• So what will premiums really look like under Obamacare?

    Unless you’ve been living under a rock recently, you must be aware of the back and forth between supporters and haters of Obamacare with respect to premiums in the exchanges. As I’ve explained before, this is somewhat an issue of focus. It is likely true that there are “bros” who are male, young, healthy, and single who have – in the past – been able to find really cheap insurance plans. In the future, under community ratings and guaranteed issue, they will likely be compelled to buy more robust, yet more expensive plans. So those specific individuals will see “rate shock”.

    Others, including me, will argue that this describes a minority of people. The biggest push  for health care reform was to get people who could not previously get insurance, or at least something they could afford, something that was doable. And, in that respect, the ACA will likely succeed. Got a chronic condition? Now you can get a plan! It will also be the same price as everyone else’s. Are you 50? You, too, can now get insurance. Tons of those people will also get subsidies to help them afford those premiums. Even in the young and healthy, many can go on their parent’s plans through age 26. Even more will get those subsidies. So the accurate picture is that very few will see the “rate shock” that many are talking about.

    Hovering over this debate, however, has been some uncertainty. No one really knew, after all, where the real premium price would fall. If they were higher than projected, then the arguments of affordability would fall away. Those who screamed “rate shock” would actually be right in more cases than expected. A recent report by the Kaiser Family Foundation has given us some answers:

    With open enrollment in new insurance marketplaces set to begin Oct. 1, this analysis provides an early look at insurance premiums in 17 states and DC that have publicly released comprehensive data about their rates and the impact of tax credits that will offset part of the costs for low- and moderate-income families.

    The analysis compares the premiums in the largest cities in each of the 17 states plus DC for individuals and families in different circumstances to illustrate the insurance rates they might pay, with and without the tax credits created under the law to make coverage more affordable. The 17 states plus DC include eleven operating their own marketplaces (also called exchanges) and seven that have defaulted to the federal government.

    One thing the report cleared up right away is that there are multiple insurers competing for business in all states. Only two states have only 2 insurers in the exchange, and one is Vermont, which keeps trying to go single-payer anyway. More importantly, however, there are actual numbers for what a plan will cost at the bronze and silver levels, both with and without subsidies.

    For a single 25 year old, making $28,725 a year, the monthly premium for a bronze plan (with subsidies) ranges from $111 in New York City to $173 in Soiux Falls. For that same 25 year old making $50,000 (or above 400% of the poverty line), premiums for that plan range from $122 in Albuquerque to $310 in New York City. Make that hypothetical person 60, and things look even better. With subsidies, bronze plans go from free in Hartford, CT to $140 in Sioux Falls. Without subsidies, things are more expensive, ranging from $310 in Baltimore to $531 in Indianapolis.

    But that 60 year old likely couldn’t have gotten insurance in the individual market a couple of years ago. If he could, the plan would have been much more expensive, with significantly higher out-of-pocket costs than what the ACA will deliver.

    The best news for the Obama administration, however, is that these numbers are coming in under what the CBO projected. The bad news is that there will still be people for whom these prices will be “unaffordable”. I expect that those who dislike the law will continue to focus on those people, and on the few who will still see a price increase (ie bros). That’s fine. But this report, like most of what we’re seeing at a population level, shows that the ACA can potentially work to make insurance more affordable (and attainable) for the vast majority of uninsured.


    • So, obviously there’s a lot of ink spilled on this. One thing I haven’t seen is an estimate of the costs over the life of the insured… are you aware of any discussion of that?

      That is, even if there were some rate hike for a particular demographic (the young) their lifetime outlay still may be significantly lower (or higher).

      In particular, since Obamacare eliminated lifetime limits (didn’t it? I’d hate to be wrong about that), it seems that lifetime outlay is at least as important a comparison as the immediate (1-year) changes in rates on any single person or demographic, even considering short-term differences in coverage between existing plans and exchange plans.

      I ask in earnest… I haven’t seen a conversation about this despite reading dozens or hundreds of posts about premium changes. Perhaps I’m reading the wrong things. I figured if anyone knew, you TIE folks might.

