So what will premiums really look like under Obamacare?

by Dr. Aaron Carroll

Unless you’ve been living under a rock recently, you must be aware of the back and forth between supporters and haters of Obamacare with respect to premiums in the exchanges. As I’ve explained before, this is somewhat an issue of focus. It is likely true that there are “bros” who are male, young, healthy, and single who have – in the past – been able to find really cheap insurance plans. In the future, under community ratings and guaranteed issue, they will likely be compelled to buy more robust, yet more expensive plans. So those specific individuals will see “rate shock”.

Others, including me, will argue that this describes a minority of people. The biggest push  for health care reform was to get people who could not previously get insurance, or at least something they could afford, something that was doable. And, in that respect, the ACA will likely succeed. Got a chronic condition? Now you can get a plan! It will also be the same price as everyone else’s. Are you 50? You, too, can now get insurance. Tons of those people will also get subsidies to help them afford those premiums. Even in the young and healthy, many can go on their parent’s plans through age 26. Even more will get those subsidies. So the accurate picture is that very few will see the “rate shock” that many are talking about.

Hovering over this debate, however, has been some uncertainty. No one really knew, after all, where the real premium price would fall. If they were higher than projected, then the arguments of affordability would fall away. Those who screamed “rate shock” would actually be right in more cases than expected. A recent report by the Kaiser Family Foundation has given us some answers:

With open enrollment in new insurance marketplaces set to begin Oct. 1, this analysis provides an early look at insurance premiums in 17 states and DC that have publicly released comprehensive data about their rates and the impact of tax credits that will offset part of the costs for low- and moderate-income families.

The analysis compares the premiums in the largest cities in each of the 17 states plus DC for individuals and families in different circumstances to illustrate the insurance rates they might pay, with and without the tax credits created under the law to make coverage more affordable. The 17 states plus DC include eleven operating their own marketplaces (also called exchanges) and seven that have defaulted to the federal government.

One thing the report cleared up right away is that there are multiple insurers competing for business in all states. Only two states have only 2 insurers in the exchange, and one is Vermont, which keeps trying to go single-payer anyway. More importantly, however, there are actual numbers for what a plan will cost at the bronze and silver levels, both with and without subsidies.

For a single 25 year old, making $28,725 a year, the monthly premium for a bronze plan  (with subsidies) ranges from $111 in New York City to $173 in Sioux Falls. For that same 25 year old making $50,000 (or above 400% of the poverty line), premiums for that plan range from $122 in Albuquerque to $310 in New York City. Make that hypothetical person 60, and things look even better. With subsidies, bronze plans go from free in Hartford, CT to $140 in Sioux Falls. Without subsidies, things are more expensive, ranging from $310 in Baltimore to $531 in Indianapolis.

But that 60 year old likely couldn’t have gotten insurance in the individual market a couple of years ago. If he could, the plan would have been much more expensive, with significantly higher out-of-pocket costs than what the ACA will deliver.

The best news for the Obama administration, however, is that these numbers are coming in under what the CBO projected.  The bad news is that there will still be people for whom these prices will be “unaffordable.” I expect that those who dislike the law will continue to focus on those people, and on the few who will still see a price increase (ie bros). That’s fine. But this report, like most of what we’re seeing at a population level, shows that the ACA can potentially work to make insurance more affordable (and attainable) for the vast majority of uninsured.

Aaron Carroll, MD, MS Expert on the future of healthcare policy and reform delivers keynotes across America