It’s too early to know how much individual health insurance policies will cost once the online marketplaces created under the Affordable Care Act launch Jan. 1. But that hasn’t stopped experts and interest groups from making predictions.

The latest analysis comes from the Society of Actuaries. It’s attracting attention because of the group’s expertise and nonpartisanship. What actuaries do for a living — predicting future expense based on multiple squishy factors — is at the core of figuring out what will happen under Obamacare.

Thanks to subsidies and the requirement that everybody get insurance or pay penalties, the society forecasts that the number of people covered by individual polices will double to 25.6 million by 2017.

Getting the headlines was the forecast that insurer costs — medical claims per policyholder — will soar, on average, 32 percent for the individual market in 2017, with wide variations among states. That’s not the same thing as saying prices consumers pay for policies will rise 32 percent. But if claims are higher, insurers generally charge more.

Opponents of the health overhaul seized on the figure to suggest the law could really be called the Unaffordable Care Act. The Obama administration says the study leaves out factors that will restrain what plan members actually pay, including more competition among insurance companies.

Kaiser Health News reporter Jay Hancock talked to experts to learn what it means for the consumers the health law was meant to help.

Q: What’s predicted to drive up costs?

A: Many of those seeking coverage in online marketplaces -- known as exchanges -- are expected to be older and sicker. They’ll have more incentive to buy policies, and they’ll tend to increase claims paid by insurers.

On the other hand, “young and healthy people are less likely to be interested in insurance, because they’re less likely to find value,” said Kristi Bohn, a consultant for the Society of Actuaries who worked on the report.

The penalty for not having insurance is likely to be far less than the cost of coverage. The fewer young or healthy people who sign up, the higher the costs per plan member.

The authors also made assumptions about how many employers will cancel their plans. Companies with sicker workforces are predicted to be more likely to end employer-based coverage and steer people toward exchanges.

Q: I get insurance at work, were they talking about my insurance claim costs?

A: No. This report was just about people who buy on the individual insurance market, currently under 10 percent of the country, though that's expected to go up as the law kicks in. The vast majority of Americans get insurance through work or through government programs (Medicare, Medicaid, the military).

Q: Does the study predict health insurance premiums will go up 32 percent by 2017?

No. First, it’s only forecasting the individual insurance market. That’s where millions of Americans newly covered under the ACA are expected to find policies. The report says nothing about costs for employer-based health insurance.

Equally important, the 32 percent forecast is for medical expenses paid by insurers, not what insurers will charge in premiums, and not what consumers will pay.

Q: But if medical claims go up, shouldn't insurance prices also go up? How much difference could there be?

A: In the individual market designed under the health law, quite a bit, say supporters. The ACA limits insurer profits and also gives government regulators oversight of rate increases, both of which could hold premiums down.

Even if sticker prices rise, an important feature of the health law is subsidies for people to buy insurance, through tax credits for those with lower incomes. So what many newly-insured people actually end up paying themselves won’t be the same as what the insurance company bills.

Thanks partly to subsidies, "many people buying individual coverage today will see decreases in costs," said Larry Levitt, senior vice president at the Kaiser Family Foundation. (Kaiser Health News is an editorially independent program of the foundation.)

Insurers who end up signing lots of sicker members will also be partly reimbursed for several years by a reinsurance pool designed to lower their risk. That will lower their expenses, and it wasn’t accounted for by the SOA study.

Q: Does it matter where I live?

A: Yes. The report found huge variability, based on geography. While the estimated increase would be 62 percent for California by 2017, in New York state, the report estimates claim costs to drop by almost 14 percent.

Q: Will health plans offer the same coverage in 2017 that they do now?

A: That’s another reason the 32-percent headline could be misleading. Thanks to ACA minimum coverage requirements, benefits will be more generous starting next year. So what insurers pay in claims can expected to be higher, too.

“The number of people who are underinsured has grown dramatically over the last decade,” said Sara Collins, a vice president at the Commonwealth Fund. "One reason claims might be a lot lower now is the benefit package is so crummy.”

The health law was intended to shift spending into the commercial insurance system that is now outside it: high out-of-pocket costs for those in low-benefit plans; uncompensated emergency-room care; patients paying in cash, and so forth. Moving those costs under the insurance umbrella increases insurance-based spending.

Q: The idea of the insurance exchanges is to create competition, isn't that supposed to lower costs?

A: Yes. The idea behind state health exchanges is that insurers will compete for business by pressing providers for discounts and passing part of the savings to members. The actuary study didn’t account for that kind of competition.

"Every insurer I’ve talked to says they’re building lower-cost networks that they plan to use for their exchange plans," said Levitt.

Q: Does this mean costs in the health exchanges aren't a concern?

A: No. Many consumers will pay more in premiums to get more in benefits. The high cost of medicine could mean that, even for those getting big subsidies, affordability will be an issue.

Many consumers "will be moving into a really fully insured product for the first time, so there may be a higher cost associated with getting into that market," Health and Human Services Secretary Kathleen Sebelius said this week.

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Florida governor Rick Scott, one of the biggest critics of President Obama’s health reform efforts, said Wednesday he would do the administration’s bidding and expand the Medicaid program.

But Scott said he was doing the expansion on his own terms: for three years only, while the federal government is footing the entire bill.