    • So much in flux – thank you for continuing the conversation!

    • When I was living in Virginia and doing some odd consulting work while trying to get a real job in policy, I paid $88 a month for a policy with an $8,000 deductible. It was worth paying something for the catastrophic coverage.

      Alexandria is in a different rating area than Richmond. But it looks like the cheapest Richmond plan would have been something like $134 a month before subsidies, and $79 a month after subsidies at what I was making then. I figure $100 a month in the DC-MD-VA rating area after subsidies. And that plan would have given me a lot more coverage – that $8,000 deductible plan provided basically no coverage until you hit your deductible, so I subsisted on OTC meds and borrowed my wife’s nasal spray.

      I understand some young healthy males in other parts of the country will now have to pay a lot more, but they’ll also be getting a lot more. Had I not been able to afford the insurance and then had the auto accident I had when I was on a student health plan, I would still be digging out of debt. Had I had Obamacare then, I would have been able to get my allergies treated and be able to go cycling without worrying about getting hit by another car (and for non-Washingtonians or Baltimoreans, drivers in those two cities are the worst in the entire United States).

    • My husband was looking at the prices on the CA exchange yesterday. We can get the cheapest “gold” plan for nearly a $250/month saving over his COBRA payment. The fact that we can get insurance at all is the real winner. When my dad retired, my mom was unable to get insurance that covered her right leg because of a history of a traumatic fracture (with which in the subsequent 25 years she has never had a problem). I’m sorry that the bros and the ex-pats living in countries without mandatory health insurance are being ground under the boot heel of socialism, but you can’t make an omelette without the requisite broken eggs.

      • I’m not sure how I’m being ground under the boot heel of socialism. Most expats in countries without mandatory insurance will move home if they get seriously ill, because those countries generally don’t have good medical care for people who can’t pay and are uninsured and plenty of them don’t cover expats. So, they need insurance or to fund the uninsured through the penalty.

        I haven’t checked the law, but I know that Expat organizations would be up in arms if we expats had to pay the uninsured penalty when we have insurance. So, I’m not expecting a penalty.

        • Sorry, that was meant to be sarcasm which is rarely effective in writing. Ex-pats with insurance are considered to have met the requirements for insurance and are not subject to a penalty under the PPACA. Since all industrialized countries and a good portion of less advanced countries require legal residents to maintain insurance those ex-pats are fine. The over 65 ex-pats also have inpatient coverage under Medicare part A although they will probably have to submit claims themselves and they will need local coverage for outpatient care. They may need additional coverage as well to meet legal residence requirements. One of the “libertarian” commenters here likes to make claims that this is not true and I was really responding to that.

    • Lost in all of this is the fact that we will be locking in a system that sucks up,18% of GDP when what we should have been trying to do is get health care costs down – some countries spend 1/4 of what we do and get much better results…

      My progressive friends will make doctors and drug companies and hospitals very wealthy and happy and steal from our children and grandchildren to do so.

      • Actually, this does raise an important point progressives should contend with. Many of the progressives I know tend to blame a lot of excess spending on drug companies, device companies and insurers. They do not tend to blame physicians as far as I know.

        While it’s certainly true that drug and device companies make too much, I think we will need to reduce incomes throughout the health sector, including physicians’ incomes, to keep spending under control. We also need specialists’ incomes to fall compared to primary care physicians. That’s a little uncomfortable to say to someone’s face, but I think it is true.

      • To justify my other comment on reducing physicians’ incomes, see table 2 of the current National Health Expenditures. This table expresses spending by type of service, in absolute amounts and percent distribution.

        Spending on hospital care accounts for 31.5% of total national health expenditures.

        Spending on physicians and clinical services is 20.0%.

        In fact, spending on drugs and devices is 9.7% and 1.4% of total national health expenditures respectively. And the total net cost of health insurance is 5.8%.

        So, while a progressive would say that we should certainly reduce spending on drugs, devices and health insurance, these three sectors account for 16.9% of national health expenditures. Physicians account for more. We need to squeeze them also. We do obviously need to squeeze hospitals, but we are already doing that through the ACA (albeit in the long term).