rising-resize-380x300-resize-380x300By now, you might have heard that the Indianapolis Department Of Insurance projected a 72% increase in individual health insurance market for Indianapolis. The IDOI has also released the Individual Insurance Market Report, which goes on to explain this projected increase.

This is a legitimate explanation for the increase, and the only thing that is not included into the 72% is the eligibility for subsidized premiums in the exchange. In the report, it does show that about 500,000 Hoosiers will be eligible for subsidies.

First, you must understand the way the IDOI determined the rate increase. They compared current medically underwritten health plans (in which they use  medical or health information in the evaluation of an applicant for coverage), Indianapolis Comprehensive Health plans (ICHP) (guaranteed issue, a policy that is offered to any eligible applicant without regard to health status) with Silver Plans.

According to the report, if you take a healthy 25-year old male and compare health insurance now versus on a Silver Plan, the current rates are $108 compared to $266 on the Silver Plan, which is a 145% rate increase. Now let’s use the same example, but this time we add pre-existing conditions. On the ICHP, the cost is $304 verus $266 on the Silver plan.  This is a 12.5% decrease.

In this example of healthy versus non-healthy, the non-healthy individual would benefit from the law with a rate decrease. Then, we add in subsidies and there may be real premium joy. For the healthy person that does not qualify for subsidies, now they have premium shock.

The report also looks at a 55-year old couple with excellent health and then with poor health. They may be paying $673 a month currently versus $1,188 on the new silver plan. This is a 76% rate increase…premium shock! If the same couple is unhealthy, they may be paying $1,673 a month on ICHP versus $942 on the Silver plan, which is is a 43% decrease. Premium joy!

I have two categories for post-Health Care Reform: Premium Joy and Premium Shock.

To get to Premium Joy, you will have to qualify for subsidies. To be really happy with the premium, one will need to be under the 250% Federal Poverty Level. Premium Shock is going to hit  Hoosiers that have household incomes over the 400% FPL.  These people could see 100% increases or more in premiums

Under the new law, everyone will have the same access to health insurance, which will help many Hoosiers. For instance, take the 7,200 people on the ICHP. The policy holders went to this high risk pool because they were turned down by a private insurance company. Each of those policy holders could see 25%-35% reduction in premiums in 2014.

So while the report states there will be a 72% increase in health insurance, that statement is only accurate if you don’t include federal subsidies.