ObamaCare Is Reducing Projected Costs! Actual Costs, Not So Much...
Jun 21, 2013 at 11:48 AM
David Hogberg in Congressional Budget Office, Government Health Care, Health Care, Regulation, Think Progress, exchanges, premiums

The Administration and its propaganda arms are touting a new analysis by Avalere Health that purports to show that premiums on the ObamaCare exchanges are quite cheaper than expected.  For example, here is ThinkProgress:

A new analysis of health care premiums proposed under the Affordable Care Act concludes that health plans will cost even less than originally expected. That’s likely because the insurance marketplaces will encourage more competition between insurers….

“The initial data suggest that competition in exchanges is working to lower premiums, which will benefit nonsubsidized enrollees and the federal government,” said Caroline Pearson, vice president at Avalere Health, in an interview with The Hill.

However, as ThinkProgress acknowledges, Avalere is comparing the premiums that have been released by some exchanges to the premium projected by the Congressional Budget Office.  From the analysis:

A new Avalere Health analysis shows that in nine states the second-lowest cost “Silver” premiums appear to be lower than the Congressional Budget Office (CBO) estimate for 2016. Premiums for the second lowest cost Silver plans for a 40-year-old nonsmoker will range from a low of $205 in one region in Oregon to a high of $413 in another region in Vermont. CBO previously projected nationwide the average monthly premiums for the second-lowest cost Silver plan would be $433.

So, ObamaCare looks good when measured against projected costs.  But how about comparing the proposed premiums in the exchange to those premiums actually in the current individual market?  When you do that, as you can with Oregon, the comparison doesn’t turn out so good.  From my recent National Policy Analysis:

In July 2012, Wakely Consulting Group conducted an analysis of the effect ObamaCare would have on Oregon’s insurance market for Governor John Kitzhaber. Wakely estimated that, in 2011, the average monthly premium in Oregon’s individual market was $202.

To determine what rates are today, for the sake of argument, let’s assume that premiums in Oregon’s individual market rose an average of 10% annually in the last two years, so that the average premium in Oregon’s individual market in 2013 would be about $244. Examining the rates released by Cover Oregon reveals that average monthly premium for 2014 will be $405. That’s a 66 percent increase! If the comparison is limited to the cheaper Bronze plans, the results aren’t much better. The average of the Bronze plan premiums is $347, an increase of 42 percent. That should be a rate shock even by Potter’s standards.

It would be nice if ObamaCare supporters actually began comparing the cost of proposed premiums in the exchanges to the actual cost of premiums currently in the individual market, and not merely to past projections.  Don’t hold your breath.

Photo: iStockphoto

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