Just as the President said, his health plan would drive healthcare costs down. Now, FORBES magazine's Rick Ungar concedes that he (Ungar) and all of the conservatives were wrong and the President's plan does exactly that in California (profiled in this article).
Rate Shock-California Obamacare Insurance Exchange Announces Premium Rates
Source: FORBES MAGAZINE 5/28/13
ARTICLE: http://www.forbes.com/sites/rickungar/2013/05/24/unexpected-health-insurance-rate-shock-california-obamacare-insurance-exchange-announces-premium-rates/
Every now and again, a political pundit is required to stand up and admit to the world that he or she got it wrong.
For me, this would be one of those moments.
For quite some time, I have been predicting that Obamacare would
likely mean higher insurance rates in the individual market for the
“young immortals” and others under the age of 40. At the same time, my
expectation was that those who fall into the older age ranges would
benefit greatly as their premium charges would be lowered thanks to the
Affordable Care Act.
It is increasingly clear that I had it wrong.
Yesterday, Covered California—the
name given to the healthcare exchange created pursuant to the
Affordable Care Act that will serve the largest population of insured
citizens in the nation—released the premium rates submitted by
participating health insurance companies for the four health insurance
program categories (bronze, silver, gold and platinum) established by
the Affordable Care Act, along with the catastrophic policy created for
and available to those under the age of 30.
Upon reviewing the data, I was indeed shocked by the proposed premium
rates—but not in the way you might expect. The jolt that I was
experiencing was not the result of the predicted out-of-control premium
costs but the shock of rates far lower than what I expected—even at the lowest end of the age scale.
So, why the all too popular narrative that Obamacare would mean unaffordable healthcare premium costs for so many Americans?
Setting aside the never-ending nonsense peddled by the opponents of
healthcare reform, everyone from the Congressional Budget Office to
numerous private actuaries have warned that premium shock could be
expected to set in once the public began to see the reality of what
Obamacare would mean to their pocketbooks. And yet, the only real jolt
to the system being felt by these public and private prognosticators
today is utter amazement over just how reasonable the California prices
have turned out to be.
How did the CBO and the actuaries get it so wrong?
As Jonathan Cohn of The New Republic correctly points out—
“One reason for the misplaced expectations may be that actuaries have
been making worst-case assumptions, even as insurers—eyeing the
prospects of so many new customers—have been calculating that it’s worth
bidding low in order to gobble up market share. This would help explain
why premium bids in several other states have proven similarly
reasonable. “The premiums and participation in California, Oregon, Washington and other states show that insurers want to compete for the new enrollees in this market,” Gary Claxton, a vice president at the Kaiser Family Foundation,
said via e-mail. “The premiums have not skyrocketed and the insurers
that serve this market now are continuing. The rates look like what we
would expect for decent coverage offered to a standard population.”
Cohn is saying that, despite the political naysayers, the healthcare
exchange concept appears to be working very well indeed in states like
California, Oregon and Washington—the first states to publish the
expected health exchange prices for purchasing coverage. These are also
states that are actually committed to seeing the program work as opposed
to those states whose leaders have a vested political interest in
seeing the Affordable Care Act fail.
Keep in mind that the entire idea of the exchanges is to require
health insurance companies to compete openly with one another by
offering identical coverage programs in the three created classes—each
offering insurance coverage that actually delivers meaningful protection
to customers—and then openly disclosing the price each insurance
company will charge for that policy. Thus, shoppers can clearly see
which company has the best price on an apples-to-apples basis.
For all the negative chatter about how including older and sicker
Americans in the health insurance pools would drive up the price for
younger participants in the pool less likely to be ill, what we are now
seeing in states like California is that the desire on the part of the
health insurance companies to increase market share—thanks to the large influx of customers as a result of Obamacare—is driving prices downward.
That is precisely what the President said would happen.
Sarah Kliff at The Washington Post reveals just far off the prognosticators have been.
“The Congressional Budget Office predicted back in November 2009 that
a medium-cost plan on the health exchange – known as a “silver plan” –
would have an annual premium of $5,200. A separate report from
actuarial firm Milliman projected that, in California, the average
silver plan would have a $450 monthly premium.”
The actual costs?
Kliff continues, “On average, the most affordable “silver plan” –
which covers 70 percent of the average subscriber’s medical costs –
comes with a $276 monthly premium. For the 2.6 million Californians who
will receive federal subsidies, the price is a good deal less expensive…”
As you can see, the actuaries missed by a huge percentage.
To see how younger Californians will make out when they shop on the public exchanges, take a look at the graphs Kliff provides here.
You may be very surprised to learn that the meaningful insurance that
you are now required to purchase is far more reasonably priced than you
imagined.
There is a moral to this story for those open to receive the message.
If you are among the many Americans who have bought into the fear and
loathing that has been the campaign against Obamacare, you just might
wish to reconsider. With every passing day, the various myths, legends
and lies put forward by those with a political axe to grind, TV or radio
rating to be raised or vote to be purchased, are falling victim to the
facts.
Of course, if you continue to find it more useful to hate the
Affordable Care Act than to recognize the benefit of what this program
offers to you and your family, nothing I can say is likely to change
your mind.
But, accept it or not, the reality is that the early report card on
Obamacare—at least in those states willing to give the law a chance to
succeed—is looking pretty darn good. So good, in fact, that the data
reveals that even a supporter such as myself was off the mark when
predicting significantly higher rates for the youngest among us.
This is one time that I could not be happier to be proven wrong.
UPDATE: A number of readers have responded to this
article by asking the question, “If the California exchange is so good,
why have United Healthcare, Aetna AET +3% and Cigna CI +3.38% decided not to participate?”
It is true that these companies are not going to participate in the CA CA +0.93%
healthcare exchange. And while this makes a great meme for the
opponents of healthcare reform, there is something they are not telling
you —these three companies have never been players in the California
individual insurance market so there was never any expectation that they
would participate. While each of these companies are a major factor in
group health insurance-both large and small- their combined
participation in the individual market in CA has not been more than 8
percent for a great many years. Meanwhile, the other large insurance
companies that have participated in the individual policy business in
California have comprised 85 percent of the market. Each of these
insurers are participating on the exchange. So, things are not always as
they may seem which is why it is so important to read beyond the
headline.
Contact Rick at thepolicypage@gmail.com and follow me on Twitter and Facebook.
