Obamacare: California Fudges The Math - Rates up 64-146%

[Anonymous]

Again, nobody promised that the individual insurance rates for healthy 25-year old males would go down under the ACA.

That's a lie and all one has to do is google to see how it was sold. You start by noting the actual name includes the word "Affordable". Now what do you think the average voter or typical low information Democratic legislator who knows he/she must vote on it to see what is in it will think?

Let's qualify this. Perhaps somebody somewhere promised that the individual insurance rates for healthy 25-year old males would go down under the ACA. But health insurance actuaries knew rates would go up for the 25-year old healthy male cohort--that was a deliberate tradeoff that was made in order to ensure there would be affordable coverage for the sick and the old.

The average Californian looks to have their rates doubled IF they keep their existing insurance.

That is a lie. The average Californian gets his or her insurance through group insurance and will so no changes whatsoever. For people with individual insurance, young healthy men will see their premiums rise a lot, older people will see them go down, the poor will see their rates go down a lot, and people who had previously been excluded from the market because of pre-existing health issues will have access to the same rates as everybody else. There will be winners and losers, but on average, people won't see a change.

The reality is that they will shift to less coverage to keep costs down. Sorry, but you live in a low information newspeak propaganda world.

In general, it's a logical fallacy to counter my points with an insult about the world in which I live. In this case though, your preconceptions about the world in which I live are dramatically wrong.

[_Analytics]

Again, nobody promised that the individual insurance rates for healthy 25-year old males would go down under the ACA.

That's a lie and all one has to do is google to see how it was sold.

Just out of curiousity, I decided to do this google search and see what in the hell you are talking about.

I goggled, "will the affordable care act reduce healthcare costs for everybody?" expecting, according to you, to see a whole bunch of liberal sources that would say, "Yes! Everybody will see their insurance rates go down the moment Obamacare is implemented!"

The first link was a Washington Post article that said this:

. The Obama administration, for its part, thinks there will be a bit of a mix; some will see their costs rise and others will not. "Women are going to see some lower costs, some men are going to see some higher costs," Health and Human Services Secretary Kathleen Sebelius.

That source then linked to this report by the actuarial consulting firm Milliman, which goes into great detail about who they thought would see lower rates, and who would see higher rates.
http://www.healthexchange.ca.gov/Docume ... 8-2013.pdf

It’s interesting to note that the report says, “One way to assess the current and future health status of the individual market is relative to the health status of the current large group market. The large group market is similar to the ACA individual market because new insureds are not underwritten in either market.”

Note this is similar to the comparison to small-group rates that the original editorial called “apples to oranges”, “misleading,”, and not “legitimate,” and to what you called “fudged math.” Do you consider the actuary who wrote this report to be a naieve victim living in a “low information newspeak propaganda world?”

[_Kevin Graham]

Again, nobody promised that the individual insurance rates for healthy 25-year old males would go down under the ACA.

That's a lie and all one has to do is google to see how it was sold.

Roger has already refuted this but here's another example from January of this year:

“Death panels” are out. “Sticker shock” is in. For the last few weeks, critics of Obamacare have spent less time on their more hysterical claims and focused, instead, on a practical argument. Because the new health care law mucks up the insurance market with regulations on pricing and benefits, they say, you’re going to pay a lot more for insurance. “Health insurance costs are going up,” Sally Pipes, president of the Pacific Research Institute and one of the law’s most persistent critics, wrote recently in a Forbes column. “And for that, you can thank Obamacare.”

It’s the kind of argument that gives the administration and its political allies night sweats, because it has some basis in fact. Come next year, when the Affordable Care Act takes full effect, some people are going to start paying more for their health insurance than they would otherwise. But notice the key word in the previous sentence: “Some.” The real story about Obamacare, the one the law’s critics don’t emphasize, is that far more people will actually pay less. And while those paying more may not be happy about it, they’ll also be getting something for the extra premium dollars they pay up front.

