Aetna Inc. (AET), WellPoint, Inc. (WLP), CIGNA Corporation (CI) – Obamacare Health Insurance Premiums: Lower Than Expected?

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Twenty-four days! That’s the amount of time we have left, including today, before state-run health exchanges are scheduled to open for business and individuals will be allowed to openly and transparently compare insurance plans between differing companies to see what suits their needs best.

Aetna Inc. (NYSE:AET)

Following Thursday night’s NFL opening game, I caught my first personal glimpse of the push to educate the public about the Patient Protection and Affordable Care Act. Living in Washington state, one of the 16 states that’s decided to participate in the state-run exchanges, I watched a town hall meeting that gathered some of my state’s top lawmakers to answer the public’s questions regarding the new bill, also known as Obamacare.

While the seemingly insurmountable technological aspects of getting the health exchanges ready for implementation and the difficult task of getting the public educated about Obamacare is ongoing, one concern that hasn’t left the forefront of a majority of folks’ minds since the bill was passed in 2010 is what it might do to health insurance premiums.

There is no question that something needed to be done to curb the willy-nilly progression of health-care premiums over the past couple of decades. However, skeptics abound as to whether the current bill will successfully keep premiums under control while providing equal or better care for Americans. In June, a Gallup poll showed that just 44% of Americans approved of the new law, while 52% opposed it. Needless to say, Obamacare has been fighting an uphill battle from the start.

However, new data revealed this week in a study by the Kaiser Family Foundation may prove that trudging uphill, in three feet of snow, both ways, may just be possible.

Score one for the Obamacare supporters
The Kaiser Family Foundation’s study (link opens PDF file) involved looking at all 17 states that had publicly released their insurance rate data, as well as the District of Columbia. With that information, the Kaiser Family Foundation utilized the number of insurers in each state, as well as a projection of the subsidized and unsubsidized premiums of various age groups within the largest city in each of these states, to compare health insurance premiums from one area to the next.

As you might suspect, there were some huge variances in premiums. In Baltimore, Md., and Albuquerque, N.M., the premiums for a 40-year-old on the bronze plan (one that covers 60% of medical costs) were the lowest, at $146 and $155 per month, respectively. In New York City and Burlington, Vt., they ran the highest at $308 and $336. The variance here has to do with existing laws long before the PPACA came along that didn’t differentiate premiums by age and disallowed insurers the right to deny coverage to people with pre-existing conditions.

What you probably didn’t expect is the finding by the Kaiser Family Foundation that premium costs in 15 of the 18 largest cities is lower than the Congressional Budget Office estimate of $320 per month as it relates to the average cost of the second-lowest cost silver level plan (the second-lowest cost silver plan is the benchmark for all subsidized comparisons).

Obviously, this study could wind up being a boon for insurers who could scoop up additional consumers with word that premiums are coming in lower than expected. Aetna Inc. (NYSE:AET)WellPoint, Inc. (NYSE:WLP), and CIGNA Corporation (NYSE:CI) have all made huge purchases to get their hands on the highly coveted Medicaid expansion member market, but would be wise not to ignore the individual markets in the states they operate, as they can use this lower-cost study to their advantage.

Another underlying beneficiary here would be drugstores such as Walgreen Company (NYSE:WAG), which has been actively promoting Obamacare in the hope of boosting its pharmacy business. If premium costs are coming in below projections, that’s all the more reason for Walgreen Company (NYSE:WAG) to trumpet this news to consumers. Simply put, insured individuals are much more likely to go and see a doctor and get a pharmacy prescription written than uninsured individuals.

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