Wednesday, September 4, 2013

Interactive Map: In 13 States Plus D.C., Obamacare Will Increase Health Premiums By 24%, On Average

This is a summarized version of a longer piece by Avik Roy writing at Forbes

Click on the graphic above to visit the Obamacare Rate Map, an interactive guide to understanding the impact of the health law on insurance premiums in the individual market. The Map was produced by Yevgeniy Feyman, Avik Roy, and Paul Howard of the Manhattan Institute for Policy Research. ...

The relevant Obamacare insurance filings are still unavailable in 37 states

In less than four weeks—on October 1, 2013—Obamacare’s subsidized insurance exchanges are supposed to be fully on-line. But as of today, the relevant governmental agencies have only made public the insurance carrier filings for 13 states and the District of Columbia. In other words, we’re still waiting for important information on health insurance premiums from nearly three-fourths of the states. ...

Most states are seeing rate hikes; some will see reductions

While these mostly-blue states will see an average premium increase of 24 percent, the impact of Obamacare is highly variable. Nine of the states will see increases on average, and five will see decreases on average. ...

Younger men (+43%) and older women (+27%) hardest hit

It’s been widely reported in the press that younger Americans—particularly younger men—will be hardest hit by Obamacare’s changes to the individual insurance market. And, in our analysis, 27-year-old men fare the worst, with an average gross premium increase of 43 percent. It’s important to note that these rates are adjusted to take into account those with pre-existing conditions; healthy individuals should expect to see even steeper rate hikes. (For more details on our methodology, go here.)

It’s not widely understood, however, that older Americans will also see rate increases. Of the states we examined, 64-year-old men will see 20 percent increases on average. 64-year-old women will see 27 percent increases on average, which is actually higher than what 40-year-old women (10 percent) and 27-year-old women (22 percent) will see.

Vermont (+97%) and Ohio (-30%) are the biggest surprises

As I noted above, Vermont is one of those blue states where the individual insurance market was already heavily regulated. In 1993, the Green Mountain State instituted guaranteed issue and community rating, laws that remain on the books today. The other states that have instituted such reforms have seen an adverse selection death spiral, in which healthy people correctly see health insurance as a raw deal for them, driving premiums up as they drop out. ...


In the case of California, there are a number of important differences between the analyses we conducted in June and this new September one. First off, a number of the low-priced plans that were available to Californians in June appear to have been pulled from the market. As a result, the average pre-Obamacare rate in the new analysis was higher than it had been previously. In addition, a previous analysis compared the cheapest pre-Obamacare rate to the cheapest post-Obamacare rate; the new analysis looks at the five cheapest in each category. In the case of California, this change had the effect of narrowing the difference between the pre- and post-Obamacare markets.

In addition, there are a number of plans that have been filed in the State of California that were not listed in Covered California’s May release. These additional plans, in several instances, resulted in lower rates than what Covered California had indicated. Also, insurers such as UnitedHealth and Aetna have withdrawn from the market, believing that they may not be allowed to charge premiums that will cover their costs. If Aetna and United are right, these changes will have the effect of artificially depressing premiums in 2014, but inflating them in 2015, as costs and premiums realign at a higher level.

The combination of these changes provided us with a different result in California. We had previously calculated that 25- and 40-year-olds would each see an 81 percent increase in underlying rates, compared to 2013 premiums adjusted for pre-existing conditions. The new analysis found that rates would increase by 23 and 14 percent, respectively, for those age groups.

I wrote about another way to think about California in July. Sam Richardson of the University of Texas looked at comparable plans offered by the same insurer, Kaiser, under Obamacare and prior to it. They each had $5,000 deductibles and 30 percent coinsurance, and nearly identical actuarial values. However, the pre-Obamacare plan cost $100 a month, and the new plan cost $205. As we continue to build out our 50-state map, we intend to conduct this type of analysis for each state.