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Federal report: Health insurance rates vary significantly by state

By Maryalene LaPonsie on August 7th, 2013

In a report to the Senate Committee on Finance, the U.S. Government Accountability Office revealed a wide discrepancy among states in regard to the price of individual health insurance plans.

The report was sent to the committee to provide a baseline of health insurance rates for individual policies in each state. The information was provided in advance of the implementation of an individual health insurance mandate which will go into effect in 2014 and is expected to result in an influx of new customers shopping for health insurance plans.

Many plans charge thousands in premiums

To prepare its report, the GAO analyzed premium data posted by health insurance companies on the government's health reform website. The office considered six buying scenarios including single males and females, families of four and couples older than age 55. It then published its findings for each state and included the minimum, maximum and median premium amounts.

In many states, families and older couples may pay significantly more than younger single individuals, regardless of their smoking status. For example, in Illinois, the median premium for medical insurance for a smoking 30-year-old male is $1,722 with a $2,500 deductible. Meanwhile, plans for couples older than age 55 have a median premium of $7,519 and an $18,000 deductible.

For families of four with parents who are age 40, the following states had some of the highest median health insurance rates:

  • New Jersey: $53,784 with a $5,000 deductible
  • Maine: $28,361 with an unknown deductible (deductible amount not reported by insurer)
  • Hawaii: $17,485 with no deductible
  • Massachusetts: $15,193 with a $3,000 deductible
  • New York: $14,375 with no maximum deductible or out-of-pocket costs
  • South Carolina: $11,576 with a $15,000 deductible
  • Virginia: $11,244 with a $1,000 deductible
  • Washington: $10,296 with an unknown deductible
  • South Dakota: $10,243 with a $15,000 deductible

On the other end of the spectrum was Kentucky which offered the cheapest median premiums for families of four. According to the GAO, the state's median premium for that category is $3,282 with a $7,000 deductible.

Comparing health insurance quotes for the best price

The GAO study demonstrates the importance of gathering multiple health insurance quotes to find the best rates. While premiums varied significantly from state to state, they were also wide variables within each state.

For example, family plans in California had a median premium of $8,841 with a $15,000 deductible. However, plan premiums ranged from $2,832 with a $13,000 deductible to $43,632 with a $4,000 deductible. Overall, the GAO found 314 plans for California families on the government's health reform website.

While some states, such as Vermont and Rhode Island, only have a handful of health insurance plans listed on the government site, other states, including Colorado, Texas and Pennsylvania, have thousands of medical insurance options from which customers can select.

To ensure they are getting the best deal possible, consumers should not only consider premiums but deductibles and out-of-pocket maximum costs as well.

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