“While the federal government is committed to paying 100 percent of the cost of new people in Medicaid, I cannot, in good conscience, deny the uninsured access to care,” Scott said in a news conference.

“We will support a three-year expansion of our Medicaid program under the new health care law, as long as the federal government meets their commitment to pay 100 percent of the cost during this time. This legislation would sunset after three years and need to be reauthorized.”

Scott denied he was giving in to the administration. “It is not a white flag of surrender to government-run health care,” he said.

The 2010 Affordable Care Act was designed to transform health care in the United States, which most experts agree currently costs too much and leaves far too many people without health insurance. It was meant to provide more care to people who can’t buy insurance by forcing states to expand Medicaid.

The hope was to add about 16 million of the poorest people to the rolls -- about half of those who need health insurance. But after a series of challenges to the law, the U.S. Supreme Court ruled in June that the Medicaid expansion requirement went too far. While most of the Affordable Care Act was constitutional, the court ruled, the federal government could not force states to offer Medicaid to more people.

The Congressional Budget Office projects that 12 million people will become newly eligible for Medicaid in the states that choose to expand their offerings by 2022. The law required states to extend Medicaid to people earning up to 133 percent of the federal poverty level, or about $14,800 for single people and $31,000 for a family of four.

Many Republican governors immediately said they wouldn’t expand Medicaid.

Texas governor Rick Perry turned down $76 billion in federal matching funds that would have helped pay to do it over the first five years. “We’re just not going to be a part of … socializing health care in the state of Texas,” Perry told reporters in July.

South Carolina’s Nikki Haley said expanding Medicaid would bring people out who were already qualified -- and she said that her state would go broke taking care of them, even if the federal government paid the bill for those who would newly qualify. In addition, states will have to start paying a very small percentage in 2017.

But health care experts predicted that many red states would not turn away free money from the federal government.

Arizona governor Jan Brewer said her state would expand Medicaid to about 300,000 residents in her state of the state address last month. Michigan governor Rick Snyder made his announcement Feb. 6: His state will add about 320,000 people to the joint state-federal health insurance plan for the low-income.

“I am forced to accept it as today’s reality and I have decided to expand Nevada’s Medicaid coverage,” Nevada governor Brian Sandoval, another Republican,  said in December.

Republican-leaning holdouts include Alabama, Louisiana, Idaho, Mississippi, South Carolina, Maine and 12 others.

Scott said he wasn’t happy, but said he was facing reality.

“There are no perfect options. Our options are either having Floridians pay to fund this program in other states while denying health care to our citizens or using federal funding to help some of the poorest in our state with the Medicaid program as we explore other health care reforms,” he said.

Left-leaning groups applauded.

“Now about 613,000 Florida women stand to gain the security of quality health coverage and the ability to get the care they need, when they need it, without facing huge medical bills,” said Judy Waxman of the National Women’s Law Center.

“Combined with other reforms in the Affordable Care Act, this expansion would reduce the percentage of uninsured women in Florida from 25.3 percent to 5.8 percent.”

Scott says he’s not against health reform, he just doesn’t like the approach taken in the 2010 health reform law.

“Before I ever dreamed of standing here today as Governor of this great state, I was a strong advocate for better ways to improve health care than the government-run approach taken in the President’s health care law,” he added.

“I believe in a different approach. But, regardless of what I -- or anyone else -- believes, a Supreme Court decision and a presidential election made the President’s health care mandates the law of the land.”

Scott says he will still refuse to set up a state health insurance exchange, leaving the federal government to run it.

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Health insurance exchanges will change the way people buy coverage and will help millions of uninsured people get a private plan. Nearly 49 million people are uninsured in the United States, but the numbers vary dramatically by state.

Exchanges will be the most visible part of President Barack Obama's health care overhaul law in everyday life. Open enrollment starts Oct. 1, less than 10 months away.

Some questions and answers on how the exchanges will work:

Q: What's a health insurance exchange?

A: "Exchange" is just another word for "marketplace." The plans sold in the new markets will start covering patients on Jan. 1, 2014. Each state will have its own exchange serving people who buy their health insurance directly, as well as a separate one for small businesses. The vast of majority of people now covered by employer plans will not see a change.

There will be three types of exchanges at the beginning: those run by states, those run by the federal government, and partnerships. Most Republican governors opposed to "Obamacare" are letting Washington run the exchanges in their states.

For consumers, the benefits should be the same no matter who runs the exchange.

Q: How will exchanges work?

A: Exchanges are supposed to have the feel of an online travel site — think Orbitz or Expedia. Middle-class people will be able to pick from a range of private insurance plans, and most people will be eligible for help from the government to pay their premiums.

Low-income people will be steered to safety-net programs for which they might qualify. This could be a problem in states that choose not to expand their Medicaid programs under a separate part of the health care law. In that case, many low-income residents in those states would remain uninsured.

Q: How will I know if I can get help with my health insurance premiums?

A: You'll disclose your income to the exchange at the time you apply for coverage and they'll let you know. Only legal residents of the United States can get financial assistance.

The health care law offers sliding-scale subsidies based on income for individuals and families making up to four times the federal poverty level, about $44,700 for singles, $92,200 for a family of four. But do yourself a favor and read the fine print because the government's help gets skimpier as household income increases.

