This action might not be possible to undo. Are you sure you want to continue?
Avik Roy, Contributor
Angela Braly, then-CEO of WellPoint, testified before Congress about allegations that its California unit, Anthem Blue Cross, was raising premiums on some customers by more than 30 percent. Last week, California announced that the Affordable Care Act would increase nongroup insurance premiums by as much as 146 percent. (Image courtesy U.S. House of Representatives) 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 gloomand-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. 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.
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 .
CMS on Obamacare's Health Insurance Exchanges: 'Let's Just Make Sure It's Not a Third-World Experience' Avik Roy Contributor How Obamacare Dramatically Increases The Cost of Insurance for Young Workers Avik Roy Contributor This problem will be especially acute when the law’s main provisions kick in on January 1. Sign up to receive a weekly e-mail digest of articles from The Apothecary. . leading many to worry about health insurance “rate shock.” *** Follow @Avik on Twitter and Google+. and The Apothecary on Facebook. 2014.
then.” A bit more analysis would have prevented Rick from falling for California’s sleight-of-hand. Californians under Obamacare who buy insurance for themselves will see their insurance premiums double. “This is a home run for consumers in every region of California.” That’s the sentence that led to all of the triumphant commentary from the left.” writes my Forbes colleague Rick Ungar. So if you’re 40. Last week. the median cost of the five cheapest plans was only $92. In California. But on eHealthInsurance. “the healthcare exchange concept appears to be working very well indeed in states like California. . for the typical 25-year-old male non-smoking Californian. Covered California—the name for the state’s Obamacarecompatible insurance exchange—released the rates that Californians will have to pay to enroll in the exchange. Except that Lee was making a misleading comparison.” I mean the median monthly premium across California’s 19 insurance rating regions. “ranged from two percent above to 29 percent below the 2013 average premium for small employer plans in California’s most populous regions.com (NASDAQ:EHTH). the median price of a bronze plan for a 40-year-old male non-smoker will be $261. “Despite the political naysayers. the median cost of the five cheapest plans was $121. Obamacare will drive premiums up by between 100 and 123 percent. Obamacare will increase individual-market premiums by an average of 116 percent. 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 “bronze” comprehensive plan. on eHealthInsurance.*** Lee’s claims that there won’t be rate shock in California were repeated uncritically in some quarters. which costs an average of $184 a month. Under Obamacare. Here’s what happened.” exulted Peter Lee. costs $205 a month. the cheapest plan on Obamacare’s exchanges is the catastrophic plan. For both 25-year-olds and 40-year-olds.” the state said in a press release. That is.) The next cheapest plan. But in 2013. (By “average. The difference is critical. Obamacare to double individual-market premiums If you’re a 25 year old male non-smoker. only people under the age of 30 can participate in the slightly cheaper catastrophic plan. buying insurance for yourself. In other words. your cheapest option is the bronze plan. “The rates submitted to Covered California for the 2014 individual market.
Orange County. and San Diego In the map below. (eHealth offers more than 50 plans in the typical California zip code.com for the most populous zip code in that region. For each of the state’s 19 insurance regions.) .Impact highest in Bay Area. I illustrate the regional variations in Obamacare’s rate hikes. which typically offered three to six plans in each insurance rating region. focusing on the five cheapest is the fairest comparator to the exchanges. I compared the median price of the bronze plans offered on the exchange to the median price of the five cheapest plans on eHealthInsurance.
Molina (NYSE:MOH).” But Obamacare has actually doubled individual-market premiums in the Golden State. and Kaiser Permanente. UnitedHealthCare (NYSE:UNH) and Aetna (NYSE:AET) have stayed out. especially in the counties north of San Francisco. So far. Also hard-hit are Orange and San Diego counties. Health Net (NYSE:HNT). as it gives us an early window into how the exchanges will work in a state that has an unusually competitive and inexpensive individual market for health insurance. . But that’s the irony. According to Covered California.As you can see. The full rate report is subtitled “Making the Individual Market in California Affordable. including Anthem Blue Cross (NYSE:WLP). like Marin. 13 carriers are participating in the state’s exchange. Obamacare’s impact on 40-year-olds is steepest in the San Francisco Bay area. Spinning a public-relations disaster It’s great that Covered California released this early the rates that insurers plan to charge on the exchange. Napa. and Sonoma.
