The Audacity of Concern

Really, how dare anyone be alarmed by this:

Republicans have long blamed President Obama's signature health care initiative for increasing insurance costs, dubbing it the "Unaffordable Care Act."

Turns out, they might be right.

For the vast majority of Americans, premium prices will be higher in the individual exchange than what they're currently paying for employer-sponsored benefits, according to a National Journal analysis of new coverage and cost data. Adding even more out-of-pocket expenses to consumers' monthly insurance bills is a swell in deductibles under the Affordable Care Act.

Health law proponents have excused the rate hikes by saying the prices in the exchange won't apply to the millions receiving coverage from their employers. But that's only if employers continue to offer that coverage--something that's looking increasingly uncertain. Already, UPS, for example, cited Obamacare as its reason for nixing spousal coverage. And while a Kaiser Family Foundation report found that 49 percent of the U.S. population now receives employer-sponsored coverage, more companies are debating whether they will continue to be in the business of providing such benefits at all.

Economists largely agree there won't be a sea change among employers offering coverage. But they're also saying small businesses are still in play.

Caroline Pearson, vice president at Avalere Health, a health care and public policy advisory firm, said there's a calculation low-wage companies will make to determine if there's cost savings in sending employees to the exchanges.

"The amount you have to gross up their wages so they can get their own insurance and the cost of the penalties may add up to less than the cost of providing care," she said.

It's a choice companies are already making. The number of employers offering coverage has declined, from 66 percent in 2003 to 57 percent today, according to Kaiser's study.

Look on the bright side: At least we are finding out what is in the health care reform bill. You know, now that we have passed it.

We Passed Health Care Reform . . .

And now, we are finding out what is in it: 

Democrats continue to try to dismiss the evidence that Obamacare will dramatically increase the cost of insurance for people who buy it on their own. But on Thursday, the Ohio Department of Insurance announced  that, based on the rates submitted by insurers to date, the average individual-market health insurance premium in 2014 will come in around $420, “representing an increase of 88 percent” relative to 2013. “We have warned of these increases,” said Lt. Gov. Mary Taylor in a statement. “Consumers will have fewer choices and pay much higher premiums for their health insurance starting in 2014.”

The rates that Ohio reported are proposed rates; the Department of Insurance still has to formally approve them. “A total of 14 companies proposed rates for 214 plans to the Department. Projected costs from the companies for providing coverage for the required [by Obamacare] essential health benefits ranged from $282.51 to $577.40 for individual health insurance plans.”

It’s called “rate shock,” but it’s not shocking to people who understand the economics of health insurance. In August 2011, Milliman, one of the nation’s leading actuarial firms, predicted that Obamacare would increase individual-market premiums in Ohio by 55 to 85 percent. This past March, the Society of Actuaries projected that the law would increase premiums in that market by 81 percent. Like good players on “The Price is Right,” they both came in just under the Dept. of Insurance’s figure.

I am pretty sure that the actuaries wish that they were wrong. But it would appear that they might have been all too accurate. My question is why we didn't hear more about this when Obamacare was being debated in Congress? I mean, I would hate to think that supporters of the Affordable (ha!) Care Act just decided to ram the bill through without letting the American people hear about the consequences that would fall on the country if the bill passed. That wasn't what all those honorable representatives and senators were aiming to do, was it?

Is Obamacare Affordable?

There has been some celebrating on the port side ever since stories like this one​ came out, indicating that premium costs associated with the Affordable Care Act--Obamacare--are, well, affordable. We are to believe that 

[b]ased on the premiums that insurers have submitted for final regulatory approval, the majority of Californians buying coverage on the state's new insurance exchange will be paying less—in many cases, far less—than they would pay for equivalent coverage today. And while a minority will still end up writing bigger premium checks than they do now, even they won't be paying outrageous amounts. Meanwhile, all of these consumers will have access to the kind of comprehensive benefits that are frequently unavaiable today, at any price, because of the way insurers try to avoid the old and the sick.

Paul Krugman is positively gleeful as he contemplates the political consequences that he expects to ensue should these findings hold up:

. . . think about the political dynamics. Because the Supreme Court decided to let states opt out of the Medicaid expansion, some states — notably Texas — will have a pretty dysfunctional version of Obamacare in 2014, although even those systems will provide significant benefits to many people. Still, the whole political calculus was supposed to be that Republicans in red states could point to the horrors of Obamacare and ride them to political victory. Instead, it looks as if we’re going to see blue-state residents reaping the benefits of a functional health care system, while red-state residents are denied many of those benefits, for what looks like no better reason than mean-spirited spite — because what’s going on is, indeed, mean-spirited spite.

Predictions that Obamacare will be a big political issue are probably right — but not in the way gleeful conservatives imagined.

Unfortunately for Krugman et al., these claims of triumph do not give us some very important details about the California findings. For those details, one must consult Walter Russell Mead:​

On Wonkblog, a pro-ACA outlet that cheered loudly when the California numbers came out, Sarah Kliff argues that success in the Golden State might not be replicable elsewhere. According to Kliff, California is one a few states to take an “active purchaser” approach to the ACA. This means that a state board has the power to select which plans will be available in the exchange, and can reject any plan whose rates are too high. Most other states, however, do it differently:

The vast majority of states…operate under a “clearinghouse model.” In that scenario, any health plan that meets a set of criteria gets approval to sell on the health insurance exchange. All 33 state exchanges that the federal government will run operate under this  clearinghouse model. So do 10 of the 18 state-run health exchanges (this includes the District of Columbia). Two states, Kentucky and New Mexico have not, according to Kaiser Family Foundation, addressed the issue yet.

In the final count, only six states are currently “active purchaser” states, so nationwide might not be as low as California’s projections suggest.

If that’s not enough to temper any lingering optimism, consider that the state had to make some significant tradeoffs to keep rates so low, as an LA Times piece reveals. Under the plans offered on the exchange, consumers will have access to far fewer doctors and hospitals. Blue Shield of California, for example, will give its exchange customers access to only 36 percent of its regular physician network . . .

Mead ends his piece with the following words: "With Obamacare, even the good news is often bad." Quite so.