Study: Most individual insurance plans fall short of health law's standards

Most people who buy their own health insurance would get a much more generous policy under the Affordable Care Act, according to a new study published in Health Affairs.

Most individual policies today fall short of the ACA's most basic standards, the study said. That means many consumers will get more benefits and will likely face lower out-of-pocket costs — but premiums could rise as a result.

People who buy health insurance on their own typically pay higher premiums and higher out-of-pocket costs than people who get their coverage through an employer. Individual policies also tend to offer less coverage and, until the ACA is fully implemented in 2014, can exclude coverage for pre-existing conditions.

According to the Health Affairs study, even the most basic plan under the ACA's new standards would be significantly more generous than what most people get today on the individual market.

The ACA establishes new insurance marketplaces, called exchanges in every state and it sets minimum standards for plans sold through the exchanges. For the most basic policies, insurers have to cover 60 percent of a plans's total cost, leaving customers to pay no more than the other 40 percent.

But a majority of the plans in today's individual market cover less than 60 percent of all costs, according to the Health Affairs study.

Slightly more than half of people on the individual market are enrolled in policies that cover less than 60 percent of plan costs. One-third of individual policies pay 60 to 69 percent, enough to meet the lowest thresholds under the healthcare law.

Many consumers will therefore get more generous coverage by buying through an exchange. But, according to the Congressional Budget Office (CBO), the boost in benefits could also raise premiums.

"Premiums for health insurance in the individual market will be somewhat higher on average under [the healthcare law] than under prior law, mostly because the average insurance policy in that market will cover a larger share of enrollees’ costs for health care and provide a slightly wider range of benefits," CBO said in a 2009 report.

CBO said the increases would be partially offset by other policies that would lower premiums, but would still come out slightly higher. Consumers won't necessarily shoulder the extra costs, though, because the federal government will provide subsidies to help cover the cost of insurance.