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What are individual health insurance plan choices looking like outside of the new public exchange system?

Brokers who were interviewed said efforts by the drafters of the Patient Protection and Affordable Care Act (PPACA) to expand access to individual health coverage seem to be hurting the non-exchange market.

Toby Stark, an independent insurance broker in New Jersey said he thinks there will be fewer options available on plans outside of the exchange in 2014.

David Oscar, an insurance broker at Altigro Resource Group, said consumers who are willing to buy exclusive provider organization (EPO) or health maintenance organization (HMO) coverage will still have an abundance of choices in 2014.

Consumers looking for more flexible plans will find the market to be less kind, Oscar said.

“In a perfect world you would be able to choose the benefits you want included in your plan,” Stark said. “However, the insurance carriers and legislators are so intertwined. Carriers have to follow what the legislators pass, and what they are passing are benefits that are tied to hot-button issues. In other words, what people are most complaining about.”

A few years ago, consumers were complaining about the high cost of coverage, unexpected gaps in coverage, and the difficulties people with chronic health problems had with getting and keeping coverage.

PPACA might resolve some of those complaints – and make high-quality, reasonably priced medical insurance available even to people who qualify for disability benefits, or long-term care benefits — but at a cost, brokers said.

 

PPACA drafters set up the exchanges to help consumers and small-business owners shop for coverage, and to distribute new federal subsidies.

Except in the District of Columbia and Vermont, where insurers must sell all new 2014 individual coverage through the exchange programs, individuals can still buy coverage outside of the exchanges.

PPACA requires insurers to sell both exchange and non-exchange individual plans on a guaranteed-issue basis during the initial open enrollment period, which is set to last from now until March 31.

The only personal health factor insurers can use when selling either exchange or non-exchange individual coverage is age.

PPACA also requires insurers selling any individual medical plan, whether on or off the exchange, to provide a standardized “essential health benefits” (EHB) package that includes coverage for hospital care, physician services, and chronic disease management.

In the past, issuers of individual medical policies sometimes held costs down by limiting or excluding coverage for mental health care, or for the care related to a normal pregnancy and delivery. The PPACA EHB rules now require individual medical plans to offer mental health benefits and maternity benefits.

Other PPACA rules put new limits on deductibles but increase out-of-pocket annual maximums – the sum of deductibles, co-payments and coinsurance payments – to a total higher than what many insured consumers have been used to.

For now, many carriers in the individual market are focusing on last-minute sales of products written under the old, pre-PPACA rules.

Most analysts looking at the effects of PPACA on 2014 individual health premiums have been looking at the effects of on-exchange prices.

Brokers interviewed said they think non-exchange prices have gone up 70 percent or more in many states, especially for younger, healthier consumers in states that have traditionally let insurers use medical underwriting and benefits limits to hold individual policy premiums down.

For low-income and moderate-income consumers who use the exchanges, new PPACA subsidies will cut net monthly premium costs sharply. But consumers with higher incomes — and consumers at any income level who buy coverage off the exchange — cannot get the subsidies.

An effort to verify the brokers’ observations by using commercial health insurance information and shopping sites to compare 2013 individual plan menus with 2014 plan menus ran into an obstacle: It’s tough to find 2014 non-exchange product menus on the Web.

HealthPocket.com shows, for example, that 27-year-old individuals in Bronx County, N.Y., will be able to choose from a menu of 228 plans in 2014, with a monthly premium range of $96 to $2,428. That compares with a menu of just five plans, with monthly premiums of $184 to $2,224, available in the county today. But HealthPocket does not indicate which, if any, of the 228 plans available in 2014 are non-exchange plans.

Some PPACA opponents have tried to persuade consumers to pledge to buy only non-exchange coverage.

Stark and Oscar said that, for a consumer, the only benefit to buying coverage through a PPACA exchange is the possibility of getting a subsidy.

That’s especially true for consumers in states that have been letting the U.S. Department of Health and Human Services handle exchange enrollment through the balky HealthCare.gov site, said Oscar, who is a past president of the New Jersey Association of Health Underwriters.

“The cost of the non-subsidy plans is the same no matter where you buy them from,” Stark said. “So, there is no advantage to a consumer buying from HealthCare.gov if they are not subsidy eligible.”

The difficulty of working with the HealthCare.gov site makes the idea of buying 2014 individual coverage through traditional channels a no-brainer for higher-income consumers who won’t qualify for subsidies, brokers said.

The HealthCare.gov site “is not working and it’s difficult to even confirm a subsidy through it,” Oscar said. “No one is helpful right now…The insurance carriers and federal government have to figure this all out.”

Some carriers, like Aetna, might move more of their individual business to the PPACA exchange system, if the exchange system ends up working as well as HHS has predicted, brokers said.

Oscar said some of the carriers sitting on the sidelines already have non-exchange individual products that mimic exchange products.

“The Affordable Care Act is an experiment,” Oscar said. “Carriers are just waiting to see how it all plays out.”

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