For example, a family of four headed by a 40-year-old making $35,000 will get a $10,742 tax credit toward an annual premium of $12,130. They'd have to pay $1,388, about 4 percent of their income, or about $115 a month. A similar hypothetical family making $90,000 will get a much smaller tax credit, $3,580, meaning they'd have to pay $8,550 of the same $12,130 policy. That works out to more than 9 percent of their income, or about $710 a month.

The estimates were made using the nonpartisan Kaiser Family Foundation's online calculator. Some people will also be eligible for help with their copayments.

Final note: Though it's called a "tax credit" the government assistance goes directly to the insurer. You won't see a check.

Q: What will the benefits look like?

A: The coverage will be more comprehensive than what's now typically available in the individual health insurance market, dominated by bare-bones plans. It will be more like what an established, successful small business offers its employees. Premiums are likely to be higher for some people, but government assistance should mostly compensate for that.

Related: Buying health insurance will never be the same

All plans in the exchange will have to cover a standard set of "essential health benefits," including hospitalization, doctor visits, prescriptions, emergency room treatment, maternal and newborn care, and prevention. Insurers cannot turn away the sick or charge them more. Middle-aged and older adults can't be charged more than three times what young people pay. Insurers can impose penalties on smokers.

Because the benefits will be similar, the biggest difference among plans will be something called "actuarial value." A new term for consumers, it's the share of expected health care costs that the plan will cover.

There will be four levels of coverage, from "bronze," which will cover 60 percent of expected costs, to "platinum," which will cover 90 percent. "Silver" and "gold" are in between. Bronze plans will charge the lowest premiums, but they'll have the highest annual deductibles. Platinum plans will have the highest premiums and the lowest out-of-pocket cost sharing.

Here's a wrinkle: The government's subsidy will be tied to the premium for the second-lowest-cost plan at the silver coverage level that's available in your area. You could take it and buy a lower cost bronze plan, saving money on premiums. But you'd have to be prepared for the higher annual deductible and copayments.

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This fall, new insurance markets called exchanges will open in each state, marking the long-awaited and much-debated debut of President Barack Obama's health care overhaul.

The goal is quality coverage for millions of uninsured people in the United States. What the reality will look like is anybody's guess — from bureaucracy, confusion and indifference to seamless service and satisfied customers.

Exchanges will offer individuals and their families a choice of private health plans resembling what workers at major companies already get. The federal government will help many middle-class households pay their premiums, while low-income people will be referred to safety-net programs they might qualify for.

Most people will go online to pick a plan when open enrollment starts Oct. 1. Counselors will be available at call centers and in local communities, too. Some areas will get a storefront operation or kiosks at the mall. Translation to Spanish and other languages spoken by immigrants will be provided.

When you pick a plan, you'll no longer have to worry about getting turned down or charged more because of a medical problem. If you're a woman, you can't be charged a higher premium because of gender. Middle-aged people and those nearing retirement will get a price break: They can't be charged more than three times what younger customers pay, compared with six times or seven times today for most private plans.

If all this sounds too good to be true, remember that nothing in life is free and change isn't easy.

Starting Jan. 1, 2014, when coverage takes effect in the exchanges, virtually everyone in the country will be required by law to have health insurance or risk fines. The mandate is meant to get everybody paying into the insurance pool.

Obama's law is called the Affordable Care Act, but some people in the new markets might experience sticker shock over their premiums. Smokers will face a financial penalty. Younger, well-to-do people who haven't seen the need for health insurance may not be eligible for income-based assistance with their premiums.

Many people, even if they get government help, will find that health insurance still doesn't come cheaply. Monthly premiums will be less than the mortgage or rent, but maybe more than a car loan. The coverage, however, will be more robust than most individual plans currently sold.

Consider a hypothetical family of four with $60,000 in income and headed by a 40-year-old. They'll be eligible for a government tax credit of $7,193 toward their annual premium of $12,130. But they'd still have to pay $4,937, about 8 percent of their income or $410 a month.

A lower-income family would get a better deal from the government's sliding-scale subsidies.

Consider a similar four-person family making $35,000. They'd get a $10,742 tax credit toward the $12,130 annual premium. They'd have to pay $1,388, about 4 percent of their income, or about $115 a month.

The figures come from the nonpartisan Kaiser Family Foundation's online Health Reform Subsidy Calculator. But while the government assistance is called a tax credit and computed through the income tax system, the money doesn't come to you in a refund. It goes directly to insurers.

The Affordable Care Act is the biggest thing that's happened to health care since Medicare and Medicaid in the 1960s. But with open enrollment for exchange plans less than 10 months away, there's a dearth of consumer information. It's as if the consumer angle got drowned out by the political world's dispute over "Obamacare," the dismissive label coined by Republican foes.

Yet exchanges are coming to every state, even those led by staunch GOP opponents of the overhaul, such as Govs. Rick Perry of Texas and Nikki Haley of South Carolina. In their states and close to 20 others that are objecting, the exchanges will be operated by the federal government, over state opposition. Health and Human Services Secretary Kathleen Sebelius has pledged that every citizen will have access to an exchange come next Jan. 1, and few doubt her word.

But what's starting to dawn on Obama administration officials, activists, and important players in the health care industry is that the lack of consumer involvement, unless reversed, could turn the big health care launch into a dud. What if Obama cut the ribbon and nobody cared?

