49-State Analysis: Obamacare To Increase Individual-Market Premiums By Average Of 41%
One of the fundamental flaws of the Affordable Care Act is that, despite its name, it makes health insurance more expensive. Today, the Manhattan Institute released the most comprehensive analysis yet conducted of premiums under Obamacare for people who shop for coverage on their own. Here’s what we learned. In the average state, Obamacare will increase underlying premiums by 41 percent. As we have long expected, the steepest hikes will be imposed on the healthy, the young, and the male. And Obamacare’s taxpayer-funded subsidies will primarily benefit those nearing retirement—people who, unlike the young, have had their whole lives to save for their health-care needs.
41 states, plus D.C., will experience premium hikes
If you’ve been following this space, you know that I and two of my Manhattan Institute colleagues—Yevgeniy Feyman and Paul Howard—have developed an interactive map where you can see how Obamacare affects premiums in your state. (If you ever need to find it, simply Google “Obamacare cost map.”)
In September, we released the first iteration of the map, which included data from 13 states and the District of Columbia. We only had data from a few mostly-blue states because the remainder were mostly participating in the federal exchange, and the federal exchange—for reasons we now understand more fully—hadn’t released any premium information at that time. That analysis found that underlying premiums would increase by 24 percent in those 13 states plus D.C.
Obamacare’s supporters argue that these rate increases aren’t important, because many people will be protected from them by federal subsidies. Those subsidies aren’t free—they’re paid for by taxpayers–and so it is irresponsible for people to argue that subsidies somehow make irrelevant the underlying cost of health insurance. Nonetheless, it’s important to understand the impact of subsidies on Obamacare’s exchanges; later in September, we released a second iteration of the map to do just that.
Today’s release, with the third iteration of the map, contains both premium and subsidy data for every state except Hawaii. (Believe it or not, we’ve had success mining data from every exchange website but Hawaii’s.) This nearly-complete analysis finds that the average state will face underlying premium increases of 41 percent. Men will face the steepest increases: 77, 37, and 47 percent for 27-year-olds, 40-year-olds, and 64-year-olds, respectively. Women will also face increases, but to a lesser degree: 18%, 28%, and 37% for 27-, 40-, and 64-year-olds.
Eight states will enjoy average premium reductions under Obamacare: New York (-40%), Colorado (-22%), Ohio (-21%), Massachusetts (-20%), New Jersey (-19%), New Hampshire (-18%), Rhode Island (-10%), and Indiana (-3%). Most, but not all, of these states had heavily-regulated individual insurance markets prior to Obamacare, and will therefore benefit from Obamacare’s subsidies, and especially its requirement that everyone purchase health insurance or pay a fine.
The eight states that will face the biggest increases in underlying premiums are largely southern and western states: Nevada (+179%), New Mexico (+142%), Arkansas (+138%), North Carolina (+136%), Vermont (+117%), Georgia (+92%), South Dakota (+77%), and Nebraska (+74%).
If you’re interested in more details about our methodology, you can find them here. As with our past work, we calculated an average of the five least-expensive plans in every county in a state pre-Obamacare, adjusted to take into account those with pre-existing conditions and other health problems. We then did the same calculation with the five least-expensive plans in every county in the Obamacare exchanges. We then used these county-based numbers to come up with a population-weighted state average pre- and post-Obamacare.
Exchange plans narrow your choice of doctor, despite higher costs
The key thing to understand about our before-and-after comparison is that it is an average. If you’re healthy today, you will face steeper rate increases than these figures indicate. If you have a serious medical condition, however, and haven’t been able to find affordable health coverage as a result, you will do much better under Obamacare than the average person. Men will face steeper increases than women in most states, because women consume more health care than men do, and Obamacare forbids insurers to charge different prices on the basis of gender.
In addition, our comparison ignores other differences between pre-Obamacare and post-Obamacare plans. For example, in some cases, people looking for comparably-priced coverage on the exchanges will need to accept higher deductibles and other cost-sharing arrangements.
Importantly, post-Obamacare exchange plans will typically have narrow networks of physicians and hospitals, especially excluding those tied to prestigious medical schools. In today’s Wall Street Journal, Edie Sundby, who struggles with gallbladder cancer, argues that her pre-Obamacare access to leading academic cancer centers like Stanford has “kept me alive,” and notes that the plans available to her on the exchange don’t allow her to keep her doctor.
Elderly will receive massive subsidies, thanks to younger people
Thanks to community rating, a key feature of Obamacare, insurers are only allowed to charge their oldest customers three times the amount they charge their youngest customers. Because 64-year-olds consume on average six times as much health care as 19-year-olds, this rule has the effect of driving up the cost of insurance for young people.
