Health insurance rates lower with ObamaCare

[RecycleMichael]

http://www.forbes.com/sites/rickungar/2013/05/24/unexpected-health-insurance-rate-shock-california-obamacare-insurance-exchange-announces-premium-rates/

Unexpected Health Insurance Rate Shock-California Obamacare Insurance Exchange Announces Premium Rates

Every now and again, a political pundit is required to stand up and admit to the world that he or she got it wrong. For me, this would be one of those moments. For quite some time, I have been predicting that Obamacare would likely mean higher insurance rates in the individual market for the "young immortals" and others under the age of 40.  At the same time, my expectation was that those who fall into the older age ranges would benefit greatly as their premium charges would be lowered thanks to the Affordable Care Act.

It is increasingly clear that I had it wrong. Yesterday, Covered California—the name given to the healthcare exchange created pursuant to the Affordable Care Act that will serve the largest population of insured citizens in the nation—released the premium rates submitted by participating health insurance companies for the three health insurance program categories (bronze, silver and gold) established by the Affordable Care Act, along with the catastrophic policy created for and available to those under the age of 30.

Upon reviewing the data, I was indeed shocked by the proposed premium rates—but not in the way you might expect.  The jolt that I was experiencing was not the result of the predicted out-of-control premium costs but the shock of rates far lower than what I expected—even at the lowest end of the age scale.

So, why the all too popular narrative that Obamacare would mean unaffordable healthcare premium costs for so many Americans?

Setting aside the never-ending nonsense peddled by the opponents of healthcare reform, everyone from the Congressional Budget Office to numerous private actuaries have warned that premium shock could be expected to set in once the public began to see the reality of what Obamacare would mean to their pocketbooks. And yet, the only real jolt to the system being felt by these public and private prognosticators today is utter amazement over just how reasonable the California prices have turned out to be.

How did the CBO and the actuaries get it so wrong? As Jonathan Cohn of The New Republic correctly points out—

"One reason for the misplaced expectations may be that actuaries have been making worst-case assumptions, even as insurers—eyeing the prospects of so many new customers—have been calculating that it's worth bidding low in order to gobble up market share. This would help explain why premium bids in several other states have proven similarly reasonable. "The premiums and participation in California, Oregon, Washington and other states show that insurers want to compete for the new enrollees in this market," Gary Claxton, a vice president at the Kaiser Family Foundation, said via e-mail. "The premiums have not skyrocketed and the insurers that serve this market now are continuing.  The rates look like what we would expect for decent coverage offered to a standard population."

Cohn is saying that, despite the political naysayers, the healthcare exchange concept appears to be working very well indeed in states like California, Oregon and Washington—the first states to publish the expected health exchange prices for purchasing coverage. These are also states that are actually committed to seeing the program work as opposed to those states whose leaders have a vested political interest in seeing the Affordable Care Act fail.

Keep in mind that the entire idea of the exchanges is to require health insurance companies to compete openly with one another by offering identical coverage programs in the three created classes—each offering insurance coverage that actually delivers meaningful protection to customers—and then openly disclosing the price each insurance company will charge for that policy.  Thus, shoppers can clearly see which company has the best price on an apples-to-apples basis.

For all the negative chatter about how including older and sicker Americans in the health insurance pools would drive up the price for younger participants in the pool less likely to be ill, what we are now seeing in states like California is that the desire on the part of the health insurance companies to increase market share—thanks to the large influx of customers as a result of Obamacare—is driving prices downward.

That is precisely what the President said would happen. Sarah Kliff at The Washington Post reveals just far off the prognosticators have been.
"The Congressional Budget Office predicted back in November 2009 that a medium-cost plan on the health exchange – known as a "silver plan" – would have an annual premium of  $5,200. A separate report from actuarial firm Milliman projected that, in California, the average silver plan would have a $450 monthly premium."

The actual costs?