"The people who stand to benefit the most are the least aware of the changes that are coming," said Rachel Klein, executive director of Enroll America, a nonprofit that's trying to generate consumer enthusiasm.

"My biggest fear is that we get to Oct. 1 and people haven't heard there is help coming, and they won't benefit from it as soon as they can," she added. "I think it is a realistic fear."

Even the term "exchange" could be a stumbling block. It was invented by policy nerds. Although the law calls them "American Health Benefit Exchanges," Sebelius is starting to use the term "marketplaces" instead.

Polls underscore the concerns. A national survey last October found that only 37 percent of the uninsured said they would personally be better off because of the health care law. Twenty-three percent said they would be worse off in the Kaiser poll, while 31 percent said it would make no difference to them.

Insurers, hospitals, drug companies and other businesses that stand to benefit from the hundreds of billions of dollars the government will pump in to subsidize coverage aren't waiting for Washington to educate the public.

Blue Cross and Blue Shield plans, for example, are trying to carve out a new role for themselves as explainers of the exchanges. Somewhere around 12 million people now purchase coverage individually, but the size of the market could double or triple with the new approach, and taxpayers will underwrite it.

"Consumers are expecting their health insurance provider to be a helpful navigator to them," said Maureen Sullivan, a senior vice president for the Blues' national association. "We see 2013 as a huge year for education."

One goal is to help consumers master the "metals," the four levels of coverage that will be available through exchange plans — bronze, silver, gold, and platinum.

Blue Cross is also working with tax preparer H&R Block, which is offering its customers a health insurance checkup at no additional charge this tax season. Returns filed this year for 2012 will be used by the government to help determine premium subsidies for 2014.

"This tax season is one of historical significance," said Meg Sutton, senior adviser for tax and health care at H&R Block. "The tax return you are filing is going to be key to determining your health care benefits on the exchange."

Only one state, Massachusetts, now has an exchange resembling what the administration wants to see around the country. With six years in business, the Health Connector enrolls about 240,000 Massachusetts residents. It was created under the health overhaul plan passed by former Republican Gov. Mitt Romney and has gotten generally positive reviews.

Connector customer Robert Schultz is a Boston area startup business consultant who got his MBA in 2008, when the economy was tanking. Yet he was able to find coverage when he graduated and hang on to his insurance through job changes since. Schultz says that's freed him to pursue his ambition of becoming a successful entrepreneur — a job creator instead of an employee.

"It's being portrayed by opponents as being socialistic," Schultz said. "It is only socialistic in the sense of making sure that everybody in society is covered, because the cost of making sure everybody is covered in advance is much less than the cost of putting out fires."

The Connector's executive director, Glen Shor, said his state has proven the concept works and he's confident other states can succeed on their own terms.

"There is no backing away from all the challenges associated with expanding coverage," Shor said. "We are proud in Massachusetts that we overcame what had been years of policy paralysis."

Some questions and answers on how the exchanges will work

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By Jay Hancock
Kaiser Health News

Consumer-driven medical spending may be the second-biggest story in health care, after the Affordable Care Act. As employers give workers more "skin in the game" through higher costs from purse and paycheck, the thinking goes, they'll seek more efficient treatment and hold down overall spending.

But consumers may not have as much skin in the game as experts thought, new government figures show.
Despite rapid growth in high-deductible health plans and rising employee contributions for insurance premiums, consumers' share of national health spending continued to fall in 2011, slipping to its lowest level in decades.

"I'm surprised," says Jonathan Gruber, a health economist at the Massachusetts Institute of Technology. "All the news is about the move to high-deductible health plans. Based on that logic … I would have expected it to go up."

True, medical costs are still pressuring families. Household health expense has outpaced sluggish income growth in recent years, says Micah Hartman, a statistician with the Department of Health and Human Services, which calculates the spending data.

But from a wider perspective, consumer health costs continued a trend of at least a quarter-century of taking up smaller and smaller parts of the health-spending pie. Household expense did go up. But other medical spending rose faster, especially for the government Medicare and Medicaid programs.

Economists measure three kinds of consumer health costs: insurance premiums paid through payroll deductions or for individual policies; out-of-pocket costs for deductibles and co-pays; and Medicare payroll taxes. Such outlays fell to 27.7 percent of the health care economy in 2011, down from 28 percent in 2010 and from 32 percent in 2000, according to the national health expenditures report issued by HHS last week.

That's in spite of the fact that one worker in three is covered by a plan with a deductible of at least $1,000, up from one in 10 in 2006, according to the Kaiser Family Foundation. (KHN is an editorially independent program of KFF.) Among small firms, half the workers are now in high-deductible plans.

One factor holding down costs even for families with consumer plans has been patent expirations for expensive, commonly used medicines such as Prevacid and Flomax.

"People these days are spending a lot less out-of-pocket on prescription drugs," said Peter Cunningham, director of quantitative research at the Center for Studying Health System Change. "A lot of that has to do with the shift from brand name to generics."

Nobody thinks consumer-driven medicine has run its course. Insurers and employers are still building tools for patients to shop for care by comparing costs for MRI scans, for example, or researching hospital quality records.

High-deductible plans are expected to win a large share of the business sold next year through the health law's state insurance exchanges. Many companies say they intend to offer high-deductible insurance -- especially plans with tax-favored health savings accounts -- as the only option.