But there’s a double whammy. Because premiums for those nearing retirement can still be three times higher than those of younger Americans, elderly individuals will disproportionately benefit from Obamacare’s subsidies. The subsidies increase in proportion to the percentage of your income that is tied up in health insurance; for elderly people whose premiums are much higher, the subsidies are higher too.
And when I say young people, I particularly mean young men. A young woman of average income in the average state will experience little net change in premium costs, if you take subsidies into account; 40-year-old women will see an average increase of 9 percent, and 27-year-old women will see an average decrease of 5 percent. (However, as I noted above, women in good health will see meaningfully higher increases than these averages reflect.)
Let’s take the two extremes. If you’re a 27-year-old man, your average premium under our methodology, pre-Obamacare, is $133 a month. Post-Obamacare, that increases to $201. If you add in the subsidies that accrue to someone with the median income of a 27-year-old man, the net cost of Obamacare insurance goes down slightly to $188. That’s a 41 percent increase, despite the impact of subsidies.
If you’re a 64-year-old woman, on the other hand, your average pre-Obamacare premium was $430 a month. Post-Obamacare, the underlying premium increases to $545 a month. But when you factor in subsidies for the average 64-year-old woman, the net cost of Obamacare insurance drops to $292. That’s a 32 percent decrease, inclusive of subsidies, from pre-Obamacare premiums, and a 46 percent discount off of post-Obamacare prices.
The irony is that, in 2012, younger voters overwhelmingly supported President Obama, while older voters backed Mitt Romney. Obamacare, in the average state, is a massive transfer of wealth from the young to the old.
This all assumes, of course, that the exchanges eventually work
Right now, the headlines are dominated with stories about the deep and thorough dysfunction of the federally-built Obamacare insurance exchange. It’s a serious problem. If the exchanges aren’t fixed soon, the likely outcome is that older, sicker, and poorer people sign up, while everyone else goes without coverage. That, in turn, will imbalance the insurance pool in the exchanges, making its products more expensive and subsidy-dependent. Those facing cancellation of their existing coverage face the greatest risk under the worst-case scenario.
But there is a best-case scenario, especially from the standpoint of the law’s supporters. It’s that the exchanges eventually get fixed, and turn out to be popular, even among the young men—the “bros”—who bear the steepest costs under the new system. If they do, not only will Obamacare be here to stay, but the law could end up evolving into an effective replacement for our older, single-payer health-care entitlements, Medicare and Medicaid.
From where we stand today, unfortunately, there is no reason to believe that the Obama administration has a handle on the problems with the federal exchange. Young men seem no more likely to buy a costlier insurance product than they were to buy one, pre-Obamacare, that was more affordable. And so we should remain concerned about the likelihood of the law’s ultimate success.
Post by iammalcolmx on Nov 18, 2013 14:12:17 GMT -5
Someone at work showed me this chart a few weeks ago. I assume the rates are going up now because they can't say no to people and there are now minimums. I wonder was any research done regarding how much the rates raised when you had to start covering kids with pre-existing conditions?
This whole thing is so frustrating, I know I sound like a broken record but is anyone doing any research to figure out why we spend so much on Healthcare? Increased spending is how we are all going to be impacted by the Cadillac tax.
Also how are middle class people paying more taxes? Tell me they are not talking about the Medicare surcharge because if they are I am just going to zip my lips lest we have another "What is Middle Class" epic thread.
If you’re interested in more details about our methodology, you can find them here. As with our past work, we calculated an average of the five least-expensive plans in every county in a state pre-Obamacare, adjusted to take into account those with pre-existing conditions and other health problems. We then did the same calculation with the five least-expensive plans in every county in the Obamacare exchanges. We then used these county-based numbers to come up with a population-weighted state average pre- and post-Obamacare.
So they're comparing crappy plans that are cheap and cover nothing to plans that now cover a greater number of things and are more expensive. This is not impressive methodology.
But I suppose the Manhattan Institute is forced to use whatever method they can find that shows "OMG Obamacare is terrible!!!"
Someone at work showed me this chart a few weeks ago. I assume the rates are going up now because they can't say no to people and there are now minimums. I wonder was any research done regarding how much the rates raised when you had to start covering kids with pre-existing conditions?
This whole thing is so frustrating, I know I sound like a broken record but is anyone doing any research to figure out why we spend so much on Healthcare? Increased spending is how we are all going to be impacted by the Cadillac tax.
Also how are middle class people paying more taxes? Tell me they are not talking about the Medicare surcharge because if they are I am just going to zip my lips lest we have another "What is Middle Class" epic thread.
