The WasteWatcher: The Staff Blog of Citizens Against Government Waste

Fuzzy Math and Little Details on Obamacare Premium Costs

The WasteWatcher is the staff blog of Citizens Against Government Waste (CAGW) and the Council for Citizens Against Government Waste (CCAGW). For questions, contact blog@cagw.org.


Today, the Department of HHS finally revealed the premium prices for Obamacare.  Several press outlets got an advanced copy and some reporters were not all that impressed.

Here is Politico’s take:

The Obama administration on Wednesday released a long-awaited report on premiums in Obamacare’s federal insurance exchanges — the first look at the rates that will apply in the vast majority of states.

There’s just one big catch: The report doesn’t actually reveal very much about what most people will pay.

The administration put the best face on the health insurance premiums, emphasizing that the rates have come in lower than expected in the 36 states where the feds will run part or all of the exchanges.  That part of the report gives them a snappy answer to the widespread predictions of “rate shock” by critics of Obamacare.

But it was a far cry from full disclosure.

Want to know what you might pay for health coverage in an exchange next year?  Too bad.  The report gives lots of examples of the kinds of people who will get good prices — but everyone else will remain in the dark until at least next Tuesday, when Obamacare is supposed to open its doors.

What the report fails to say is what the health plans in the federal exchanges would cost anybody else — i.e., the majority of Americans."

And from Bloomberg:

Obama’s $3,000 Health-Law Premiums Test Limits of Affordability - Health insurance under Obamacare will cost individuals at least $2,988 a year on average, a price that Republican opponents may target as out-of-reach for many Americans who don’t qualify for U.S. subsidies.

While the $249 monthly payment is intended to be discounted through tax credits, less than half of people now buying insurance on their own may get that help.  The release of the data by the Obama administration comes just six days before the Affordable Care Act’s insurance exchanges open for enrollment, and a day after Ted Cruz, a Texas Republican, took the floor of the U.S. Senate to oppose the law…

The report today outlined rates for exchanges in 47 states and illustrates the effect of subsidies available for people earning less than four times the poverty level -- about $94,000 for a family of four.  None of the companies selling plans in the states were identified.

The rates vary widely by state.  The highest prices noted in the data are in Wyoming, where the cheapest bronze plan averages $425 a month for an individual and the cheapest silver plan $489. In Minnesota, prices average $192 a month for the cheapest silver plan and $144 for the lowest bronze plan.

The Washington Post:

How much will Obamacare premiums cost?  Depends on where you live - A 27-year-old in Austin who earns $25,000 could pay $85 per month for health insurance next year, and a family of four in St. Louis with income of $50,000 might face a $32 monthly premium, according to new federal data on health insurance rates under the Affordable Care Act.

The report, released Wednesday by the Department of Health and Human Services, showed significant variation in the insurance premiums that Americans shopping on the individual market could pay under the president’s health-care overhaul.  Across the 48 states for which data were available, the unsubsidized monthly premiums could be as low as $70 for an individual and as high as $1,200 for a moderate plan for a family of four.

The Post also notes that health insurance experts, “warn that premiums don’t tell the whole story.  The low rates are possible in part because insurance companies created special plans that include fewer in-network doctors and hospitals than many current plans.  This may not be a problem for healthy people who currently lack insurance.  But those with illnesses may discover that their specialists are not covered by an exchange insurance plan.  Low-income people accustomed to a certain community clinic may find that going there is no longer an option.  And everyone may encounter long waits to see a doctor.”

Again according to Politico:

The report was issued to news organizations on Tuesday under a strict embargo, with specific instructions not to share the information with anyone else, like outside health insurance experts who might be able to provide more analysis of the numbers.  Apparently, though, the word still leaked out.  Douglas Holtz-Eakin, president of the American Action Forum and a leading critic of the law, reached out to POLITICO to give unsolicited reaction to the new numbers — which POLITICO did not share with him.

'There are literally no comparisons to current rates.  That is, HHS [has] chosen to dodge the question of whose rates are going up, and how much,' Holtz-Eakin said.

He did allow that the rates 'don’t appear dramatically different than in the state exchanges' — but said that only proves that 'with all that market power, HHS doesn’t seem to have delivered much.'"

Politico is correct, many people who have been critical of the law since from the start obviously got copies of the announcement and had some time to analyze it.

Avik Roy said in Forbes:

For months now, we’ve been waiting to hear how much Obamacare will drive up the cost of health insurance for people who purchase coverage on their own. Last night, the U.S. Department of Health and Human Services finally began to provide some data on how Americans will fare on Obamacare’s federally-sponsored insurance exchanges. HHS’ press release is full of happy talk about how premiums will be ‘lower than originally expected.’ But the reality is starkly different."

Roy goes on to give a pretty substantial analysis on what he and his colleagues are finding around the country.  He said, “Earlier this month, I and two colleagues from the Manhattan Institute—Yevgeniy Feyman and Paul Howard—published an interactive map that detailed Obamacare’s impact on individually-purchased health insurance premiums in 13 states plus D.C.  As the accompanying article described, Obamacare increased premiums in those states by an average of 24 percent” and that “a Manhattan Institute analysis of the HHS numbers, Obamacare will increase underlying insurance rates for younger men by an average of 97 to 99 percent, and for younger women by an average of 55 to 62 percent. Worst off is North Carolina, which will see individual-market rates triple for women, and quadruple for men.”

Here is The Heritage Foundation’s take on the HHS release:

Today the Department of Health and Human Services (HHS) released a report regarding premiums and plan offerings in Obamacare’s exchanges for next year.  Despite the Administration’s claims, premiums are going up due to Obamacare—and the quality of the “coverage” is, in many cases, going down…

What HHS didn’t mention is that CBO also estimated in a November 2009 analysis that individually purchased insurance premiums would go up by an average $2,100 per family, due to the increased mandates and requirements included in Obamacare.  So when HHS says that premiums are “below projections,” it really means that premiums are still going up as a result of Obamacare—just by less than originally advertised.  That’s a far cry from candidate Obama’s promise that his health plan would lower premiums by $2,500 per year…

The HHS report also makes claims about a wide variety of plan offerings.  What the report didn’t mention is that many of these “new” plans are Medicaid managed care plans, which insurance companies admit “will look a lot like the Medicaid plans we are currently administering.”  HHS also didn’t mention that patients object to being placed in a program withlow physician reimbursements and poor health outcomes—even some Medicaid patients don’t call the program “real insurance.”

So instead of just raising premiums, Obamacare is inflicting a double whammy: forcing the American people to buy health plans costing more than what they paid previously, and providing such limited access to provider networks they may not be able to find a doctor that will treat them. It’s why Congress should act now to stop Obamacare before it starts.

Politico points out in their piece that HHS’s declaration that “rates will come in lower than expected” will be the “snappy” answer and talking point for Obamacare fans.  And sure enough, that is what you are finding in some news reports, on Twitter, and other social media.

But there is plenty of real analysis going on out there and much more to come  next week when the exchanges are supposed to officially open for enrollment. That's when we should be able to find out what's really going on.

Provided of course, the computer systems work.

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