Who are these people? Before we get to that, let’s talk about who they are not. If you are like most non-elderly Americans with private insurance, you get health benefits from a medium- or large employer. It’s part of your compensation. Obamacare isn’t going to have much effect on your premiums one way or the other—except, hopefully, in the long run, as the law’s efforts to control health care costs gradually reduce the annual increases to which you’ve become accustomed.

No, the real action in the health care law will take place in what’s known as the “non-group” market, which affects far fewer people (a few million) but does so in some pretty profound ways. If you’ve ever tried to buy insurance on your own, then you know what a nightmare it is. Here is where insurers screen carefully for bad medical risks. If carriers decide you are one of these people—maybe you have diabetes or a history of gastro-intestinal problems, or maybe you beat cancer a few years ago—they will charge you higher premiums, withhold benefits for anything related to your pre-existing conditions, or deny you coverage altogether.1

The non-group market is also notoriously unstable. Premiums can jump wildly from year to year, depending on how well your insurer is doing financially and what’s happening to other people in your “block.” (That’s what insurers call a group of people who pay premiums into a common pool, from which insurers take money to pay those beneficiaries’ bills.) Benefits and networks vary enormously, from plan to plan. Even careful, conscientious consumers frequently discover that their insurance leaves them without coverage they expected—or, in cases of outright fraud, without coverage at all.2

One of Obamacare’s primary goals is to fix these problems. To do so, it will set up virtual marketplaces, known as “exchanges.” If that’s how you end up buying insurance—in other words, if you don’t get coverage through an employer or through a government program like Medicaid—you’ll discover that you can buy any policy insurers are selling, at the list price, no matter what your pre-existing medical status. The only variable will be your age and whether you use tobacco, but even for those factors insures will have only limited ability to change prices. You will have different options for coverage, hopefully quite a few, but you’ll also know that every plan includes comprehensive benefits—basically, everything from checkups to cancer care. And depending on your income level, you’ll be eligible for financial assistance on both premiums and future out-of-pocket expenses.

The regulations and subsidies that make this possible will each influence the price you pay, although in different and sometimes contradictory ways. The regulations on benefits, for example, will tend to make insurance more expensive, because today non-group policies are so notoriously spotty. Among the most conspicuous differences will be coverage of maternity care: Individual policies rarely include maternity benefits. Starting next year, they must. But that means insurers are going to be paying a lot more to deliver babies (and deal with the complications at birth, which can be enormously expensive). That will eventually come through as higher premiums. On the other hand, the financial assistance—which is in the form of tax credits—will make insurance less expensive for people who receive it. And those subsidies will get pretty big. For some people, they will amount to several thousand dollars a year.

As you may have guessed by now, what this all means to you personally depends primarily on who you are. As a general rule, the people who suffer the most under the current system will also benefit the most under the new one. If you are older or sicker and have been trying to get coverage in the non-group market, then you’re in luck because insurers won’t be able to jack up your premiums (or reduce or deny you coverage) anymore. If your income is moderate to low—say, less than $50,000 a year for a family of four—you’re also going to be a winner. The subsidies, which are larger for people with less money, will more than offset the higher costs.

But a system that no longer discriminates against some people is, by definition, also a system that no longer discriminates in favor of others. That brings us to the people who really will see higher prices, the ones the Obamacare critics have in mind. They will tend to be younger, healthier, and more affluent—and they will tend to be men. These are the people who, today, benefit from medical underwriting: They pay low premiums, and tolerate tiny doctor networks or skimpy benefits, because they are unlikely to have medical conditions that require extensive medical treatment. These are also the people who, under the new system, will make too much money to qualify for large subsidies, enough to offset the cost of higher insurance.