Have you read this article? It explores this very issue and it's a really interesting read.
Post by LoveTrains on Nov 18, 2013 14:21:02 GMT -5
I said it before and I'll say it again - the prices on the exchange are about comparable to what my H already pays for his portion of his employer provided insurance.
But then my state was listed as a state that has seen premium reductions.
What portion of the increased prices are because the plans are better? I know they mentioned that the states that have seen premium reductions often had more stringent requirements for insurers to begin with.
If you’re interested in more details about our methodology, you can find them here. As with our past work, we calculated an average of the five least-expensive plans in every county in a state pre-Obamacare, adjusted to take into account those with pre-existing conditions and other health problems. We then did the same calculation with the five least-expensive plans in every county in the Obamacare exchanges. We then used these county-based numbers to come up with a population-weighted state average pre- and post-Obamacare.
So they're comparing crappy plans that are cheap and cover nothing to plans that now cover a greater number of things and are more expensive. This is not impressive methodology.
But I suppose the Manhattan Institute is forced to use whatever method they can find that shows "OMG Obamacare is terrible!!!"
OK I only skimmed and am operating on 4 hours of sleep but I thought they compared Bronze plans before to Bronze plans now. If that is the case they seem to be comparing apples to apples, right?
If you’re interested in more details about our methodology, you can find them here. As with our past work, we calculated an average of the five least-expensive plans in every county in a state pre-Obamacare, adjusted to take into account those with pre-existing conditions and other health problems. We then did the same calculation with the five least-expensive plans in every county in the Obamacare exchanges. We then used these county-based numbers to come up with a population-weighted state average pre- and post-Obamacare.
So they're comparing crappy plans that are cheap and cover nothing to plans that now cover a greater number of things and are more expensive. This is not impressive methodology.
But I suppose the Manhattan Institute is forced to use whatever method they can find that shows "OMG Obamacare is terrible!!!"
OK I only skimmed and am operating on 4 hours of sleep but I thought they compared Bronze plans before to Bronze plans now. If that is the case they seem to be comparing apples to apples, right?
It doesn't look like that to me - it looks like they took the absolute cheapest plans in every state before the requirements were added and compared those to the cheapest plans available AFTER the requirements were added.
OK I only skimmed and am operating on 4 hours of sleep but I thought they compared Bronze plans before to Bronze plans now. If that is the case they seem to be comparing apples to apples, right?
It doesn't look like that to me - it looks like they took the absolute cheapest plans in every state before the requirements were added and compared those to the cheapest plans available AFTER the requirements were added.
They did?? Well then I am curious about a study with Bronze plans.
It doesn't look like that to me - it looks like they took the absolute cheapest plans in every state before the requirements were added and compared those to the cheapest plans available AFTER the requirements were added.
They did?? Well then I am curious about a study with Bronze plans.
I would like to see that too! I am interested in a direct apples-to-apples comparison.
OK I only skimmed and am operating on 4 hours of sleep but I thought they compared Bronze plans before to Bronze plans now. If that is the case they seem to be comparing apples to apples, right?
It doesn't look like that to me - it looks like they took the absolute cheapest plans in every state before the requirements were added and compared those to the cheapest plans available AFTER the requirements were added.
oh so they use the gov haslam/Kevin huffman manipulating statistics schtick going on here.
Here's more detailed info about their methodology iammalcolmx
In order to document rate changes, we first gathered pre-ACA insurance rates using the federal government's finder.healthcare.gov website. Our pre-ACA dataset consists of the five least expensive plans (by monthly premium) for the most populous zip code in every county. To cover a significant age range we collected rates for 27, 40, and 64-year old male and female non-smokers. We adjusted these rates to take into account those who are denied health insurance coverage as well as those who receive a surcharge. Using the "denial rate" and "surcharge rate" from the federal government's repository, we assumed that those who are surcharged pay 75 percent more and those who are denied, find insurance elsewhere at three times the original rate. We used this to develop a weighted average of the five least expensive insurance plans for every zip code we identified. To develop a state-wide average, we took the state-wide average for every age-gender combination.
For ACA rates, we created state-level averages by averaging rates for the five cheapest plans across all counties in a state. The data was sourced from ValuePenguin and because the ACA bans denials based on pre-existing conditions, there is no need to develop a weighted average of these rates.
Also, this part is confusing me: Additionally, the average of 5 cheapest plans in Alabama ends up being more expensive than the second-cheapest silver plan (which is used to calculate subsidies). Thus, in Alabama, we assume, for the purposes of developing a net cost of insurance for the median individual, that the individual purchases the second-cheapest silver plan.