"I've heard of nothing but acceleration" of employers into consumer-directed health insurance, said Roy Ramthun, a benefits consultant who was a senior health policy advisor in President George W. Bush’s administration. "More local units of government, school districts and even some union plans are starting to move more aggressively into these areas."

High deductible plans are already getting credit for helping with an overall slowdown in medical spending growth. Among other factors, economists suspect that the prospect of higher wallet costs has made consumers even more likely than usual to avoid doctor visits in the middle of a sluggish economy. (Public health officials fear this will backfire with a later spike in illness.)

Sooner or later, households’ share of the medical-cost pie will start to get bigger, analysts say. The declines have been getting smaller, suggesting the trend will reverse.

One reason is continued growth of high-deductible plans. Another is that, starting in 2014, the health act requires individuals to start buying coverage or pay a penalty. Another is that federal health spending has risen more than three times as fast as consumer health spending since 2007, which can’t continue.

Even with recent tax increases on high-income households, the huge Medicare program for seniors and the disabled is growing at an unsustainable pace, says Joseph Antos, a health economist at the pro-markets American Enterprise Institute. That means Medicare, too, will need to seek higher premiums, deductibles or co-pays from the patient’s pocket, he said.

"Medicare is on a fiscal slide," he said. "Things are going to have to happen. Eventually, whether you call it premium support or not, we’re going to have to move to some kind of budgeted system in Medicare."

 Want more health news? Don't miss the latest on NBCNews.com

Long-awaited federal rules for health insurance plans came out Tuesday, and they make clear that insurance plans that people can buy on the open market next year will look a lot like some of the most popular plans on offer now – with a few big differences.

As the 2010 health reform law requires, insurers will no longer be able to dump patients who are starting to cost too much, they won’t be able to charge women more than men, they have to cover anyone who can pay and they’ll have to pay for maternity care, eye exams for kids and for mental health services.

“Insurers will not be able to charge someone more just because she is sick or because she used to be sick,” Health and Human Services Secretary Kathleen Sebelius told reporters on a conference call.

The new rules from the Health and Human Services Department cover the new state exchanges, where people will be able to buy health insurance starting in 2014.

The rules lay out how much extra insurers can charge to cover certain groups of people, like smokers and people who are older. They also say when states outline so-called essential health benefits – the minimums of what health insurers should cover – they should use the best existing plans as a guideline. HHS also issued some guidelines for employers and insurers who want to offer wellness programs, which encourage people to keep themselves healthy.

The first batch of new rules have long-expected provisions forbidding insurers to discriminate against patients who already have diseases such as cancer, asthma or heart disease. “Today, as many as 129 million—or one in two—non-elderly Americans have some type of pre-existing health condition, ranging from life-threatening illnesses like cancer to chronic conditions like diabetes, asthma, or heart disease,” HHS said in a statement.

“In most states, these consumers can be denied individual health insurance coverage or have benefits for medical conditions excluded by insurance companies. In addition, individuals and small employers often find that they have few protections against exorbitant premiums increases.”

charge the oldest customers as much as five times more in premiums as the youngest adult customers. HHS stuck with a proposal that allows insurers to charge the oldest patients three times as much as they charge a 21-year-old. And the rates can go up a little bit with every birthday. But smokers can be charged premiums that are five times higher under the new rules.

“Under the law, states can choose to enact stronger consumer protections than these minimum standards. In addition, starting in 2017, states have the option of allowing large employers to purchase coverage through the Exchanges,” HHS adds.

The health insurance exchanges are meant to be the main place that adults under 65 can buy health insurance if they don’t get covered through an employer. The 2010 Affordable Care Act is meant to improve coverage and lower costs by getting millions more Americans health insurance so they get medical care earlier, before before easy-to-treat conditions like high blood pressure can cause expensive strokes or heart attacks.

Right now, about 48 million Americans go without health insurance, according to the Census Bureau. That’s more than 15 percent of the population. About 55 percent of Americans are covered through an employer; 31 percent have a public insurance plan such as Medicare or Medicaid, and 10 percent buy their own health insurance.

The Congressional Budget Office predicts that 23 million people who don’t have health insurance now will get it on one of the exchanges. More than 18 million of them will qualify for a federal subsidy averaging $6,000 a year per person. People earning up to four times the federal poverty level can get a subsidy: that’s an income of $92,000 a year for a family of four.

The rules on so-called essential health benefits –specific services that insurers have to offer and conditions they must cover -- include 10 areas: Ambulatory patient services, emergency services, hospitalization, maternity and newborn care, mental health and substance use disorder services, including behavioral health treatment, prescription drugs, rehabilitative services and devices, laboratory services, preventive and wellness services and chronic disease management and pediatric services, including oral and vision care.

“The proposed rule defines essential health benefits based on a state-specific benchmark plan, including the largest small group health plan in the state,” HHS says. These can be the largest plan, for instance, or the largest commercial health maintenance organization in a state.

For instance, if the state’s chosen benchmark plan pays for just one drug for a certain condition, so may all the plans offered on the exchange. If that benchmark plan pays for three different drugs, so will all the plans.

And HHS also set how much each level of plan – platinum, gold, silver and bronze – may require patients to pay out of pocket. Beginning in 2014, so-called bronze plans can ask patients to pay 40 percent of costs; 30 percent for a silver, 20 percent for a gold; the top-level platinum plans must pay 90 percent of patient costs. The platinum level plans may charge higher premiums, while the bronze plans will be the cheapest in terms of monthly premiums.

