In an unexpected move, the Obama administration has revised its earlier forecast of health insurance rates under health care reform, stating that premiums for the mid-range "silver" plans could come in 18 percent below previous predictions for individual and small group coverage.
The new report from Health and Human Services projects an average monthly premium of $321 for silver coverage, a significant reduction from the $392 that was forecast last year by the Congressional Budget Office, or CBO.
Of the states included in the report, only Vermont, at $400, had an average premium higher than the original CBO estimate, while New Mexico claimed the lowest average premium at $226. Also included in the report were California, Colorado, New York, Ohio, Oregon, Rhode Island, Virginia, Washington and the District of Columbia.
Critics had predicted much higher rates
The revised predictions counter sharply the claims by opponents of the Affordable Care Act that rates will skyrocket from existing levels once the state exchanges complete the final implementation phase of Obamacare in 2014. Authors of the report cautioned that rates in some states could skew closer to earlier predictions, however.
The blast of good news comes just two months before Americans will see the actual rates for themselves when open enrollment on the new state health marketplaces is scheduled to get under way Oct. 1. The CBO estimates that 7 million of the nation's nearly 50 million uninsured will enroll in exchange plans next year, increasing to 25 million by 2018.
The silver plans, midway between the cheapest, high-deductible bronze plans and the more expensive gold and platinum tiers, are expected to attract the most customers during the inaugural open enrollment, which lasts until March 31, 2014. Bronze plans will typically cover 60 percent of the cost of care, while platinum plans will typically pick up 90 percent of the bill.
Favorable rates for the young and healthy
The data also suggest that rates will likely be affordable for young adults, a healthy demographic whose participation will be key for offsetting the expected swarm of older, sicker enrollees. Health and Human Services estimates that the cost of the lowest-priced silver plan for a 25-year-old Californian will be $174 per month without federal subsidies and $34 per month with subsidies for an individual with an income of $17,235, or 150 percent of the federal poverty level.
The Obama administration also welcomed good news out of New York last week. Officials there now predict that rates could plummet 50 percent, on average, from current levels when the new state marketplace opens this fall.
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Jay MacDonald is a Bankrate contributing editor and co-author of "Future Millionaires' Guidebook," an e-book by Bankrate editors and reporters.