On my way to work, I heard an NPR story about Obamacare and Senator Cruz’s filibuster. The most striking point of the story was the claim that many premiums in the exchanges are lower than expected. Here is Julie Rovner:
Premiums in the health insurance exchanges set to open next week will be lower than anticipated, the Obama administration announced Wednesday.
According to a released by the Department of Health and Human Services, “premiums nationwide will . . . be around 16 percent lower than originally expected,” and 95 percent of uninsured people live in a state with average premiums that are lower than expected.
The segment seems to be based mostly on a cheerful press release and report from HHS claiming premiums are “lower than originally expected.” The report is very light on details — lower premiums than who expected? Not the Obama administration, since it expected that premiums would be lower for everyone as Manhattan Institute’s Avik Roy pointed out yesterday. If the premiums are lower than people who predicted a rate shock, that’s hardly an accomplishement. Roy has a good piece this morning debunking the HHS’s report and talking points. His main finding: Obamacare will push individual-market premiums up 99 percent for men and 62 percent for women.
In addition, this morning Wall Street Journal’s Louise Radnofsky reports on the newly disclosed insurancwe prices. She writes:
Costs will vary widely from state to state and for different types of consumers. Government subsidies will cut costs for some lower-income consumers.
Across the country, the average premium for a 27-year-old nonsmoker, regardless of gender, will start at $163 a month for the lowest-cost “bronze” plan; $203 for the “silver” plan, which provides more benefits than bronze; and $240 for the more-comprehensive “gold” plan.
But for some buyers, prices will rise from today’s less-comprehensive policies. In Nashville, Tenn., a 27-year-old male nonsmoker could pay as little as $41 a month now for a bare-bones policy, but would pay $114 a month for the lowest-cost bronze option in the new federal health exchanges.
Likewise, the least-expensive bronze policy would rise to $195 a month in Philadelphia for that same 27-year-old, from $73 today. In Cheyenne, Wyo., the lowest-cost option would be $271 a month, up from $82 today.
Here is a chart:
Some of these people will get generous subsidies, but they are unlikely to be enough in the long run. Also, if they decide to opt out, they will be hit with a penalty and left with no insurance.
In the end, it looks to me that Obamacare will make insurance less affordable for many Americans. It seems that the administration knows it, since, as Roy explains:
[I]ts 15-page report makes no mention of premiums for insurance available on today’s market. Silence, they say, speaks louder than words. HHS’ silence on the difference between Obamacare’s insurance premiums and those available today tell you everything you need to know. Rates are going higher. And if you’re healthy, or you’re young, the Obama administration expects you to do your duty and pay up.
Now, pro-Obamacare advocates may argue that these increases in premiums are well worth the pain since it means lower premiums for Americans who “were rejected for coverage because they were ill, or who were charged higher premiums.” Leaving aside the fact that those who will have to pay higher premiums should be the ones deciding whether this higher cost is worth putting up with, it is a very different argument than arguing that the law would produce lower premiums for everyone, or that the law is producing lower than expected premiums. (For more Obamacare failed promises, see this post.)
On another note, whatever one thinks of the legislative efficacy of Senator Cruz’s s spectacle today, the fact is that he is hosting the conversation that the country needed to have before Obamacare first came out for a vote. Now that the implementation is upon us, this conversation is more relevant now than ever.