Finally, the rules encourage wellness plans. “Programs must be reasonably designed to promote health or prevent disease," HHS says. “Programs must have a reasonable chance of improving health or preventing disease and not be overly burdensome for individuals.” The plans can reward patients who lower their cholesterol, for instance, by cutting premiums.

But the rules do not specify the types of wellness programs employers can offer.

States were originally supposed to say whether they would design their own insurance exchanges by last Friday, or if they will let the federal government do it, but HHS has extended the deadlines. States now can declare what they intend to do by December 14.

So-called open enrollment starts in October 2013, and plans offered on the exchanges should begin providing coverage in Jan. 1, 2014. But the rules have been so late in coming out, and the states have delayed their decisions for so long,  that some critics say they doubt the federal government or state states wil be ready on time. HHS’s Gary Cohen denies this. “Absolutely, we will be ready. There will be an exchange in every state open for business on October 1 of next year,” he said.

Related stories:

• States start signing on to health reform law's marketplaces
• Feds give states a last minute break on exchanges
• States get more time for health insurance plans

By Julie Appleby
Kaiser Health News

New online insurance markets set to begin selling health coverage to consumers next October may be hampered by delays in launching a key computer program, according to state consultants and insurance regulators.

State regulators learned late last week that an electronic system most insurers will use to submit their policies for state and federal approvals won’t be ready for testing next month, as originally planned. The lag is being blamed on the wait for several regulations from the Obama administration, which are needed to update the software.

The slowdown “creates another three-month delay,” said Dan Schuyler, a director at Leavitt Partners, a consulting firm working with states to set up the markets, called exchanges. “They’re not going to be ready.”

Others believe the delay, while not necessarily critical, will further squeeze insurance regulators and insurers, who still have much work to complete before next fall when enrollment is slated to start in the exchanges, a critical part of the health law. Enrollment is set to begin Oct. 1 for policies that go into effect Jan. 1, 2014.

An estimated 9 million individuals are expected to use the markets that first year to shop for coverage and find out if they are eligible for government subsidies.

But depending on how long the update takes, “it could make it difficult to have a robust and competitive marketplace on the exchanges,” said Kim Holland, a former Oklahoma insurance commissioner who is now executive director of state affairs for the Blue Cross and Blue Shield Association.

The Obama administration has maintained that planning is moving forward on schedule and that the exchanges will open on time.

The difficulty in updating the System for Electronic Rate and Form Filing, known as SERFF, is the latest obstacle in the planning for the online marketplaces. Many states stalled preparations as a result of the controversy surrounding the law, with opponents encouraging them to wait to see who won the election first.

Even some supporters are arguing to postpone the opening of the marketplaces to give states and insurers more time.

“If I could wave a magic wand and change (the start) from 2014 to 2015, I would,” said Sandy Praeger, Kansas’ elected insurance commissioner, whose plan for a state partnership exchange was rejected by Gov. Sam Brownback.  “But I don’t know if [federal lawmakers] can do that.”

Aside from the political obstacles, a host of technical and regulatory steps must be taken before the exchanges can open, including reviews of every type of policy submitted by insurers to determine they meet new standards for coverage and pricing. Those standards can’t be incorporated into the review system, however, until several yet-to-be-issued federal rules are finalized.

“Without the rules, we can’t get the (SERFF) system going,” said Holland.

The anticipated rules are expected to provide additional details on the types of benefits insurers must include in policies sold in the new marketplaces, Holland said.  While proposed rules – including how insurers can adjust their premiums based on a consumer’s age or where they live – may be released this week, they are likely to give stakeholders at least a 30-day comment period before they are adopted. Generally, insurers say it can take a year to 18 months to develop new products and get them approved.

“The timeline is definitely getting crunched,” said Joel Ario, a consultant with Manatt Health Solutions who formerly served as the Obama administration’s head of exchange planning. “Insurers tell me they will need final approval of their products by July 1 so they will have three months to actually get set up to market them.”

That means there still is time, say some state regulators. In Mississippi, the SERFF delay is not being viewed with alarm, partly because the state expects only a handful of insurers to submit policies for review.

“We’ll have our work cut out for us, no doubt about that. But I don’t think we are in need of the time that some of the other states need,” said Aaron Sisk, senior staff attorney with the Mississippi insurance department, which he said will notify the federal government by Friday that it will run its own exchange.

But Sisk added, “if they keep pushing back the time, it could become a problem pretty quick.”

Insurers “are going to do everything they can to be ready to go by Oct. 1 of next year,” said Robert Zirkelbach, spokesman for American’s Health Insurance Plans, the industry’s lobbying group. “They want to offer coverage in the exchanges.”

The SERFF system is already used in nearly all states so insurers can electronically file applications for new products and premium adjustments. Developed by the National Association of Insurance Commissioners, the system was designed to streamline a process that can involve hundreds of pages of documents for each type of policy sold.  To help implement the health law, the SERFF software is being updated to help state and federal regulators determine which policies meet the standards to be sold in the new markets.

The health law envisions states running their own marketplaces, but it allows the federal government to set them up and run them if states do not.