Kliff continues, "On average, the most affordable "silver plan" – which covers 70 percent of the average subscriber's medical costs – comes with a $276 monthly premium. For the 2.6 million Californians who will receive federal subsidies, the price is a good deal less expensive..."

As you can see, the actuaries missed by a huge percentage.

To see how younger Californians will make out when they shop on the public exchanges, take a look at the graphs Kliff provides here. You may be very surprised to learn that the meaningful insurance that you are now required to purchase is far more reasonably priced than you imagined.

There is a moral to this story for those open to receive the message.

If you are among the many Americans who have bought into the fear and loathing that has been the campaign against Obamacare, you just might wish to reconsider. With every passing day, the various myths, legends and lies put forward by those with a political axe to grind, TV or radio rating to be raised or vote to be purchased, are falling victim to the facts.

Of course, if you continue to find it more useful to hate the Affordable Care Act than to recognize the benefit of what this program offers to you and your family, nothing I can say is likely to change your mind.

But, accept it or not, the reality is that the early report card on Obamacare—at least in those states willing to give the law a chance to succeed—is looking pretty darn good. So good, in fact, that the data reveals that even a supporter such as myself was off the mark when predicting significantly higher rates for the youngest among us.

This is one time that I could not be happier to be proven wrong.

UPDATE: A number of readers have responded to this article by asking the question, "If the California exchange is so good, why have United Healthcare, Aetna AET -1.79% and Cigna CI -1.02% decided not to participate?"

It is true that these companies are not going to participate in the CA CA +0.2% healthcare exchange. And while this makes a great meme for the opponents of healthcare reform, there is something they are not telling you —these three companies have never been players in the California individual insurance market so there was never any expectation that they would participate. While each of these companies are a major factor in group health insurance-both large and small- their combined participation in the individual market in CA has not been more than 8 percent for a great many years. Meanwhile, the other large insurance companies that have participated in the individual policy business in California have comprised 85 percent of the market. Each of these insurers are participating on the exchange. So, things are not always as they may seem which is why it is so important to read beyond the headline.

[Ed W]

Mary and I were talking about this last night.  If it holds true in Oklahoma, it may reduce some of our worries about retirement.

[Red Arrow]

Mary and I were talking about this last night.  If it holds true in Oklahoma, it may reduce some of our worries about retirement.

Keep in mind that you will be on Medicare. Medicare is being "robbed" to support Medicaid.  Make sure you can find a physician who will accept Medicare or a supplement.  See my earlier posts about finding a new primary care physician for my mother.

[Ed W]

Keep in mind that you will be on Medicare. Medicare is being "robbed" to support Medicaid.  Make sure you can find a physician who will accept Medicare or a supplement.  See my earlier posts about finding a new primary care physician for my mother.

Trust me, I pay attention to posts like that.  As it stands now, I couldn't afford health insurance for the two of us if I were to retire now.  COBRA could continue for 17 months, I think, but it would eat up fully half my monthly pension. I'm not averse to belt tightening. Starvation, on the other hand.......

[Red Arrow]

Trust me, I pay attention to posts like that.  As it stands now, I couldn't afford health insurance for the two of us if I were to retire now.  COBRA could continue for 17 months, I think, but it would eat up fully half my monthly pension. I'm not averse to belt tightening. Starvation, on the other hand.......

Good luck to both of us, I hope.  It will keep me working for a few more years, if I am lucky.

I've been on COBRA twice.  It's not cheap but it does provide "continuous coverage" regarding pre-existing conditions.

[Conan71]

This is a good sign, and let's hope after first year enrollment there's not a significant up-tick due to claims experience.  The author did leave me confused about the comment about an under 30 catastrophic coverage pool, so not certain if the lower cost is simply for those who are healthy and under 30 or if that is the same cost throughout the pool including older, higher risk insureds with pre-existing conditions.

