Obamacare Premiums Aren’t Living Up to Doomsayers’ Predictions

Early results suggest single-digit increases, not a price apocalypse.

PASADENA, CA - NOVEMBER 19: A healthcare reform specialist helps people select insurance plans at the free Affordable Care Act (ACA) Enrollment Fair at Pasadena City College on November 19, 2013 in Pasadena, California. The event, sponsored by the Chamber of Commerce and the Los Angeles Association of Health Underwriters, offers one-on-one sessions with insurance experts certified by Covered California to help people enroll for healthcare coverage under the ACA. 
National Journal
Sam Baker
July 21, 2014, 5:46 p.m.

Obama­care’s crit­ics prom­ised the law would send in­sur­ance premi­ums skyrock­et­ing. They were wrong.

Or, if they’re not wrong, they’re at least not right yet.

Nearly 20 states have re­leased pre­lim­in­ary in­form­a­tion about premi­ums for in­sur­ance policies sold on their in­sur­ance ex­changes, and the night­mare scen­ari­os have not come to pass. In most of those states, the av­er­age in­crease across all ex­change plans is in the single di­gits.

Ac­cord­ing to a Price­wa­ter­house­Coopers ana­lys­is of 18 states’ ini­tial fil­ings, 10 states will see av­er­age premi­um in­creases of less than 10 per­cent—nom­in­al hikes in line with the stand­ard in­creases that have happened every year with or without Obama­care.

The out­liers so far are In­di­ana, with an av­er­age in­crease of 15 per­cent, and Rhode Is­land, where the av­er­age premi­um will fall by about 1 per­cent.

Ini­tial rates could still change; sev­er­al states have the power to re­view pro­posed in­creases and bar­gain for a bet­ter deal. But the early look at states’ 2015 rates helps shed some light on wheth­er Obama­care’s second year will bring steep cost hikes.

There are wild vari­ations among dif­fer­ent in­sur­ance plans. In Ore­gon alone, one plan wants to cut its premi­ums by 21 per­cent, while an­oth­er wants to raise its rates by 28 per­cent. The ex­tremes make for easy talk­ing points (“Look how much premi­ums are go­ing up!” “No, they’re go­ing down!”), but they don’t re­flect the ex­per­i­ence most people will have when it’s time to pony up for plans: The av­er­age Ore­gon in­sur­ance premi­um will rise by 2.2 per­cent.

Larry Levitt, vice pres­id­ent for spe­cial ini­ti­at­ives at the Kais­er Fam­ily Found­a­tion, said he’s sur­prised by the vari­ation in pro­posed changes but that on av­er­age, premi­ums are work­ing out to about what he ex­pec­ted: hikes of 7 per­cent to 8 per­cent in most places.

Premi­ums go up every year, and Levitt said in­creases of about 8 per­cent were to be ex­pec­ted based on rising med­ic­al spend­ing and ad­just­ments based on the first year of en­roll­ment.

In­surers had to set their 2014 premi­ums based on their best guesses about who would sign up, and they don’t have much more in­form­a­tion as they head in­to 2015.

“In­surers were fly­ing pretty blind when they put to­geth­er their 2014 premi­ums and, frankly, they’re still fly­ing pretty blind,” Levitt said.

Be­cause so many of Obama­care’s 2014 en­rollees signed up at the very end of the en­roll­ment win­dow, they haven’t filed a ton of med­ic­al claims for in­surers to work from as they try to fig­ure out how much their new cus­tom­ers will cost them.

That helps ex­plain some of the biggest changes in 2015 premi­ums—big cuts are most likely from in­surers that were es­pe­cially cau­tious about 2014 and ended up do­ing bet­ter than they ex­pec­ted, while big in­creases are most likely from plans that thought they’d end up with health­i­er cus­tom­ers than they did.

An in­flux of new in­surers is also help­ing to keep premi­um in­creases in check, ac­cord­ing to health care ana­lysts. Ma­jor in­surers, in­clud­ing United­Health­care, are en­ter­ing more states’ ex­changes next year after sit­ting on the side­lines for 2014.

What We're Following See More »
$7.3 MILLION IN JULY
Donations to DNC Relied on ‘Workaround’
6 minutes ago
THE DETAILS

The Democratic National Committee's "influx of money" in July "owes in part to an unprecedented workaround of political spending limits that lets the party tap into millions of dollars more" from Hillary Clinton’s biggest donors. "At least $7.3 million of the DNC’s July total originated with payments from hundreds of major donors who had already contributed the maximum $33,400 to the national committee." Those payments were "first bundled by the Hillary Victory Fund and then transferred to the state Democratic parties, which effectively stripped the donors’ names and sent the money to the DNC as a lump sum."

Source:
OFF COAST OF HAWAII
Obama Creates World’s Largest Protected Reserve
17 minutes ago
THE DETAILS

President Obama this morning "created the largest protected area on the planet Friday, by expanding a national marine monument off the coast of his native Hawaii to encompass 582,578 square miles of land and sea."

Source:
1996 CHARGES WERE DROPPED
Bannon Was Accused of Domestic Violence
27 minutes ago
THE LATEST

New Trump campaign CEO Stephen Bannon "was charged with misdemeanor domestic violence, battery and dissuading a witness following an incident in early January 1996, though the case was ultimately dismissed." Bannon's former wife reported that "he pulled at her neck and wrist during an altercation over their finances."

Source:
MAJORITY OPPOSES ‘BATHROOM BILLS’
Poll: Three-Quarters of Americans Support LGBT Protections
2 hours ago
THE DETAILS

A new poll by the Public Religion Research Institute "found 72 percent of Americans now favor passing laws to protect lesbian, gay and transgender people from discrimination, including three-quarters of Democrats and two-thirds of Republicans." A majority also opposes "bathroom bills," of the kind passed by North Carolina.

Source:
PROCEDURES NOT FOLLOWED
Trump Not on Ballot in Minnesota
23 hours ago
THE LATEST
×