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How Federal Regulations Will Affect Health Insurance Costs in Texas

A provision in the Affordable Care Act requires insurers to spend 80% of patient premiums on care. Texas had sought to delay its implementation.
A provision in the Affordable Care Act requires insurers to spend 80% of patient premiums on care. Texas had sought to delay its implementation.

By October 1, we should know how much health insurance plans purchased through the new federal marketplace will cost.

Texas has declined to implement the marketplace itself, but new regulations of insurance plans and their rates will still be in effect here. So if you plan to buy insurance through the marketplace when it launches next week, Lisa McAdams with the Center for Medicare & Medicaid Services in Dallas suggests you keep the following two things in mind:

"It's a private insurance plan that people who apply and enroll through the marketplace will be receiving," McAdams says. "There are some protections, however, in the Affordable Care Act, from excessive increases in premium rates."

The Affordable Care Act allows insurance premiums to increase by 10 percent from one year to the next. Above that, federal or state officials are supposed to determine if the rate hike is reasonable. That’s a change from current state law.

"In Texas, our individual health insurance market – which means anybody who’s buying directly from the company, whether it’s for one person or the entire family – rates are completely unregulated there," says Anne Dunkelberg, an analyst and director at the Center for Public Policy Priorities.

Someone who was priced out of insurance because of a preexisting medical condition should be able to find a more affordable plan now. But Dunkelberg says some people will notice their rates going up – for instance, young people who may have very basic health plans that don’t currently offer all the benefits required under the Affordable Care Act.

"If I was the 25-year-old guy who’s healthy as can be, who was getting the great premium because I'm young and healthy and I'm not having a baby, I might be the guy who’s rates are going up," she added.

The Rand Corporation published a study in August 2013 that examined whether the Affordable Care Act would cause insurance rates to jump in 10 states. Texas was one of those. Christine Eibner led that study.

"If your plan met the requirements for minimum generosity without the ACA, we don’t predict you’ll see an increase because of the law," Eibner says. "However if you’re in a plan that didn’t meet the minimum benefit generosity levels, you might see an increase."

So if your premiums do go up and you’re concerned, do you turn to the Texas Department of Insurance?

"That’s correct," Lisa McAdams says. "Because...the state department of insurance, even in federally facilitated marketplaces, still has the jurisdiction with respect to any issues with respect to any plan in that state.

A few more things to keep in mind if you’re looking into buying health insurance:

  • People who earn between 100 and 400 percent of the federal poverty rate might qualify for a tax credit that will bring down the cost of a health plan.
  • On the flip side, people who decide not to enroll in any insurance plan will, in most cases, be charged a penalty. It’s one percent of your yearly income, or $95 per person in 2014, whichever is higher. That rises to 2.5 percent of income or $695 per person, in 2016.

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