“It’s important to think holistically about the costs that consumers face and to present a balanced picture,” Mendelson said. “Consumers have to be prepared for increased out-of-pocket costs in this model.”
But individuals with incomes under 250% of poverty who enroll in silver-tier plans also are eligible for federal cost-sharing subsidies that reduce their share of total costs to an average of 6%.
The percentage of premiums covered by the federal tax credits varies significantly by state and even by local market, since they are pegged to the premium of the second lowest-cost plan in each market. In some markets, premiums are significantly higher than in others—even compared with other markets in the same state—due at least partly to the level of plan competition in the exchange.
In Mississippi, the average premium was $438 a month, but the federal government is expected to pick up 95% of the tab. That leaves an average monthly payment of just $23 for individuals. By contrast, in New Jersey, subsidies are expected to cover just 68% of the average $465 monthly premium. That leaves individuals on the hook for $148 on average each month.
The level of insurance competition varied widely across the country. On average, there were five insurers offering 47 plans in each of the 36 states served by the federal exchange. But nationwide, that ranged from just one insurer selling plans (West Virginia and New Hampshire) to 16 (New York). According to HHS, 82% of individuals eligible to purchase a plan through the federal exchange lived in areas with at least three insurers, while 4% of potential customers had plans from just one insurer.
For the 2015 enrollment year, Connolly said she anticipates the average number of insurers competing for customers in each state will increase to 6. The country’s largest insurer, UnitedHealth Group, has indicated that it will compete in more state marketplaces in the next open enrollment period, which begins Nov. 15. In addition, four consumer-governed co-op insurers, which were seeded with federal loan dollars under the Patient Protection and Affordable Care Act, are expanding into additional states.
“We’re definitely seeing growth and expansion for 2015, which indicates to us that the insurance companies are deciding that this is a growth opportunity,” Connolly said. “They are chasing after more of these potential new customers.”
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