Florida's insurance officials said Tuesday that health insurance rates will rise 5 to 20 percent for small businesses and 30 to 40 percent in the individual market through the state's new exchange under the federal health law.
Some of the state's largest individual health insurers, including Florida Blue and Cigna, will be among 11 plans competing through the exchange in the individual market and five insurers will offer plans in the small group market. Florida insurers have until Wednesday to approve plans in the exchange.
Under the Affordable Care Act, coverage sold on the individual market has to undergo a significant upgrade. As of Jan. 1, insurers can no longer turn away people with pre-existing medical conditions, and they will be limited in what they can charge to older policy holders. Consumers' financial exposure will be capped. Insurers are also required to offer a certain set of benefits under the plans, so while prices may increase, consumers will be getting an upgraded product.
But residents making less than $48,000 a year will receive a voucher from the federal government to help offset premium costs. The less a person makes, the more the government will pay.
In general, premiums in the individual market will be higher on average, but after the tax credits, most people will end up paying less, said Larry Levitt of Kaiser Family Foundation, who commented on the exchanges in general and was not speaking specifically to Florida's rates.
Several other states have already released rates in the past few months, but the Republican-led Florida Legislature, which has been reluctant to implement the new health law, decided to let the federal government run the state's online marketplace. The feds aren't expected to release the rates until September.
The new marketplaces, which are open for enrollment Oct. 1, will have the feel of an online travel site where individuals, families and small businesses can compare different private insurance plans. Individuals will be required to either have health insurance from their employer or purchase it and will pay a roughly $100 penalty next year if they don't. Anyone making below the poverty line, $11,490 for an individual or $23,550 for a family of four, won't be eligible to buy insurance through the online marketplace.
"Everyone is so focused on price that they're giving the consumer a false sense that it's only the price that's important to them," said Ray Smithberger, general manager in charge of Cigna Individual and Family Plans. For example, they want potential customers to understand that even though a premium may be low, there could be a $5,000 deductible before the plan kicks in.
Cigna will offer two to four plans at the bronze, silver and gold levels to residents in the Orlando, Tampa and South Florida that will include a variety of deductibles. The insurer will not offer platinum or catastrophic plans. Cigna officials also said they will not participate in the small business exchange.
Cigna surveyed 7,300 people in five states including Florida to find out what they were looking for from plans under the exchange. Not surprisingly, price was the most important factor, followed by having a relationship with a doctor and round the clock customer service.
Florida Blue, the largest domestic insurer in the state, will offer a range of plans through the exchange in all 67 counties in the individual and small group market at different price points that tend to increase in plans that have a broader network of providers.
For insurers, the online marketplace marks a distinct change in the way they conduct business as they begin selling directly to consumers. Florida Blue has 11 retail stores, which they say take the confusion out of purchasing insurance by offering customers face to face interaction. The insurer is also experimenting with onsite clinics staffed by primary care doctors at two stores in Pensacola and Polk County and plans to expand to wellness products, including vitamins and fitness equipment.
Educating Americans about the Affordable Care Act will be paramount for the federal government and insurers as 78 percent of uninsured adults don't know about opportunities that will be available to them in 2014 under the new health laws, according to Enroll America, a nonprofit group sponsoring a national campaign that includes home visits and passing out brochures at farmers markets and churches.
The insurance commission warned Tuesday that enticing young healthy adults to buy insurance was also a significant concern. Many experts predict rates will rise for these so-called "young invincibles" and if too many young adults avoid the new insurance marketplace, it could throw off the entire equilibrium of the Affordable Care Act.
"We've got to do something to make sure that we're protecting the integrity of this program for years to come. If it starts off that you don't get that right risk pool, it's very, very hard to recover from that," said Jon Urbanek, a senior vice president with Blue Cross and Blue Shield of Florida.