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.