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Obamacare Insurance Prices Could Be Half What Some Residents Now Pay

With only preliminary data available, it's too early to make detailed cost comparisons -- but savings could be significant

exchange screen

The news is better than good -- and better than expected. The price of insurance sold on the ACA/Obamacare marketplace could be half as much as New Jersey residents pay now for similar coverage.

It's still to early to make precise cost comparisons. While information about prices was released yesterday, details about the plans were not. And plans are bound to vary widely, so making one-to-one comparisons is exceedingly tough. Still, at first blush, it appears as if some policies will cost about what they do now while others could be at least 50 percent cheaper.

For months the concern has been that rates in New Jersey would not be reduced because the Affordable Care Act has new mandates -- such as dental care -- and barebones plans will now longer be on offer.

Those who purchase the most extensive coverage through the marketplace/exchange will generally see the greatest savings. But even those who currently have bare-bones plans can expect to pay similar amounts for more thorough benefits.

Residents can begin enrolling for insurance through the marketplace on October 1, with coverage starting on January 1, 2014.

Joel Cantor, director of the Rutgers Center for State Health Policy, said the primary reason for the lower rates is the expected increase in the number of younger and healthier residents in the insurance market, allowing healthcare costs of sicker residents to be borne by a broader population. The ACA requires all Americans to purchase insurance or pay a penalty.

Cantor noted that the premiums released yesterday are for the most part lower than those available today.

For example, without the exchange, a family of four with a head of household who is 40 years old would currently have to pay nearly $3,000 per month for an HMO plan with a $30 copayment for doctor’s visits.

On the marketplace, the same family would be able to buy a plan for $943 per month -- roughly a third of what they're currently paying. Further, if the family’s income was $50,000 per year, the premium would be reduced to $282 per month due to federal tax credits that subsidize the purchase.

“For some people they’re going to be substantially lower than what they’re paying in 2013,” Cantor said of the premiums, adding that many details aren’t available, making a direct comparison difficult.

The marketplace or exchange is a one-stop shop for residents and small businesses to buy insurance and learn if they are eligible for subsidies, either online, by phone, in person, or by mail. It was a central feature of the Affordable Care Act.

There will be four tiers of insurance available through the marketplace, reflecting the amount of cost sharing that residents will pay out of pocket beyond the monthly premiums. This cost sharing will be done through a combination of copayments, in which residents pay a fixed amount for a medical service; deductibles, which are the amount that residents must pay before insurance covers medical costs; and co-insurance, which is a percentage share of the medical costs.

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