Even as Ted Cruz continued his parallel-universe effort to not-block implementation of Obamacare, the government on Wednesday morning unveiled insurance rates for those joining the new exchanges set up under the law. In short: costs will be lower than expected — in part because the plans will offer more limited options than expected. Assuming that its opponents don't undermine the whole deal.
A bit of clarification up top. The rates announced today don't apply to every American. They are the rates for those who lack insurance and want to sign up for coverage. By January 1, adults are required to either have coverage or pay a fine. To facilitate that coverage, the law created these exchanges.
Across the 48 states for which data were available, the unsubsidized monthly premiums could be as low as $70 for an individual and as high as $1,200 for a moderate plan for a family of four.
The average national premium for an individual policy will be $328 in 2014, before including any of the tax credits that will be available to low- and middle-income Americans to help them purchase coverage.
The report offers per-state averages, which we've mapped at right. The rates included in that map are those for the second-lowest-cost silver plan. There are three tiers — gold, silver, and bronze — with different packages in each. The gold plan covers 80 percent of costs; silver, 70 percent; bronze, 60 percent. The second-lowest-cost silver plan is used as the base rate to calculate subsidies. So if you live in, say, Iowa, the average cost for that plan in the state is $287. As The Washington Post's Sarah Kliff explained earlier this year, depending on your salary relative to the poverty level, you'll receive a subsidy linked to that second-lowest-cost silver plan. Unless you make four times the poverty level, though, you wouldn't pay that full price. It is, as critics have suggested, complex.
As ThinkProgress notes, however, in 95 percent of the cases, the new rates fall beneath the government's initial projections. The report itself notes that even before the tax credits, rates will be 16 percent lower than expected. After a report from the Kaiser Family Foundation earlier this month, this result was expected. It's important to point out, however, that those lower costs are due in part to the more limited offerings they comprise. The New York Times reported on that aspect earlier this week:
When insurance marketplaces open on Oct. 1, most of those shopping for coverage will be low- and moderate-income people for whom price is paramount. To hold down costs, insurers say, they have created smaller networks of doctors and hospitals than are typically found in commercial insurance. And those health care providers will, in many cases, be paid less than what they have been receiving from commercial insurers.
"Some consumer advocates and health care providers," the story continues, "are increasingly concerned."
Just as proponents of the law point to areas where costs are lower than expected, opponents of Obamacare (ideological, economic, or political) point to places they are higher. At Forbes, Avik Roy offers that argument, pointing out that the discounts advocates cite are from the government's projections, not existing costs.
[M]any 27-year-olds will face steep increases in the underlying cost of individually-purchased insurance under Obamacare. For the states where we have data—the 36 reported by HHS, plus nine others that we had compiled for our map that HHS didn’t report—rates will go up for men by an average of 97 percent; for women, 55 percent.
Part of the plan for Obamacare's success, of course, is getting more younger (healthier) people paying into the insurance pool. When President Obama started his push for enrollment in July, the emphasis was on getting young people involved. (For example.) That also means that young people are a point of pressure for the opposition, too. The creepy anti-Obamacare ads released last week are meant, in essence, to scare young people away from the government exchanges. They're by the Koch-funded group Generation Opportunity, which makes its goal more specific at the website OptOut.org. "This entire scheme is a huge handout to corporate interests — massive insurance companies, hospitals and drug companies," it reads. "Big government propping up big business isn’t OK." The site suggests absorbing the fine — $95 in 2014 — and getting a cheap, non-Obamacare-compliant plan on the open market. The goal isn't to ensure the health of young people, just to prove the political point and possibly save some money. How successful that push will be remains to be seen.
This is a complex, nuanced issue that is functionally irrelevant to most Americans and hasn't yet kicked in. Which makes it ideal for political grandstanding, as current evidence suggests. Whether or not that will continue to be beneficial will depend on how it affects pocketbooks.