Does that mean they're actually NOT using the cheapest Obamacare plans??
It doesn't look like that to me - it looks like they took the absolute cheapest plans in every state before the requirements were added and compared those to the cheapest plans available AFTER the requirements were added.
They did?? Well then I am curious about a study with Bronze plans.
check out the Bloomberg analysis I cited above...
their big finding was that more insurers participating = reduced costs, when you compare bronze-to-bronze, for example.
I'm guessing it's a combination of the fact that companies now need to insure the uninsurable and eliminate the lowest cost plans. So their average cost might jump from $600/month to $800/month if you're eliminating all plans that cost less than $180/month, right?
I also wonder how the mandate is affecting this and more people being covered. NV, for example, seems like it would be a state where a large number of people wouldn't have employer-subsidized health insurance to begin with, which often means people go without.
Elderly will receive massive subsidies, thanks to younger people
Thanks to community rating, a key feature of Obamacare, insurers are only allowed to charge their oldest customers three times the amount they charge their youngest customers. Because 64-year-olds consume on average six times as much health care as 19-year-olds, this rule has the effect of driving up the cost of insurance for young people.
But there’s a double whammy. Because premiums for those nearing retirement can still be three times higher than those of younger Americans, elderly individuals will disproportionately benefit from Obamacare’s subsidies. The subsidies increase in proportion to the percentage of your income that is tied up in health insurance; for elderly people whose premiums are much higher, the subsidies are higher too.
And when I say young people, I particularly mean young men. A young woman of average income in the average state will experience little net change in premium costs, if you take subsidies into account; 40-year-old women will see an average increase of 9 percent, and 27-year-old women will see an average decrease of 5 percent. (However, as I noted above, women in good health will see meaningfully higher increases than these averages reflect.)
Let’s take the two extremes. If you’re a 27-year-old man, your average premium under our methodology, pre-Obamacare, is $133 a month. Post-Obamacare, that increases to $201. If you add in the subsidies that accrue to someone with the median income of a 27-year-old man, the net cost of Obamacare insurance goes down slightly to $188. That’s a 41 percent increase, despite the impact of subsidies.
If you’re a 64-year-old woman, on the other hand, your average pre-Obamacare premium was $430 a month. Post-Obamacare, the underlying premium increases to $545 a month. But when you factor in subsidies for the average 64-year-old woman, the net cost of Obamacare insurance drops to $292. That’s a 32 percent decrease, inclusive of subsidies, from pre-Obamacare premiums, and a 46 percent discount off of post-Obamacare prices.
Did you link the right article? This isn't about comparing pre- and post-obamacare, so it's not looking at anything similar to my article. It just finds that the more insurers you have in an exchange, the lower prices are. That's Econ 101 stuff, right? Not something ACA did?
The key thing to understand about our before-and-after comparison is that it is an average. If you’re healthy today, you will face steeper rate increases than these figures indicate. If you have a serious medical condition, however, and haven’t been able to find affordable health coverage as a result, you will do much better under Obamacare than the average person.
This has been my experience. I have a serious medical condition (not really, but insurance companies thought so which is what matters), and my insurance will be going down substantially.
Currently, I pay $537 a month for an HMO. No deductible, but high copays. New plan will be $295 for a PPO with a $1000 deductible, but lower copays. So, over $200 less a month.
DH is also self employed. He has a high deductible plan and pays $140/month. I think he will be able to keep it and we have not been notified about any price increases. If he does need to change plans, similar exchange plans are about $10 more than what he pays now.
I know a lot of self employed people and most of those in good health have said their costs will be going up. I don't know enough about their plans to comment if they will be getting considerably better coverage or not.
Elderly will receive massive subsidies, thanks to younger people
Thanks to community rating, a key feature of Obamacare, insurers are only allowed to charge their oldest customers three times the amount they charge their youngest customers. Because 64-year-olds consume on average six times as much health care as 19-year-olds, this rule has the effect of driving up the cost of insurance for young people.
But there’s a double whammy. Because premiums for those nearing retirement can still be three times higher than those of younger Americans, elderly individuals will disproportionately benefit from Obamacare’s subsidies. The subsidies increase in proportion to the percentage of your income that is tied up in health insurance; for elderly people whose premiums are much higher, the subsidies are higher too.
And when I say young people, I particularly mean young men. A young woman of average income in the average state will experience little net change in premium costs, if you take subsidies into account; 40-year-old women will see an average increase of 9 percent, and 27-year-old women will see an average decrease of 5 percent. (However, as I noted above, women in good health will see meaningfully higher increases than these averages reflect.)
