Reworking Obamacare’s numbers: Half of Hoosiers to gain, half to lose

July 29, 2013
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No wonder opinions on Obamacare continue to be so divided, more than three years after the president signed it.

After digging deeper into the rate filings by health insurers, I have concluded that roughly half of Hoosiers buying individual coverage next year on Obamacare’s exchanges will pay less than they would have before Obamacare. The other half will pay more.

So I need to correct my post from a week ago that claimed most Hoosiers buying individual insurance would pay less, not more, under Obamacare’s combination of requirements and rebates.

I misunderstood the numbers released by the Indiana Department of Insurance on July 18. For what it’s worth, so did the journalists at Forbes, the Washington Post and other news media outlets.

The Insurance Department said the average cost of an individual insurance plan next year would be $570 per person per month, an increase of 124 percent from the previous year.

That figure is what an insurance plan would cost if it covered 100 percent of all claims predicted to be filed by one person. Since almost no one buys such generous coverage, the actual premiums paid by each customer will be significantly lower.

I looked at Anthem Blue Cross and Blue Shield’s filing to get a better handle on the numbers. Indianapolis-based Anthem is the only health insurer that will offer a health insurance plan statewide on Obamacare’s exchanges.

Anthem will charge average premiums of $407 per member per month for a health plan that is equivalent to the Silver category created by Obamacare’s exchanges. Silver plans pay roughly 70 percent of total claims a person is predicted to make, with the customer covering the rest via co-pays, deductibles or coinsurance.

That same level of coverage this year would have come with a premium of about $210 per member per month.

That’s an increase of 94 percent—which gives you an idea of how much Obamacare is adding to the cost of coverage, on average. The law includes various fees, coverage requirements and new regulations that boost the cost of coverage.

But Obamacare raises not only costs, it also raises various taxes to pay for subsidies to tamp down the cost of individual insurance coverage.

By my calculations, those subsidies will cover the increase in premiums in its entirety for all Anthem customers with household incomes up to $30,000 who buy single coverage. The subsidies will also cover all families of four, buying family coverage, with household incomes up to $94,200.

Using data from Anthem and the Kaiser Family Foundation, I calculated that about 80 percent of exchange customers that qualify for an Obamacare subsidy would end up paying less next year than they would have this year—for the same level of coverage.

But what I didn’t factor in last week was that only 63 percent of Hoosiers buying individual insurance coverage have household incomes low enough to qualify for an Obamacare subsidy, according to an analysis of Census data by the Center on Budget and Policy Priorities.

If you multiply that 63 percent by the 80 percent of subsidy recipients that will pay less, you find that 50 percent of the total individual market will pay less next year. Of course, the other 50 percent will pay more.

My apologies for goofing up the numbers last week. This stuff is complicated.
 

