Today enrollment opens for Affordable Care Exchanges. If you are renewing your plan, or are looking for health insurance, be sure to check out Healthcare.gov.
For about a week now, the national media has been frothing at the mouth about the recently announced premium changes in the Affordable Care Act exchanges run by the federal government.
My affinity for Obamacare is no secret, but I am not using the term "changes" instead of 'increase' as an innuendo to throw off my reader. The 25% increase figure often mentioned on TV and repeated by talking heads like mindless robots is actually not what anyone enrolling in the individual marketplaces will pay; it is the average increase in the pre-subsidy cost of the benchmark plan in the states where the federal government set up exchanges due to the refusal of said state authorities to do so.
That's quite a few caveats before you get to that 25% figure. For example, what the hell, you might be thinking, is a "benchmark" plan? A benchmark plan is the second cheapest Silver plan in a given state's marketplace.
Huh?
A Silver plan is a plan that most closely matches what is available in the general employer market. A Silver level plan on average covers 70% of one's medical expenses, subject of course to an out-of-pocket max. There are other levels plans available through Obamacare exchanges: Bronze plans, which have cheaper premiums but greater cost sharing, with the plan paying an average of 60% of medical costs, once again subject to out-of-pocket maxes. Gold and Platinum level plans, on the other hand, carry higher premiums but lower cost sharing, 80 and 90 percent, receptively.
Of course, a marketplace doesn't just have one Silver plan or one Bronze plan, etc. It has more. According to the same HHS report that these personalities are using to tar and feather Obamacare, the average federally run marketplace will have some 30 plans to choose from in 2017. Some of these plans will be Gold, some Platinum, and some Bronze and Silver. The "benchmark" plan in each market is the Silver level plan that is second from the cheapest.
So the average cost of the second-to-cheapest Silver plan is going up by 25% then? Not quite.
That number is the increase in the second cheapest plan before Obamacare subsidies kick in. Remember those? You know, the affordable part of the Affordable Care Act? These subsidies cap what someone earning under 400% of the federal poverty level have to pay, which is 80% of the marketplace, shielding them from much if not all of the increase. So what do those increases look like when the subsidies are factored in? They look something like this:
#Didyouknow that in most places, a change in premium rate will be significantly reduced after the #ACA tax credit? pic.twitter.com/Y1DljYIKFn
— Ed & Workforce Dems (@edworkforcedems) November 1, 2016
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Oops. Not a very convenient chart for naysayers, is it. If you'd rather look at a broader set of data, the Kaiser Family Foundation has it handy.
Also, there's this thing that tends to happen in markets. When the price of something goes up, the consumers goes shopping for a less expensive substitute. In 2017, the HHS estimates that nearly three in four consumers in the individual marketplaces will be able to find a Silver level plan for under $100 a month after subsidies.
As a matter of fact, here's a tidbit form the HHS report that our drama-seeking media is not going even close to reporting: something interesting happens if consumer behavior takes over and consumers choose lower cost plans available to them, the average premium paid by consumers actually... falls (even if they don't downgrade their benefit level)!
If all consumers switched from their current plan to the lowest premium plan in the same metal level, the average 2017 Marketplace premium after tax credits would be $28 per month less than the average 2016 Marketplace premium after tax credits – a 20 percent reduction.
So as a matter of fact, consumers could end up getting the same level of benefits for a little bit less in 2017 than they did in 2016 if they vote with their dollars. Under Obamacare!
It should be mentioned that the health care market is not a completely price-elastic market. In fact, insurance companies have counted on consumers' inertia - whether because the process to switch is too complicated or because of in-network facilities or because of the inherent work involved - to inflate their profits. But the markets are now maturing under the ACA, and people are beginning to get comfortable with looking at all of their options during open enrollment - especially the all important healthy enrolls.
It should also be noted that in the first two years of operating the ACA exchanges, the cost to the government came in well below CBO estimates, and even with the increases (that won't even be felt by most enrollees), the total costs will be in line with CBO projections next year.
Still, it would be foolish to argue that all is rosy in the health care market. A 25% increase in the Benchmark plan is worse than a likewise decrease, of course, and the government is ultimately on the hook for the increases. Obamacare sought to address a systemic problem of insurance company abuses and patients' rights, but like all other major social compact expansions, it has its share of forces working overtime to try to destroy it.
One such force is insurance company greed. The other has come from Republicans in state after state that have refused to operate their own exchanges, or even to expand Medicaid to the poor even at complete federal expense. A broad study now finds that the pre-subsidy Benchmark plan increase is 22% in states that expanded Medicaid, compared to an average increase of 29% in states that did not. Likewise, the study finds that states running their own exchange are taking 17% increase, while states that do not are facing an average 28% increase. Starkly, states that readily implemented both provisions (Medicaid expansion and their own exchange), are experiencing an average 18% increase, compared to a stunning 30% increase for states that resisted both.
These numbers make sense intuitively. In states that did not expand Medicaid, hospitals are stuck with much higher unpaid medical costs from people who cannot pay for the care they receive, a cost which hospitals then have to pass along to private insurers, who funnel it down to the consumer. States that chose to set up their own marketplaces often put in transparency, disclosure and competition requirements building on top of the federal requirements, keeping costs further in check.
So today, if you are looking for health care, go to healthcare.gov. If you need help, email me. Sign up. Cover yourself, your family. I have no qualms with you watching the media's coverage. But I want you to find out for yourself.
And as you fill out your ballot, renew the promise that we will take what President Obama has given us and expand and improve it under President Clinton. For that, she is going to need a Democratic Congress.