” It’s more like hitting into a triple play. So. cynically. . In February of that year. claimed that these increases were due to greedy profiteering by the insurers. to summarize: Supporters of Obamacare justified passage of the law because one insurer in California raised rates on some people by as much as 39 percent. and (2) not explaining that low-income people will be eligible for subsidies that protect them from much of the rate shock. But Obamacare itself more than doubles the cost of insurance on the individual market. So much for greedy profiteering.” The then-Democratic Congress called hearings. Peter Lee calls it a “home run. given the political posturing of the President and his administration in 2010. Anthem Blue Cross announced that some groups (but not the majority) would face premium increases of as much as 39 percent.” That’s a polite way of saying that Obamacare’s mandates and regulations will drive up the cost of premiums in the individual market for health insurance. the company earned 11 percent less in 2010 than it did in 2009. instead of up? “It is difficult to make a direct comparison of these rates to existing premiums in the commercial individual market. there will be new standard benefit designs under the Affordable Care Act. many of whom are already struggling to make ends meet in a difficult economy. * * * UPDATE 1: On Twitter. But journalists have a professional responsibility to check out the facts for themselves. instead comparing Obamacare-based insurance to a completely different type of insurance product. But rather than acknowledge that truth. that bears no relevance to the actual costs that actual Californians face when they shop for coverage today. “These extraordinary increases are up to 15 times faster than inflation and threaten to make health care unaffordable for hundreds of thousands of Californians. I can understand why Democrats in California would want to mislead the public on this point.How did Lee and his colleagues explain the sleight-of-hand they used to make it seem like they were bringing prices down. Even California Insurance Commissioner Steve Poizner. instead of changes in the underlying costs of the insured population. “[Anthem’s] strong financial position makes these rate increases even more difficult to understand. because of lower revenues and higher spending on patient care. “because in 2014. the agency decided to ignore it completely. Soon after. WellPoint announced that. Obama attacked insurers in 2010 for much smaller increases That Obamacare more than doubles insurance premiums for many Californians is especially ironic.” said Health and Human Services Secretary Kathleen Sebelius. Jonathan Cohn of The New Republic argues that I’m being unkind to California (1) by not describing the mandates that Obamacare imposes on insurers in the individual market.” Covered California explained in last week’s press release. The White House and its allies in the blogosphere. in fact. a Republican running for governor. decided to launch an investigation.
but whether it’s taxpayers or beneficiaries paying the premiums those premiums will be significantly higher than they are now. in fact. some won’t. he can buy a PPO plan from a major insurer with a $5. eHealthInsurance is significantly cheaper: To put it simply: Covered California is trying to make consumers think they’re getting more for less when. UPDATE 3: Yuval Levin at National Review further addresses Jonathan Cohn’s argument that people should be ok with these rate increases. a $10 copay for generic prescription drugs. So. and higher indvidual-market insurance costs for yourself. and a $7. but if you’re not low-income.000 deductible. While Covered California acknowledges that it’s tough to compare premiums pre. you face a double-whammy: higher taxes to pay for those subsidies. and Lanhee Chen. such as its requirement that plans cover you whether you’re healthy or sick. Philip Klein. including David Freddoso. Yet there are many plans on the individual market in California today that offer a structure and benefits that are almost identical to those that will be available on the state’s health insurance exchange next year. a “Bronze” plan from the exchange with nearly the same benefits. 30 percent coinsurance.000 out-of-pocket maximum for $177 a month. let’s make an actual apples-to-apples comparison for the hypothetical 25-year-old male living in San Francisco and making more than $46. UPDATE 2: A number of writers did call out California for the apples-to-oranges comparison last week. at the very least. read this post. A better approach would be to offer everyone access to low-cost consumer-driven health coverage. they’re just getting the same while paying more. Today.For an extensive discussion of Obamacare’s costly insurance mandates. it could have made a legitimate comparison so consumers could fairly evaluate the impacts of Obamacare. That’s anywhere from 38 percent to 53 percent more than he’ll have to pay this year for comparable coverage! Sounds a lot different than the possible 29 percent “decrease” touted by Covered California in their faulty comparison. For a discussion of how Obamacare’s insurance mandates dramatically increase the cost of insurance for younger workers.350. does the useful exercise of showing that even for plans with the same generous benefit package that Obamacare requires. including a slightly lower out-of-pocket maximum of $6. According to Covered California. go here.000 a year. will cost him between $245 and $270 a month.and postObamacare. . Lanhee. writing in Bloomberg View. because the Obamacare insurance plans are more financially generous: Some people will receive subsidies to help cover that cost. Jon is right that low-income individuals will be protected from these rate increases because of Obamacare’s subsidies.
The comparison offered in the California press release helps make it clear why that is: Obamacare’s new insurance rules. as many tried to do over the past week. Obamacare’s defenders can certainly point to the former fact.com/sites/theapothecary/2013/05/30/rate-shock-in-california-obamacareto-increase-individual-insurance-premiums-by-64-146/ . SOURCE: http://www. but they cannot deny the latter one and insist the new California data show there will be no rate shock. Those rules would certainly help some people—people with pre-existing conditions in the individual market will find it easier to buy coverage for instance— but they will also raise premium costs very significantly.forbes.
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue listening from where you left off, or restart the preview.