Pittsburghers fall short on subsidy bucks under health care law
There's a downside to fierce health competition in Pittsburgh that makes premiums for Obamacare coverage the lowest in the state: Philadelphians could get a better deal.
A quirk in calculating subsidies will give Philadelphia residents a bigger discount, allowing them to buy coverage for less money than uninsured Pittsburghers.
High premiums mean bigger tax credits under the Affordable Care Act. The result is lower subsidized costs for people buying coverage on HealthCare.gov outside of Western Pennsylvania — where the state's largest health insurer, Highmark Inc., lowered premiums while battling with UPMC Health Plan.
“Philadelphia has the higher prices, but they will have better subsidies,” said Titus North, executive director of Squirrel Hill consumer advocacy group Citizen Power.
Depending on a person's age and income level, buying a health plan in Pittsburgh could cost more than three times as much as doing so in Philadelphia, the Tribune-Review found in reviewing Obamacare premiums and subsidies.
The law awards discounts through upfront tax credits, primarily to people who don't get coverage from employers, on a sliding scale based on income and the price of a benchmark plan in each market.
Whether intentional or not, Highmark set the benchmark with Community Blue, a plan that excludes UPMC, the region's largest network of hospitals and doctors and Highmark's bitter competitor since the insurer bought West Penn Allegheny Health System in April.
The formula has a big impact on the costs consumers will pay.
A hypothetical 27-year-old making $18,000 a year will pay an annual premium of $1,428 for the lowest-cost plan in Pittsburgh, which is about 40 percent lower than the cheapest premium in Philadelphia. But after applying tax credits, that Pittsburgh plan would cost the person $534 a year — more than three times the $162 after-credit cost on the eastern side of the state.
Chalk it up to another case of Philly trumping the Burgh in government operations?
Highmark defended its pricing and questioned the usefulness of comparing plans in the cities. Each market is unique, with different insurers offering a range of plans, spokeswoman Kristin Ash said.
“It's not that we were intentionally trying to do that,” Ash said.
The benchmark plan in each market is the silver plan, second-lowest in price. Plans range from bronze to silver, then gold and platinum. Highmark sells one Community Blue plan each in bronze and gold levels, but two plans in the silver level.
“Those plans were submitted back when we had no idea what other insurers were going to do,” she said. “Our rate was what we thought the plans would cost.”
But many Pittsburghers will opt for a less-costly Community Blue plan, North predicted.
“They're very unlikely to be able to pay the extra premium to get anything other than Highmark's Community Blue, so they won't have access to UPMC's facilities,” North said.
At the top end of silver plans for sale in Pittsburgh are those from UPMC Health Plan, which cost 70 to 104 percent more than the benchmark. In Philadelphia, the most expensive silver plan is 39 percent more costly than the benchmark.
“Consumers need to be fully informed, as there are trade-offs to be made between price and the access to the providers they want,” UPMC spokesman Paul Wood said.
Alex Nixon is a Trib Total Media staff writer. Reach him at 412-320-7928 or firstname.lastname@example.org.
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