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| Rate Shock: In California, Obamacare to Increase Individual Health Insurance Premiums by 64-146% |
| 2013-05-31 |
| One of the most serious flaws with Obamacare is that its blizzard of regulations and mandates drives up the cost of insurance for people who buy it on their own. This problem will be especially acute when the law's main provisions kick in on January 1, 2014, leading many to worry about health insurance "rate shock." Last week, the state of California claimed that its version of Obamacare's health insurance exchange would actually reduce premiums. "These rates are way below the worst-case gloom-and-doom scenarios we have heard," boasted Peter Lee, executive director of the California exchange. But the data that Lee released tells a different story: Obamacare, in fact, will increase individual-market premiums in California by as much as 146 percent. Lee's claims that there won't be rate shock in California were repeated uncritically in some quarters. "Despite the political naysayers," writes my Forbes colleague Rick Ungar, "the healthcare exchange concept appears to be working very well indeed in states like California." A bit more analysis would have prevented Rick from falling for California's sleight-of-hand. Here's what happened. Last week, Covered California--the name for the state's Obamacare-compatible insurance exchange--released the rates that Californians will have to pay to enroll in the exchange. "The rates submitted to Covered California for the 2014 individual market," the state said in a press release, "ranged from two percent above to 29 percent below the 2013 average premium for small employer plans in California's most populous regions." That's the sentence that led to all of the triumphant commentary from the left. "This is a home run for consumers in every region of California," exulted Peter Lee. Except that Lee was making a misleading comparison. He was comparing apples--the plans that Californians buy today for themselves in a robust individual market--and oranges--the highly regulated plans that small employers purchase for their workers as a group. The difference is critical. Someone affiliated with Bumblecare wasn't being truthful? I am Shocked Obamacare to double individual-market premiums If you're a 25 year old male non-smoker, buying insurance for yourself, the cheapest plan on Obamacare's exchanges is the catastrophic plan, which costs an average of $184 a month. (That's the median monthly premium across California's 19 insurance rating regions.) The next cheapest plan, the "bronze" comprehensive plan, costs $205 a month. But in 2013, on eHealthInsurance.com (NASDAQ:EHTH), the average cost of the five cheapest plans was only $92. In other words, for the average 25-year-old male non-smoking Californian, Obamacare will drive premiums up by between 100 and 123 percent. Under Obamacare, only people under the age of 30 can participate in the slightly cheaper catastrophic plan. So if you're 40, your cheapest option is the bronze plan. In California, the median price of a bronze plan for a 40-year-old male non-smoker will be $261. But on eHealthInsurance, the average cost of the five cheapest plans was $121. That is, Obamacare will increase individual-market premiums by an average of 116 percent. For both 25-year-olds and 40-year-olds, then, Californians under Obamacare who buy insurance for themselves will see their insurance premiums double. |
| Posted by:Beavis |
#8 the more expensive 2014 plans cover more than the 2013 plans so its not a completely 'apples to apples' comparison The extra coverage is not what most consumers would have bought, so the price comparisons are valid. |
| Posted by: Rob Crawford 2013-05-31 17:18 |
| #7 Doing math is a dog whistle for racists. Note the CA exchange deliberately lied, comparing rates of small group plans with exchange individual plans. No accountability for our all powerful public officials. |
| Posted by: regular joe 2013-05-31 13:29 |
| #6 Working as designed. Push everyone to single government program. |
| Posted by: DarthVader 2013-05-31 12:26 |
| #5 Very little good will come of this Obamacare, the health insurance cart is being overturned to suit the political aims for the leftist socialist elements in the USA. Their aim is the complete control of the lives, literally lives of the people of America, from cradle to grave. |
| Posted by: Glomomp Mussolini7857 2013-05-31 12:25 |
| #4 the more expensive 2014 plans cover more than the 2013 plans so its not a completely 'apples to apples' comparison also, I think the quoted prices are for the unsubsidized policy and that California has a complicated subsidy program so its a bit more complicated than the article suggests but, yes, there's little doubt that Obamacare bends the cost up |
| Posted by: lord garth 2013-05-31 10:59 |
| #3 ..when the law's main provisions kick in on January 1, 2014 Just in time for the elections. How's that Affordable Care Act working for you? |
| Posted by: Procopius2k 2013-05-31 09:59 |
| #2 Fixed, Beavis. Yes, Preview is a wonderful thing, which I, too, should use more often. |
| Posted by: trailing wife 2013-05-31 09:55 |
| #1 Mods I should have removed Aetna CEO Bertolini: Get Ready for 'Rate Shock' as Some Health Insurance Premiums to Double in 2014 Avik Roy Contributor Insurance Analysts: Obamacare to Increase Out-of-Pocket Premium Costs, Despite Lavish Subsidies Avik Roy Contributor Preview is my friend |
| Posted by: Beavis 2013-05-31 09:52 |