Consumers are getting their first glimpse at what health insurance will look like in California as the state prepares to implement the federal healthcare law.
On Wednesday, state officials will spell out the details on policies available next year to people buying their own coverage. In January 2014, most Americans will be required to have health insurance or face a penalty.
Federal law established four broad plans of coverage — Platinum, Gold, Silver and Bronze — whose benefits vary based on the level of out-of-pocket expenses that consumers are required to pay. A Platinum plan, the most expensive, would require policyholders to pay about 10% of the cost of care, while the Bronze plan, the least expensive, pegs the patient share at 40%.
Now for the first time, California is laying out the specific co-pays and deductibles that many policyholders will face when going to see a doctor, get a lab test or visit an emergency room.
Nationwide, President Obama's Affordable Care Act requires insurers to cover certain services, such as maternity care and prescription drugs, and they must accept all applicants regardless of preexisting medical conditions. But the federal law allows states to go beyond those minimum standards and set stricter rules.
State officials said they took this extra step to help Californians get the best deal when they shop for insurance. Consumers will be able to buy these policies through Covered California, the state-run marketplace for health insurance.
"For the first time, all Californians will be able to make an apples-to-apples comparison of their health plan choices in 2014," said Peter Lee, executive director of Covered California. "Today's health insurance market is a shell game where insurers are trying to avoid paying for expensive care and consumers don't know what's covered or not covered."
Consumer advocates applauded California's move. But some healthcare experts warned that policyholders will still have to navigate a lot of jargon. And the ultimate cost of this coverage won't be known until the state negotiates rates with health insurers later this year.
To help Californians get some idea of what they might pay, officials are launching a website Wednesday to provide estimates of monthly premiums. The federal law grants premium subsidies to families earning up to about $93,000 a year to make coverage more affordable. It also expands Medi-Cal coverage to lower-income people. California estimates take those subsidies into account.
For example, the state says that a family of four earning $35,000 would pay less than $120 a month for health insurance with the help of federal subsidies. At $47,000 a year, a family's monthly premiums would be $247 a month.
Premiums are just one factor in the health insurance cost equation. Patients must also pay out of pocket for a wide range of medical care.
Under the state requirements to be issued Wednesday, for example, a Silver plan would have a $2,000 annual deductible and a $45 co-pay for a primary-care visit. A more expensive Platinum plan would have no deductible and a $25 co-pay for a regular doctor's visit. Lower-income policyholders would pay substantially less because of federal aid.
Glenn Melnick, a USC health-policy professor, said he applauds the goal of simplifying the purchase of health insurance. But he worries about government regulators eliminating consumer choice and driving up costs unnecessarily.
"Problems occur when government tries to regulate at such a detailed level and they cannot adjust quickly enough to market forces," Melnick said. "It raises costs to consumers and reduces choices. The government doesn't tell us what type of tire to put on our car."
Lee said the state insurance exchange isn't looking to stifle innovation. He said health insurers can seek permission to sell different benefit packages in the state-run marketplace and companies can offer other health plans outside the exchange.
Insurance industry spokesman Charles Bacchi said it's too soon to tell whether these additional requirements will make coverage unaffordable for many Californians. Insurers are preparing to submit their rates to Covered California, and the state expects to negotiate the final premiums by June.
"Our big concern has been maintaining affordability," said Bacchi, executive vice president of the California Assn. of Health Plans. "We will find out in the coming months."
California's move to streamline benefit packages is expected to foster more price competition and to give consumers more certainty about what they'll owe for medical care.
"Many people buying insurance now have a fear of the fine print," said Anthony Wright, executive director of Health Access, a consumer advocacy group. "They fear they will fall through some unknown loophole when they need care the most. These standardized benefits will provide a lot more peace of mind for people buying coverage whether they're eligible for subsidies or not."
Still, educating consumers is a tall order for Covered California and other government officials nationwide. State officials said they are trying to learn from the experience of Massachusetts, which ushered in universal healthcare in 2007 and quickly found that consumers were confused.
Massachusetts sought to remedy that in 2010 by streamlining its offerings.
"There were too many plan options," said Jean Yang, executive director of the Massachusetts Health Connector, the state's insurance exchange. "People had some real challenges navigating through the decision-making process."