One other thing I noticed about the silver plan the author was touting, is that it covers 70% of medical costs to the insured.  The gold plan covers 80% and platinum covers 90%.  The silver plan has a higher co-pay than most of us currently have as 80% has been pretty much the standard.  Obviously the higher your deductible or co-pay, the lower the premium is.  I would like to see co-pay and deductible limits on this particular silver plan to better analyze if it's really brought costs down or it's simply cheaper due to more risk being shared by the insured.

In other words, if initial premium increase estimates were based on the gold plan or platinum plan, then the author using the silver plan to tout a decrease in expected costs is a useless yardstick.  If silver level premiums actually did come in cheaper than originally expected, then yes, this is a very welcome sign and he did compare apples to apples.  That's one thing we do not know from the article or at least something I could not de-cipher from it.

One thing California has going for it is there's plenty of competition in the exchange, that's not something other states necessarily have to help lower the cost of entry into the program for consumers. 

Obviously, California's smooth start does not mean implementation will be easy for the rest of the country. In some states — including Alabama, Hawaii, Michigan, Delaware, Alaska, North Dakota, South Carolina, Rhode Island, Wyoming, and Nebraska — there is the problem of a lack of competition and monopolies.

Some states, including Florida and Texas, are not working as hard as California is to implement the law. But for Blumberg, California is the blueprint.

"It's going to continue to be a mix that's going to continue to play out across the states," Blumberg said. "We're going to see some that are pricing too well, and some that are pricing too high. But I think the dynamics in the market will then lead to changes after that, as you see in California."


Read more: http://www.businessinsider.com/obamacare-california-insurance-premiums-2013-5#ixzz2UbJ7eX00

[Conan71]

And for anyone who is interested, here's the cost calculator from Covered California:

http://www.coveredca.com/calculating_the_cost.html

Here's the benefit comparison:

http://www.coveredca.com/PDFs/English/CoveredCA-HealthPlanBenefitsComparisonChart.pdf

No wonder it's a less expensive plan, but probably a good product for those with less chance of needing to use their healthcare policy.

[Red Arrow]

And for anyone who is interested, here's the cost calculator from Covered California:
http://www.coveredca.com/calculating_the_cost.html
Here's the benefit comparison:
http://www.coveredca.com/PDFs/English/CoveredCA-HealthPlanBenefitsComparisonChart.pdf
No wonder it's a less expensive plan, but probably a good product for those with less chance of needing to use their healthcare policy.

The Silver Plan has at least twice the out of pocket max as my present plan.  I believe the cost of the Silver Plan is more than my present plan, including my employer's share, but I need to check to be sure.

Short answer: The CA plan does not look like a bargain to me.

Edit:
I checked the total cost (not just my cost) of my health insurance, dental, vision, life insurance, and short and long term disability and they total significantly less that the CA Silver plan.  I am single, no dependents.  Your results may vary.

[guido911]

No wonder it's a less expensive plan, but probably a good product for those with less chance of needing to use their healthcare policy.

So it's good insurance as long as you don't need it? So is have NO insurance.

[RecycleMichael]

It is no surprise that you guys work to find fault with any good news that doesn't fit your bias.

California rates are very high and ObamaCare has lowered rates for many. All insurance is a gamble...a gamble where you bet that you will lose.

I think my insurance guy and my bookie are the same guy. I pay them a little on a regular basis and if something good happens, the bookie pays. If something bad happens, the insurance pays.

[Red Arrow]

It is no surprise that you guys work to find fault with any good news that doesn't fit your bias.
California rates are very high and ObamaCare has lowered rates for many. All insurance is a gamble...a gamble where you bet that you will lose.
I think my insurance guy and my bookie are the same guy. I pay them a little on a regular basis and if something good happens, the bookie pays. If something bad happens, the insurance pays.

The good news is that insurance is available. 

