while other plans are targeted for much bigger increases. A recent report by AgileHealthInsurance.com found that insurers have requested double-digit percentage increases for almost 1 in 3 Obamacare plans.

On the other hand, an updated Kaiser Family Foundation analysis on Thursday found that in 13 major cities, the average premium for "benchmark" Obamacare-exchange plans is set to rise by an average of just 3.1 percent. Benchmark plan prices are used to determine the amount of subsidy that qualified exchange customers receive.

The Affordable Care Act mandates that nearly all Americans have some form of health coverage or pay a fine, which in 2016 will be the higher of $695 per adult or 2.5 percent of household income. To help people comply, the ACA authorized the creation of government insurance exchanges and the issuance of subsidies.