So far only 16 states and the District of Columbia have said they will run markets on their own. Last week, the Obama administration extended a deadline to mid-December for states to submit plans to set up their own markets, or to mid-February for those who want to partner with the federal government.

Ario says the extension shows the federal government “believes they can start the solicitation process [with insurers in February] and complete it in time to have product on the shelf for open enrollment in October.”

By pushing back the startup of the updated software, though, insurers will have less time to win that approval. It takes about 60 days for the average state to process an application to sell a new health insurance product, said Holland.

The delay “compresses the deadline … and everyone is concerned we will get flooded” in the spring with a slew of applications from insurers, said Praeger, a past president of the insurance commissioners association.

Meeting the deadlines “is going to be really hard,” she added. “Not that it can’t be done, but it really puts a lot of pressure on everyone.”

Kaiser Health News is an editorially independent program of the Henry J. Kaiser Family Foundation, a nonprofit, nonpartisan health policy research and communication organization not affiliated with Kaiser Permanente.

Related stories:

States get more time for health exchange plans

A consumer's guide to health reform, post-election 

Supreme Court ruling leaves poorest Americans at risk

More workers opt out of company health plans

A quarter of kids live in families struggling with medical bills

Updated at 5:50 p.m. ET, Nov. 9: There’s nothing like a deadline to focus the mind and states have a good one coming up next week – they have to decide if they're going to run their own health insurance marketplaces, called exchanges, or have the federal government do it for them. 

But they got a little break late Friday -- if they do decide to run their own exchanges, they'll have until December 14 to submit their plans to the federal government.

It’s a big decision and a big responsibility. One of the main goals of the 2010 health reform law is to get more people covered by health insurance, so they can get medical care when they need it, and so they get care earlier, before easy-to-treat conditions like high blood pressure can cause expensive strokes or heart attacks.

The exchanges – think Travelocity for health insurance – will provide a mechanism for more people to buy insurance. They’re supposed to provide a side-by-side comparison on price, what’s covered and how much you might have to pay out of pocket for a doctor’s visit. They’ll also be a route for people to get a little extra cash from the federal government to buy insurance; the health care law provides for a generous federal subsidy for many, if not most, buyers.

The states had two good excuses this year to procrastinate on exchanges. First of all, there were three major challenges to the law that went all the way to the Supreme Court. Many governors and state legislators were gambling that the Supreme Court would declare the law unconstitutional. It didn’t. Now the Nov. 16 deadline looms.

“This deadline is smoking the states out,” says Dan Mendelson of consultants Avalere Health.

But Health and Human Services Secretary Kathleen Sebelius softened the deadline a bit late on Friday. "The deadline for a Declaration letter for a State-based exchange remains Friday, November 16, 2012," she wrote in a letter to governors. "However, today, in order to continue to provide you with appropriate technical support if you are pursuing a State-based exchange, HHS is extending the deadline for State-based Exchange Blueprint application submissions to Friday, December 14, 2012."

When it ruled in June, the Supreme Court said states could decide whether to offer Medicaid – the state-federal health insurance plan for the low-income – to more people. But the rest of the law stood, including the exchanges requirement. Still, there was another possible way out – the election.

Republicans promised that they’d repeal the entire health reform law if they won in this week’s election. Now that Mitt Romney has lost to President Barack Obama and the Democrats have kept their control of the Senate, any chance of killing the Affordable Care Act is now dead. 

"Obamacare is the law of the land," House Speaker John Boehner said in an interview with ABC News on Thursday.

So far, only 13 states and Washington, D.C. have said they’ll build a health insurance exchange. Eight have said they absolutely will not, and 25 states have been sitting on the fence, says Kelly Barnes, U.S. health industries leader at PricewaterhouseCoopers.

"My administration will not partner with the federal government to create a state-federal partnership insurance exchange because we will not benefit from it and implementing it could cost Kansas taxpayers millions of dollars," Kansas Governor Sam Brownback said in a statement Thursday.

Some groups are also urging governors to defy HHS. “States can and do have the power to reject federal attempts to compel their action. Governors should use that power to tell the federal government 'no'," Nicole Kaeding of the group Americans for Prosperity said in a letter sent Friday. “By creating an exchange, states will serve as de-facto administrators of the federal government implementing its rules, regulations, and mandates.”

States that don't set up their exchanges will have to submit to what the federal government does for them.

Avalere predicts 20 states will be ready to run their own exchanges when the bulk of the health reform law takes effect on Jan. 1, 2014. “The consumer will have access to an exchange by 2014,” Mendelson said. “One way or another, this administration has to make sure that everyone who wants to purchase insurance can.”

To make sure that people don't wait until they are sick to buy health insurance, the 2010 health reform law provides for fines on a sliding scale for people who don't buy. And people who want to switch from their employer's insurance can.

States may have been hoping to escape the looming responsibility, but that doesn’t mean they have been doing nothing. “I think there are more contingency plans out there than probably people have declared,” Barnes said.  “A state like California, that has been planning all along, will have a higher level of organization.”

Waiting on the rules
Some Republican governors have done a fair bit of planning, including Bob McDonnell of Virginia and New Jersey’s Chris Christie. But many want the Health and Human Services Department to give them the rules for the exchanges, and to spell out what a federally run exchange would look like.

That would help them choose. Many have also asked if they can do a hybrid, with the state running part and the federal government running part of the exchange.