The bad news is it is NOT a bunch less expensive.  I put my numbers into the calculator for the cost of the CA silver insurance and it came up more expensive by at least $1000 for the coverage with a higher maximum out of pocket by a factor of about two.  The CA silver coverage and my insurance are not directly comparable due to co-pays and deductibles so I am left with the maximum out of pocket as a comparison.  As I mentioned earlier, finding a new primary care physician for my mother was a chore as the reduction in Medicare payments seems to have made many physicians not want to deal with medicare.  So, yes I am biased by difficulty in finding a Primary Care Physician for my mom and the published cost of the plan in CA. 

I agree that all insurance is a gamble.  You are just paying some other entity to take a risk that you don't want to take or cannot afford to take.  If you have no claims, your wallet loses.  If you have a lot of claims, someone else's wallet loses.

[Conan71]

It is no surprise that you guys work to find fault with any good news that doesn't fit your bias.

California rates are very high and ObamaCare has lowered rates for many. All insurance is a gamble...a gamble where you bet that you will lose.

I think my insurance guy and my bookie are the same guy. I pay them a little on a regular basis and if something good happens, the bookie pays. If something bad happens, the insurance pays.

I'm not trying to find fault at all, nor do I have a bias against it.  If Obamacare makes health insurance more affordable for everyone, helps lower overall healthcare costs, and that ends up meaning healthier outcomes, I'm all for it.

Here's why I dug into this story: First, what passes for "reporting" these days is slipshod editorialism at best.  I have the tendency to check the veracity of a story whether it's coming from what would be considered a liberal or conservative angle as there are far too many filters in the media these days.  

A red flag went up when the author started touting a 70/30 plan.  Most health insurance plans are 80/20 or better coverage, especially employer-provided packages.  Of course the premium cost is lower when the insurance company has less exposure, that's true with your house, business, or car.  If the cost increases CBO used to advise of increases in premium costs was based on 80/20, 85/15, or 90/10 plans this is not an accurate comparison using the California Silver Plan to tout a decrease in premium cost.  If CBO used a 70/30 plan for comparison then it would be accurate.  Unfortunately, I don't think anyone can say for certain what CBO was using in their calculations, though I find it funny people who were supporting Obamacare prior to it's passage kept pointing to the infallibility of CBO's numbers, now there's a different chorus.  

The author of the article is, well, a writer.  My wife is an independent insurance agent, and I've been a licensed agent in the past.  My grasp on insurance concepts, as well as my knowledge of what is happening with our customer base is pretty solid.

As an economic reality, you simply cannot bring millions more into the private insurance claims pool without an overall increase in premiums.  Insurance companies will now start paying out claims for those who previously would have been a charge-off at the hospital we have all paid higher health care costs for in the first place.  It will simply shift the payment point for where those people's medical care comes from.  This was in no way an overhaul of the entire American health care system, this simply re-jiggers the payment mechanism for health care and puts the government those of us who pay taxes on the hook for a good deal of that expense.  

I'm all for everyone having access to good healthcare.  Instead of creating a convoluted quasi-government/private enterprise system didn't we just expand Medicaid and Medicare coverage since those are touted as being really efficient mechanisms for health care coverage?  The reality of Obamacare may be that there's healthy competition in heavily populated states like California or New York, but for states like Oklahoma, we've actually lost insurers from this marketplace since Obamacare was passed.

The nation's largest health insurers are far from leaping at the chance to join new state health insurance exchanges under President Barack Obama's reform law, making it likely that some markets will have little or no competition next year.

These new insurance marketplaces are due to open their doors on Oct. 1 to enroll millions of Americans who have not been able to buy coverage on their own.

A key principle of Obama's health reform is that individuals will have a robust offering of insurance plans to choose from, and that competition for new customers in each state will help keep prices down for consumers.

But health insurers, some of whom fought the law before it was passed and continue to lobby to reverse parts of it, are wary. In recent days, executives at the four largest U.S. health insurers say they are likely to sell insurance plans on less than a third of the exchanges, reluctant to venture out beyond the states where they already offer coverage.