Exactly how many people fall into these categories? How much more will they pay? It’s difficult to say definitively. Several estimates are circulating, but each has their limitations. They frequently don’t account for geographic variation or the subsidies or the availability of reduced-benefit, “catastrophic” plans available to people 29 and under.3 “If the catastrophic plans are part of a separate insurance pool as proposed, that would largely do away with any rate shock for twenty-something males if they choose to enroll in those plans,” says Larry Levitt, an expert on insurance and senior vice president at the Kaiser Family Foundation.

Many states have been looking to MIT economist Jonathan Gruber to provide estimates, just as the Romney administration in Massachusetts and then the Obama Administration in Washington. Gruber, a reform advocate, tells me that “In most of the states I have looked at, many more people end up better off than worse off.” Levitt, who has been studying the available projections, has a similar take:

"With the cushioning impact of federal premium subsidies, most people buying their own insurance today will end up paying less under reform for equivalent coverage. Premiums for some will go up because of minimum benefit requirements, but that’s a trade of better insurance protection for somewhat higher premiums.4"

That last point is important. If you are one of the young, non-poor, healthy men who will end up paying a few hundred dollars or even over a thousand dollars more for your coverage next year, you might not really care that you’re among a relatively small group.5 You also might not care about the question of obligation—whether, in order to have an insurance system that protects everybody, it’s fair to ask those who have youth, health, and enough money to pay for decent insurance to fork over more than they are now.6

But before you decide Obamacare is a bad deal for you, remember that it’s not just about moral principle. It’s also about your self-interest. Today you are healthy. Tomorrow you may not be. You might have an accident or develop a serious illness—and up facing huge hospital bills. The coverage you get under Obamacare won’t be perfect, but if you’re paying more for it then it’s probably going to offer you more protection than you have now. Yes, you’ll be spending more money—but you’ll be getting something for it, too.

Of course bcspace's problem is that he doesn't read anything beyond the Right Wing blogosphere. When one of his dishonest, ignorant authors says something about the Left, he just takes it for granted.

[_Kevin Graham]

Is Obamacare a War on Bros?

The incessant drumbeat of predictions that the Affordable Care Act will wreak havoc upon the land is a long, frustrated quest to find sympathetic victims. There are, to be sure, clear losers from the new health-care law. Rich people have to pay higher taxes to fund its subsidies. Many doctors and hospitals will lose some of their income stream from the law tightening up unnecessary care. Yet neither the medical specialist nor the hospital executive nor the upper-income taxpayer quite offer the politically sympathetic face of the Everyman struggling under Obama’s socialist boot conservatives are looking for. The search has instead come to focus on a new paradigmatic victim: the healthy, financially secure 25-year-old male.

California has announced that insurance companies have submitted premiums for its state-based Obamcare exchange, and the rates will come in lower than forecast. This is to say, the law may work, at least in this regard, even better than forecast — insurers can work under its guidelines, and competition is pushing the cost to consumers down, as hoped.

Good news, right? Avik Roy, former health-care-policy adviser for Mitt Romney, found a different way to frame the news: “Rate Shock: In California, Obamacare To Increase Individual Health Insurance Premiums By 64-146%.”

Roy’s piece, which gained widespread, wide-eyed circulation in the conservative media, was quickly and ruthlessly torn to shreds by Ezra Klein, Rick Ungar, and Jonathan Cohn, in a spectacle that resembled a pack of lions tearing every scrap of flesh off a dead warthog. I’d really urge you to read every one of those pieces and relish the carnage in every gory particular. But the gist of it is that Roy compared California’s plans to the teaser rates available on ehealthsurance.com. Those teaser rates turn out to bear little resemblance to actually available health-insurance rates — they exclude swaths of potential consumers for even minute health problems.

Possibly the most misleading part of Roy’s astonishingly dishonest screed is the entry point for his pseudo-investigation:

If you’re a 25 year old male non-smoker, buying insurance for yourself…

Likewise, Hoover Institute apparatchik Daniel Kessler warns in a Wall Street Journal op-ed, “Obamacare Is Raising Insurance Costs.” Here are his examples:

For example, a 25-year-old male who lives in San Francisco …

Oregon's exchange policies are about the same. Today, a 25-year-old male who lives in Portland…

Do you notice a pattern here? This is a bit like the traveling medicine show salesman who picks the same random volunteer from the crowd at every stop. You, sir — the healthy 25-year-old in front who has never been hospitalized or needed medication in his life! Step right up!