The federal government hasn’t published those rules. They are currently awaiting approval at the Office of Management and Budget. "We intend to issue further guidance to assist you in the very near future," Sebelius wrote the governors."This administration is committed to providing significant flexibility for building a marketplace that best meets your state's needs," Sebelius added.

“It’s driving the insurance companies crazy to not have any clarity about what they need to be offering in the exchanges,” Mendelson said. “Having said that, when push comes to shove, the insurers want to be offering products in the exchanges. They will rise to the challenge.” After all, the exchanges could mean more than 20 million new customers for insurance companies.

Right now, about 48 million Americans are going without health insurance, according to the Census Bureau. That’s more than 15 percent of the population.

About 55 percent of Americans are covered through an employer; 31 percent have a public insurance plan such as Medicare or Medicaid, and 10 percent buy their own health insurance.

23 million likely will get insurance through exchanges
The Congressional Budget Office predicts that 23 million people who don’t have health insurance now will get it on one of the exchanges. More than 18 million of them will qualify for a federal subsidy averaging $6,000 a year per person. People earning up to four times the federal poverty level can get a subsidy: that’s an income of $92,000 a year for a family of four.

But it’s going to be confusing, especially for people who have never had to wrangle with an employer’s open enrollment process before. “If you have had employer-sponsored insurance, at least you are familiar with the terms,” said Barnes. “But there is also a big tranche of buyers who have never had access to insurance before. It’s a less sophisticated consumer.”

Many people will go for bare-bones coverage, Barnes predicts. “Price is going to be the first selector in this round,” she said. “When all else fails, you buy on price.”

Some people who now have employer-covered insurance are doing that anyway. There’s a clear trend for employers to offer less, and to require their employees to pay a bigger share of their health insurance coverage. “It is definitely true that employers are paying for less and less,” Mendelson says.

“They are increasing co-pays and making it expensive for patients to use medical services. But even with those trends, the benefits available in the exchange are likely to be less generous and less robust than what employers offer today.”

Nonetheless, Mendelson says the exchanges will set the standards going forward. “These are going to be solid commercial insurance products offered by leading health insurance companies,” he said. “They are widely seen as the future.”

It will pay, he said, for the companies to make it easy to understand what they’re offering for sale on the exchanges.

Related links:

Boehner: 'Obamacare is the law of the land'

A consumer's guide to health reform, post-election 

Supreme Court ruling leaves poorest Americans at risk

More workers opt out of company health plans

A quarter of kids live in families struggling with medical bills

So you think the Supreme Court upheld a law that requires most people to buy health insurance? That's only part of it. The measure's hundreds of pages touch on a variety of issues and initiatives that have, for the most part, remained under the public's radar. Here's a sampling:  

Postpartum Depression (Sec. 2952)
Urges the National Institute of Mental Health to conduct a multi-year study into the causes and effects of postpartum depression. It authorized $3 million in 2010 and such sums as necessary in 2011 and 2012 to provide services to women at risk of postpartum depression.

Abstinence Education (Sec. 2954)
Reauthorizes funding through 2014 for states to provide abstinence-only sex education programs that teach students abstinence is "the only certain way to avoid out-of-wedlock pregnancy, sexually transmitted diseases, and other associated health problems." Federal funding for these programs expired in 2003.

Power-Driven Wheelchairs (Sec. 3136)
Revises Medicare payment levels for power-driven wheelchairs and makes it so that only "complex" and "rehabilitative" wheelchairs can be purchased; all others must be rented.

Oral Health Care (Sec. 4102)
Instructs the Centers for Disease Control and Prevention to embark on a five-year national public education campaign to promote oral health care measures such as "community water fluoridation and dental sealants."

Privacy Breaks for Nursing Mothers (Sec. 4207)
Requires employers with 50 or more employees to provide a private location at their worksites where nursing mothers "can express breast milk." Employers must also provide employees with "a reasonable break time" to do this, though employers are not required to pay their employees during these nursing breaks.

Transparency on Drug Samples (Sec. 6004)
Requires pharmaceutical manufacturers that provide doctors or hospitals with samples of their drugs to submit to the Department of Health and Human Services the names and addresses of the providers that requested the samples, as well as the amount of drugs they received. 

Face-to-Face Encounters (Sec. 6407)
Changes eligibility for home health services and durable medical equipment, requiring Medicare beneficiaries to have a "face-to-face" encounter with their physician or a similarly qualified individual within six months of when the health professional writes the order for such services or equipment.

Diabetes & Death Certificates (Sec. 10407)
Directs the CDC and the HHS Secretary to encourage states to adopt new standards for issuing death certificates that include information about whether the deceased had diabetes.

Breast Cancer Awareness (Sec. 10413)
Instructs the CDC to conduct an education campaign to raise young women's awareness regarding "the occurrence of breast cancer and the general and specific risk factors in women who may be at high risk for breast cancer based on familial, racial, ethnic, and cultural backgrounds such as Ashkenazi Jewish populations."

Assisted Suicide (Sec. 1553)
Forbids the federal government or anyone receiving federal health funds from discriminating against any health care entity that won't provide an "item or service furnished for the purpose of causing … the death of any individual, such as by assisted suicide, euthanasia, or mercy killing."

Reprinted with permission from Kaiser Health News