March 29, 2013
The headline is that individual health insurance premiums in California will soar 30% in 2014 for people who currently have coverage, according to a study prepared by Milliman for the state exchange Covered California. But the numbers require a closer look.
For example, about 9% of the increase has nothing to do with reform. It relates to expected underlying cost increases driven by provider and drug price hikes and patient utilization. The rates are also expected to be higher because ObamaCare mandates better coverage and lower out-of-pocket costs than what a lot of individuals have now.
Said another way, total costs to insured individuals in California (premiums and out-of-pocket costs) will increase about 20% in 2014–with nearly half related to underlying healthcare cost trends. That’s not too far from the 13% national average increase projected by CBO back in 2009.
Of course, we’re talking averages here. Rates will vary greater depending on the individual. For example, the young will end up paying a lot more, while older people will pay less because of ObamaCare’s restrictions on how much more plans can charge based on age.
And then there are the government subsidies. People who get them–i.e., those who earn up to 400% of the federal poverty level–will see their total costs fall by a lot. Picking up the difference: taxpayers and people who aren’t eligible for subsidies.
March 26, 2013
From the Urban Institute:
Considerable attention has been given to the possible “rate shock” in nongroup insurance markets once the full reforms associated with the Affordable Care Act (ACA) are implemented in 2014. The insurance industry warns, in particular, that the 3-to-1 age bands included in the law will substantially increase premiums faced by young adults, pushing them out of the insurance market and leaving them uninsured….However, most young adults currently covered by nongroup insurance will be shielded from the full effects of the narrower age-rating bands by the ACA’s increased eligibility for Medicaid, the tax credits offered through the health insurance exchanges, or through access to employer-sponsored insurance.
March 21, 2013
Not so likely, says Justin Lake of J.P. Morgan. That’s because Arkansas expects covering the poor through exchanges will cost only 13% to 14% more than if it expanded its Medicaid program. The differential isn’t that much, Lake suggests, because Arkansas pays Medicaid providers rates that are just 25% less than commercial insurance. In other states the gap is typically wider, Lake says:
Even if this relatively low cost premium is true for Arkansas and accepted by HHS as meeting the definition of cost effective, the gap between Medicaid and commercial rates is typically much wider (we estimate a differential of 85%-95% for the hospital companies in our coverage universe), possibly making Arkansas less likely to set a precedent for other states.
March 20, 2013
Arkansas has released an actuarial analysis projecting that its plan to cover poor people through health insurance exchanges will cost the federal government 13% to 14% more than if the state simply expanded Medicaid.
That’s not all that much more really–especially if it results in higher payments to physicians than Medicaid and improved access to care. The analysis–prepared by actuarial firm Optumas and paid for by the state–adds that “in some realistic scenarios, there could be no additional federal costs at all.”
A lot has been written about the Arkansas Medicaid compromise–especially the irony noted by Arkansas Times reporter David Ramsey: i.e., the same Republicans crying over the long-term costs of ObamaCare are the ones who pushed for the higher cost Arkansas compromise.
There’s another irony. Consider how Optumas arrived at its 13% to 14% projection for the Arkansas Dept. of Human Services (DHS)–neatly summed up by conservative blogger Avik Roy:
DHS’ actuarial review found that the difference between commercial and Medicaid reimbursement rates in Arkansas was currently “less than 25%.” Adding in a 5 percent discount for the fact that exchange reimbursement rates will be lower than traditional commercial rates, and another 5 percent discount for the fact that the consumer-driven nature of the exchanges would drive prices down another 5 percent, DHS gets to a fiscal premium of 13-14 percent for the exchanges relative to Medicaid.
Implicit in the above paragraph is that exchange plans are expected be cheaper than commercial insurance outside exchanges–which is one of the things ObamaCare was hoping to achieve.
Conservatives like Roy have argued that ObamaCare will cause healthcare premiums to soar. Maybe it’s just me, but it seems odd they would now highlight the possibility that exchange plans will be more affordable than traditional commercial health insurance.