The Department of Health and Human Services did not provide a comment.

There are a number of reasons for caution, company executives say. These include a lack of clarity about the kind of prices they can charge and the number of plans they can sell on each exchange, the expectation that the program is only expected to reach about 7 million people nationwide in its first year and uncertainty over whether all of the exchanges will be ready in time.

As a result, heavily populated states where many insurers already sell plans now, such as California and New York, will have competing products for the exchanges when health reform takes full effect on Jan. 1. But states whose existing insurance markets have little or no competition, like Alabama and Alaska, may not see much of a difference, healthcare analysts say.

"We do think the uptake may be slower than maybe people thought six months ago or a year ago in terms of what is going on in the first year with the exchanges," Aetna Chief Financial Officer Shawn Guerin said in an interview.

http://www.cnbc.com/id/100701009

As far as better outcomes, that will never change until more Americans take a more proactive approach to their health.  Unfortunately many maladies people suffer from are self-inflicted.

[Gaspar]

As usual, the media was being mislead in a coordinated fashion. 

They were provided with 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." Instead of comparing equal plans today with the same plans in the future.

Here is what the actual comparison showed:
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.

http://www.forbes.com/sites/theapothecary/2013/05/30/rate-shock-in-california-obamacare-to-increase-individual-insurance-premiums-by-64-146/

http://healthpolicyandmarket.blogspot.com/2013/05/rate-shock-in-californiathe-new-health.html

[Conan71]

As usual, the media was being mislead in a coordinated fashion. 

They were provided with 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." Instead of comparing equal plans today with the same plans in the future.

Here is what the actual comparison showed:
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.

http://www.forbes.com/sites/theapothecary/2013/05/30/rate-shock-in-california-obamacare-to-increase-individual-insurance-premiums-by-64-146/

http://healthpolicyandmarket.blogspot.com/2013/05/rate-shock-in-californiathe-new-health.html

Well...it appears someone got a couple of flat tires on the victory lap. Interesting it seems it wasn't just a mis-informed blogger who understands little about insurance.  Seems like a coordinated nose stretch from the top down in rolling out this sh!t sandwich.

How did Lee and his colleagues explain the sleight-of-hand they used to make it seem like they were bringing prices down, instead of up? "It is difficult to make a direct comparison of these rates to existing premiums in the commercial individual market," Covered California explained in last week's press release, "because in 2014, there will be new standard benefit designs under the Affordable Care Act." 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.

But rather than acknowledge that truth, the agency decided to ignore it completely, instead comparing Obamacare-based insurance to a completely different type of insurance product, that bears no relevance to the actual costs that actual Californians face when they shop for coverage today. Peter Lee calls it a "home run." It's more like hitting into a triple play.

Obama attacked insurers in 2010 for much smaller increases

That Obamacare more than doubles insurance premiums for many Californians is especially ironic, given the political posturing of the President and his administration in 2010. In February of that year, Anthem Blue Cross announced that some groups (but not the majority) would face premium increases of as much as 39 percent. The White House and its allies in the blogosphere, cynically, claimed that these increases were due to greedy profiteering by the insurers, instead of changes in the underlying costs of the insured population.

"These extraordinary increases are up to 15 times faster than inflation and threaten to make health care unaffordable for hundreds of thousands of Californians, many of whom are already struggling to make ends meet in a difficult economy," said Health and Human Services Secretary Kathleen Sebelius. "[Anthem's] strong financial position makes these rate increases even more difficult to understand." The then-Democratic Congress called hearings. Even California Insurance Commissioner Steve Poizner, a Republican running for governor, decided to launch an investigation.

http://www.forbes.com/sites/theapothecary/2013/05/30/rate-shock-in-california-obamacare-to-increase-individual-insurance-premiums-by-64-146/

[guido911]

RM and ED, please read Gaspar's link and pick up the white courtesy phone...