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A Third Insurer, Kaiser, Drops Rates on DC Health Link Exchange as Competition and Transparency Cut Costs

Friday, July 19, 2013

A Third Insurer, Kaiser, Drops Rates on DC Health Link Exchange as Competition and Transparency Cut Costs

And in a big step forward for the Exchange, the Department of Insurance, Securities and Banking finishes vetting all 301 new health plans.

The big health insurer Kaiser Permanente lowered the rates it is proposing to charge customers through the District’s new DC Health Link insurance exchange by 4.4 percent for small-business employees and half a percent for individuals.

Three of the four insurers on the exchange have now lowered prices since the companies for the first time disclosed their proposed rates publicly last month.

The other two are United HealthCare, which previously dropped rates by more than 10 percent, and recently cut them almost another 5 percent; and Aetna, which cut more than 5 percent. CareFirst is the fourth company on the exchange.

The Department of Insurance, Securities and Banking has now approved all 301 plans for DC Health Link, an array large enough to offer customers a huge choice.

Because prices on the online exchange will be transparent and easy to compare when it opens Oct. 1, they will be far more competitive for the individuals and small businesses who will buy insurance through DC Health Link.

“These lower rates are more incontrovertible proof DC Health Link is already bringing competition to the insurance market,” said William P. White, commissioner of the Department of Insurance, Securities and Banking. “Kudos to the companies and the way they have adjusted quickly and adroitly to this new market.”

While it is difficult to directly compare plans on the exchange, with their required benefits, to plans the insurers sell now, the rates conform to the department’s experience of what customers now pay without the additional benefits.

The federal Department of Health and Human Services surveyed exchange rates recently, including in the District, and while the department said more research is needed, “the results strongly suggest that greater competition and transparency are leading to substantial benefits for both consumers and employers in these markets.”

The report shows that employers looking for coverage in the small group market can find rates for full benefit plans in DC Health Link more than a third lower than today’s rates.  (View the Department of Health and Human Services report [PDF])

As an example of Kaiser’s new rates, meanwhile, an HMO plan in the Bronze tier of plans on the exchange, with the highest out-of-pocket costs such as co-payments and deductibles, will cost an average $193 a month. The HMO plan in the Platinum tier, with the lowest out-of-pocket costs, averages $352.   

For people below certain income levels, the federal Affordable Care Act will provide subsidies. Among other benefits to consumers: Insurers cannot deny coverage for pre-existing conditions; and all plans must cover that new set of essential health benefits.

United Healthcare is offering the most plans, 177; CareFirst is next with 69; Kaiser, one of the nation’s largest not-for-profit health insurers, 32; and Aetna, 23.

Health maintenance organizations, or HMOs, in which patients must usually seek approval before seeing a specialist, account for 174 of the plans; preferred provider organizations, or PPOs, which are less restrictive, total 127.

To see the rates, including the new Kaiser rates, go to disb.dc.gov/hbxplans

Because Kaiser added children’s dental benefits to their revised plans, the old rates in the table would have to be adjusted to compare them directly with the new rates – a true comparison that shows the rates dropping. And Kaiser added seven new plans, which also affected direct comparisons. Taking these factors into account explains why the rate drops are not apparent in the tables comparing the original rates to the new rates.