These columns keep citing a healthy 25-year-old man as if they are offering up a randomly chosen example of how the exchanges will work. Healthy non-smoking 25-year-old males have very different health profiles than the average person.

It is true — and nobody has ever denied this — that the hypothetical 25-year-old male will pay higher insurance premiums under Obamacare. Now, this 25-year-old male probably won’t pay higher premiums under Obamacare if he does smoke, or have any potentially worrisome medical history, or have family members with any potential medical history, or even if he’s a perfectly healthy non-smoker from a perfectly healthy family but has a low enough income to qualify for tax credits to cover his premium costs. And of course he’d be unaffected if he already gets insurance through his employer.

So, we have narrowed the class of Obamacare victims down to a very, very small group of victims preparing to be crushed beneath the burdens of Obamacare. But to hold up this tiny sub-category as implicitly representative of the entire health-insurance market is misleading to the extreme.

What’s more, the interests of these Victims of Obamacare may be a bit broader than their conservative champions let on. Suppose you are a non-smoking, non-sick, non-poor, completely healthy 25-year-old from a completely healthy family who does not get employer-provided health insurance. Yes, you will be paying higher premiums. Not 146 percent higher, likely Roy falsely claims, but higher. Yet you may also contemplate the varying probabilities that one day you will be one or more of the following:

1. poor
2. sick
3. a son, husband, or father of somebody who is sick
4. no longer 25 years old

At that point, the freedom-crushing regulatory burdens of Obamacare may turn into a blessing. And this, of course, is the entire concept of insurance. Insurance is the spreading of risk. What distinguishes health insurance from insurance against, say, fire, is that insurers can make a much better guess which customer is likely to need medical care than which is likely to have their house burn down. Some people are bad actuarial health risks, and some people are good actuarial health risks.

That’s the whole dysfunction of our horrendous health-insurance system. The individual health insurance market is a tragic mess: People who need insurance the most can’t buy it, while the only people who can afford insurance don’t need it. That’s the reason for health-care reform.

The objections to health-care reform present themselves as if they’ve uncovered some kind of nightmarish bureaucratic inefficiency. What they’ve actually discovered, to the extent that they aren’t simply misleading people, is that a functioning insurance system takes money away from people who are healthy. Likewise, fire insurance screws people whose houses will never burn down.

That is what the Wall Street Journal editorial page implies when it complains that under Obamacare, “Americans are being forced to buy more expensive coverage than what they willingly buy today.” In the group-insurance market, like the kind of people who get it through work, this already happens — everybody pays the same rate, forcing the young and healthy to subsidize the old and sick, and hardly anybody complains.

The individual health insurance market is a disaster, but you have a handful of winners: young, healthy males unburdened by personal or familial illness. If conservatives hold sacrosanct their right to enjoy the full benefit of their good fortune, then it is tyrannical to force them to accept any of the burden of the health-insurance losers. It’s Rick Santelli–style Ayn Randism (“see if we really want to subsidize the losers' mortgages?”) applied to health insurance.

[_Analytics]

Great articles; thanks Kevin. I love this quote:

Suppose you are a non-smoking, non-sick, non-poor, completely healthy 25-year-old from a completely healthy family who does not get employer-provided health insurance. Yes, you will be paying higher premiums. Not 146 percent higher, likely Roy falsely claims, but higher. Yet you may also contemplate the varying probabilities that one day you will be one or more of the following:

1. poor
2. sick
3. a son, husband, or father of somebody who is sick
4. no longer 25 years old

At that point, the freedom-crushing regulatory burdens of Obamacare may turn into a blessing.