Let’s take the two extremes. If you’re a 27-year-old man, your average premium under our methodology, pre-Obamacare, is $133 a month. Post-Obamacare, that increases to $201. If you add in the subsidies that accrue to someone with the median income of a 27-year-old man, the net cost of Obamacare insurance goes down slightly to $188. That’s a 41 percent increase, despite the impact of subsidies.
If you’re a 64-year-old woman, on the other hand, your average pre-Obamacare premium was $430 a month. Post-Obamacare, the underlying premium increases to $545 a month. But when you factor in subsidies for the average 64-year-old woman, the net cost of Obamacare insurance drops to $292. That’s a 32 percent decrease, inclusive of subsidies, from pre-Obamacare premiums, and a 46 percent discount off of post-Obamacare prices.
Elderly will receive massive subsidies, thanks to younger people
Thanks to community rating, a key feature of Obamacare, insurers are only allowed to charge their oldest customers three times the amount they charge their youngest customers. Because 64-year-olds consume on average six times as much health care as 19-year-olds, this rule has the effect of driving up the cost of insurance for young people.
But there’s a double whammy. Because premiums for those nearing retirement can still be three times higher than those of younger Americans, elderly individuals will disproportionately benefit from Obamacare’s subsidies. The subsidies increase in proportion to the percentage of your income that is tied up in health insurance; for elderly people whose premiums are much higher, the subsidies are higher too.
And when I say young people, I particularly mean young men. A young woman of average income in the average state will experience little net change in premium costs, if you take subsidies into account; 40-year-old women will see an average increase of 9 percent, and 27-year-old women will see an average decrease of 5 percent. (However, as I noted above, women in good health will see meaningfully higher increases than these averages reflect.)
Let’s take the two extremes. If you’re a 27-year-old man, your average premium under our methodology, pre-Obamacare, is $133 a month. Post-Obamacare, that increases to $201. If you add in the subsidies that accrue to someone with the median income of a 27-year-old man, the net cost of Obamacare insurance goes down slightly to $188. That’s a 41 percent increase, despite the impact of subsidies.
If you’re a 64-year-old woman, on the other hand, your average pre-Obamacare premium was $430 a month. Post-Obamacare, the underlying premium increases to $545 a month. But when you factor in subsidies for the average 64-year-old woman, the net cost of Obamacare insurance drops to $292. That’s a 32 percent decrease, inclusive of subsidies, from pre-Obamacare premiums, and a 46 percent discount off of post-Obamacare prices.
Nobody wants to board the old people hate train?
I've brought this issue up, minus specific numbers, in a few threads now. I think people are too busy hating the website to sit next to me.
I've brought this issue up, minus specific numbers, in a few threads now. I think people are too busy hating the website to sit next to me.
::Sits next to IIOY:: I work with two gentlemen, one who is 69 and another who is 64 or so. The 64yo apparently loathes our President with a thousand fiery suns yet he and his wife have been trying to register on the website it first launched. He claims that ACA is a waste of money but doesn't hesitate to take advantage of it. Quite irritating.
iammalcolmx, at DH's job we are paying about 15% more for a family plan. It's still cheaper than the bronze plan and I want to cry for people who have to pay that much. With that said, I'm still kinda annoyed that a household with two working spouses get penalized if that household chooses to be insured through one employer.
I've brought this issue up, minus specific numbers, in a few threads now. I think people are too busy hating the website to sit next to me.
::Sits next to IIOY:: I work with two gentlemen, one who is 69 and another who is 64 or so. The 64yo apparently loathes our President with a thousand fiery suns yet he and his wife have been trying to register on the website it first launched. He claims that ACA is a waste of money but doesn't hesitate to take advantage of it. Quite irritating.
iammalcolmx, at DH's job we are paying about 15% more for a family plan. It's still cheaper than the bronze plan and I want to cry for people who have to pay that much. With that said, I'm still kinda annoyed that a household with two working spouses get penalized if that household chooses to be insured through one employer.
Sorry I ran when boss was coming to my desk, LMAO.
Two working spouses get penalized if you decide to stay on same plan since now employers are charging an extra $100 per month if you work and can join your own plan. It doesn't even take into account the fact that perhaps the other plan is so much more expensive. If a spouse doesn't work, then no penalty.
Sorry I ran when boss was coming to my desk, LMAO.
Two working spouses get penalized if you decide to stay on same plan since now employers are charging an extra $100 per month if you work and can join your own plan. It doesn't even take into account the fact that perhaps the other plan is so much more expensive. If a spouse doesn't work, then no penalty.
Oh yeah I have heard of this. Its because spouses are the most expensive folks to insure in general.