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  • it's complicated
    You hit the nail on the head with your last sentence, "This stuff is complicated." I've read numerous articles, and read hundreds of projections on possible costs, and they are all over the map. Do you really think $407 per month- per person- for a plan that covers only 70% of claims (after deductibles and co-pays) even remotely qualifies as "affordable"? They need to come up with a system that breaks the connection between one's employment and one's health insurance. Let's just hope that nobody ever decides to come up with a government plan for "affordable" auto insurance!
    • And Lower the middle class
      This is awesome! I will end up just over the $94,000 mark and work every day. So I can pay 90% more to make sure that those who don't/can't work can have the same lifestyle as I do. I think this is fair. (How do you show sarcasm in the written word again?) I hate socialism because all it does is make me question if I should try to product less and join the takers!
      • i HOPE it CHANGES
        I'm sure this is not the Hope & Change BO promised. His Affordable Health Care is certainly not either. It is going to kill businesses IF it ever actually comes to fruition. The Senate, Congress and White House should have the same coverage they are "providing" to the American public. And how much are insurance companies wasting (which will be passed on to us) in reading, printing and re-reading and re-printing information for their cusmoters every time the wind blows? What a sick joke.
        • part-timers
          I am sure this has been addressed by others; I have not seen too much written about it to date, but one major issue is that with so many workers having hours reduced to part-time status, does this not reduce the amount being paid into Social Security and what will be the effect of those reduced contibutions down the road, both on the system itself and the future benefits for the worker? Add to that the reduced (or eliminated) contributions to retirement accounts, 401K's, college savings etc. and now we have yet another unforeseen consequence of this plan. There is no doubt insurance is a vital part of everybody's financial plan, but I personally never planned on health insurance premiums alone (never mind auto, home, life, etc.) eating up such a disproportionate share of my budget.
        • Just One Part of It
          There will be premium joy and premium shock. If you qualify for subsidy you may have premium joy. What has to be taken into consideration is the plan design. These plans are all HMO that have no coverage out of network. So if you are use to a certain level of health care giving you flexibility, these plans may come as a shock to you. Premium shock is going to happen to the families that make more than the 400% FPL. We don't know what the true impact will be but we know it's going to be tough for middle class Hoosier to take on. www.indianahealthinsuranceexchange.com www.indianahealthinsurance.com
        • Cost sharing
          Steve, if income is under 250% of FPL then the insured may be eligible for cost sharing. Cost sharing is where the government will subsidize actual medical claims. So the Actuarial value may be closer to 94%.
        • There will still be Options
          There will still be options outside the exchange. Find a good broker like myself that will find you the best possible deal.
        • Congress
          Elain, Congress has to go onto the exchange plans starting 1-1-14. It was written into the law:)
          • You know why?
            ...it's so 'complicated' cuz the insurance companies game the system to their advantage ALWAYS and the only way to change the game is to offer single-payer universal health care for ALL Americans (and if you still want to pay Anthem executive bonuses/ stock options go right ahead!) 50,000 of our fellow Americans die every freakin' year (that's 16X the number who died on 9/11) to lack of health insurance and yet Repugnants in Congress continue to make them die, for profit...and until we take the corruption of $$$ OUT of politics Americans will continue to die! Now we spend TRILLIONS to fight 'terror' abroad which is ridiculous when millions of people are suffering and dying at home of REAL illnesses
          • Cost of "subsidies"
            Forgive me if this question has been answered. The subsidies promised seem very generous and reach far up the income ladder. These come at what price to the federal government? Someone has to pay for the subsidies either via reduced service, higher taxes, or higher health premiums. Where will the money come from and how much is it?
            • Article is a misrepresentation of the Facts.
              The article appears to have been written to please a certain political segment. The article certainly doesn't represent all of the facts. In the long term the rates will equalize and reach market rates. Indiana needs to participate in both the Medicaid expansion and also the State run exchanges. Politics are out-weighing good policy decisions. The Health Care Act is not perfect but right now politics are getting in the way of any policy fixes. It is an embarrassment and a shame because inequalities in health care are the most inhumane injustice we have today.
              • apology accepted
                JK, I knew you weren't totally on the mark with your last article trying to convince us that health insurance was going to get cheaper for the masses. I still think your perspective that it will cheaper for 1/2 and more expensive for the other 1/2 is optimistic. That being said, I appreciate your willingness to admit your error in previous assumptions/conclusions. It takes guts to admit that; most people nowadays won't!
                • Cost of subsidies
                  Eric, In February, the Congressional Budget Office estimated the federal government would spend spend $28 billion next year for exchange subsidies and related costs, with the number rising to $122 billion in 2017. See the report here: http://www.cbo.gov/sites/default/files/cbofiles/attachments/43900_ACAInsuranceCoverageEffects.pdf. CBO estimates the average exchange customer that qualifies for a subsidy will receive an upfront tax credit of $5,500 to pay for insurance. Indiana officials predict about 500,000 Hoosiers will buy in the exchange and qualify for a subsidy in 2017. So that would generate subsidies of $2.75 billion in Indiana in 2017.
                • RE: apology accepted
                  gojeepdog, Thanks for your response. It's really hard to know what's going to happen. For instance, the Daniels administration estimated that only 8% of Hoosiers that buy through the exchange in 2017 will have incomes that are too high to qualify for a subsidy (vs. 37% currently buying individual insurance that have incomes too high for a subsidy). If I had used the 8% prediction when I reworked the numbers, rather than the 37% figure, then my conclusion would have been, again, that the majority of Hoosiers in the exchange will pay less for coverage next year, not more. It is certainly the case that Obamacare will raise the overall cost of health insurance. But it shifts a lot of that cost onto taxpayers in an attempt to reduce the cost-shifting that now occurs from the uninsured onto the commercially insured. It's completely legitimate to criticize that as a policy, but when doing so, it's important to criticize the whole policy, not just one half of it. I was just trying to show people the whole, rather than the part.
                • Trusting Gov is a mistake
                  Leon - you appear to be someone who has faith in the promises made by a person/party in federal office... I cringe at your naivety. Politicians make promises they don't come remotely close to keeping all the time including our sitting President who forced this health care bill on us with bribery and arm twisting.
                • Current Members
                  Tony, you seem fairly well informed. I'll assume you are correct that Obmamcare will be used for future elected officials, but does that impact the coverage currently afforded to current and past memebers?
                • Viewpoint
                  Various national media sources have proven that the predictions are overly pessimistic in red states/overly optimistic in blue states. Indiana leadership is following the GOP rhetoric that ACA is horrendous and their chance to repeal must occur before it goes info effect and anyone actually starts to benefit from it. People seem to forget that the last decade + of skyrocketing insurance rates & decreased coverage is what brought this on.
                • BAD jeepdog
                  Saying insurance is more expensive for the "masses" misprepresents what this article is about. This is about individuals who buy their own coverage. The vast majority are covered by Medicare, Medicaid, and employer sponsered plans which will all benefit when the ACA is implemented.
                • But what about benefits?
                  You address premium costs, but not benefits. How many people are in the high risk pool that will now buy in the regular market - how many lack insurance because they can't afford the high risk pool? Are your measures of cost differences adjusted for richer benefits? Many have very thin coverage and skimp on preventative care to their hurt.

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