In a much-anticipated proposal, the state’s largest insurer has indicated what it wants to charge people buying coverage in the new insurance marketplace being created under federal health reform.

Anthem Blue Cross and Blue Shield said the average monthly premium for an individual health plan would be $440.65. The prices would vary based on each customer’s age, location and the specific health plan chosen, ranging from $101.73 to $1,259.

For small groups, the average monthly premium would be $629.53, but costs would range from $173.67 to $1,524.93.

The proposals must now be reviewed by the Connecticut Insurance Department, which can approve the rates, require they be adjusted, or reject them.

Anthem is the fourth and final insurance carrier to submit rate proposals for individual plans to be sold on the new marketplace, known as the exchange, or Access Health CT. Its average rate is somewhat higher than two other carriers — Aetna projected that its average cost would be $364, while HealthyCT, a new nonprofit carrier, proposed rates with an average cost of $427.

The fourth insurer, ConnectiCare Benefits, did not submit an average cost, but said its proposed base rate — the starting point, from which costs would be adjusted up or down based on age, location and plan selected — would be $397.

There’s a larger range of prices in the proposals for the small group market. HealthyCT said its average premium would be $445. ConnectiCare Benefits said its base rate — not the same as an average price — would be $716.

Aetna does not plan to offer coverage in the exchange’s small group market. A fourth insurer, UnitedHealthcare, is expected to submit proposals for that market.

The “walking wounded?”

The rate proposals cover health plans that will begin Jan. 1, 2014, when the major provisions of the federal health reform law known commonly as Obamacare take effect. In developing the proposals, carriers dealt with multiple uncertanties.

For one thing, it’s not clear who will be buying the plans. The exchange expects to sell coverage to 80,000 to 100,000 currently uninsured state residents, many of whom will get federal subsidies to help pay for insurance. But it remains to be seen how many people will sign up initially, what plans they select, and what their health care needs will be.

Will the newly insured people require a lot of health care services to address problems that went untreated while they lacked insurance? Are many of them people in poor health, whose medical conditions made health insurance unaffordable in the past? Or will many of the so-called “young invincibles” — young healthy people who don’t use a lot of medical services — buy insurance too, helping to balance the additional costs of less-healthy people?

In its rate proposal, Anthem said it expects its previously uninsured customers to have higher levels of morbidity than those who already have coverage. The company cited a Centers for Disease Control study that compared the health status and lifestyle of people with and without insurance.

Anthem also said it expects there to be pent-up demand for health care services among the previously uninsured. And it said it expects that lower-income customers who get federal subsidies to help cover their copayments and deductibles will use more medical services.

Aetna, which submitted its rate proposal last week, predicted a significant level of adverse selection because the penalties for not having coverage, which could encourage healthy people to buy coverage, will be relatively small.

Kevin Counihan, the exchange’s CEO, has another view, based on his experience working at Massachusetts’ exchange when that state expanded health care coverage, in part by mandating that people have insurance. He said it’s an urban myth that the uninsured are all the “walking wounded.”

“Our experience in Massachusetts clearly suggests that’s not true. A lot of people are uninsured for very rational reasons, which is that they’re very healthy and they don’t see health insurance as necessarily a good deal for them,” he said last week. “That’s one of the important elements of the mandate.”

Even with the unknowns, he said, there’s a big upside for insurers to offer coverage through the exchange.

“This is one of the largest opportunities for market growth in years,” he said.

Pricing changes

In addition to the uncertainties about the customer base, the plans sold under Obamacare must also meet new pricing rules. Insurers can no longer charge people more based on their medical histories or gender, and are limited in how much they can vary prices based on a pesron’s age. Plans must cover at least 60 percent of a person’s medical costs, more than what many currently cover.

Obamacare allows plans to charge people who smoke more than those who don’t, but Connecticut’s exchange does not permit it.

Plans sold on the exchange will be offered at a variety of levels, based on how much of the medical costs they cover. “Bronze” plans will cover 60 percent of people’s medical costs, leaving the customer to pay the remaining 40 percent. “Silver” plans will cover 70 percent, while “gold” plans will cover 80 percent. Carriers can also offer “platinum” plans that cover 90 percent of costs, although Anthem and Aetna don’t plan to do so.

People who select plans that cover more of their medical costs will likely face higher premiums. So a person who uses a lot of medical care might choose to pay higher monthly premiums so more of their care costs are covered, while someone who is relatively healthy might prefer a lower premium with the risk of higher out-of-pocket costs if they require medical care.

People under 30 will have another option: Catastrophic plans that require more out-of-pocket costs for people using medical services. They’re expected to have much lower premiums.

Another new requirement of Obamacare is that insurance plans in the individual and small group markets must spend at least 80 percent of premium dollars on medical care or quality improvement activities. That percentage is known as the medical loss ratio. Large group plans must have a higher medical loss ratio, 85 percent.

Anthem projected that the medical loss ratio for its individual plans would be 86.61 percent and 86.59 percent for its small group plans. That’s the highest of any proposed so far.

A family of five

As an example, Anthem submitted the rate calculation for a family of five from Fairfield County buying a bronze plan through the exchange’s individual market. That family would pay $1,402.36 per month for coverage.

How is that calculated?

It begins with a “starting point” rate of $296.49. Because the family selected a bronze plan, that rate gets adjusted down somewhat, to $246.97. But because they live in Fairfield County, the price goes up, to $271.67.

That figure then gets adjusted up or down for each family member, based on age. The 47-year-old parent’s rate goes up the most, to $424.62. The two youngest children will have the lowest costs — $172.51 each.

Arielle Levin Becker covered health care for The Connecticut Mirror. She previously worked for The Hartford Courant, most recently as its health reporter, and has also covered small towns, courts and education in Connecticut and New Jersey. She was a finalist in 2009 for the prestigious Livingston Award for Young Journalists, a recipient of a Knight Science Journalism Fellowship and the third-place winner in 2013 for an in-depth piece on caregivers from the National Association of Health Journalists. She is a 2004 graduate of Yale University.

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