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What’s ‘Affordable’ About the Affordable Care Act? California Premiums Set To Increase 64 Percent To 146 Percent

June 3, 2013 by  

What’s ‘Affordable’ About the Affordable Care Act? California Premiums Set To Increase 64 Percent To 146 Percent

Buyers of individual insurance plans in California are bracing for sticker shock as the Jan. 1 start date for President Barack Obama’s Patient Protection and Affordable Care Act approaches.

Covered California, the State’s healthcare exchange that’s being set up to offer a closed-market array of insurance plans that conform to the Obamacare vision, released projections last week that forecast anywhere from a 2 percent increase all the way to a 29 percent decrease in the cost of plans purchased under the exchange for individuals.

But Forbes contributor Avik Roy looked a little closer at the numbers behind that boast, and found it’s an apples-and-oranges comparison.

Last week, Covered California—the name for the state’s Obamacare-compatible insurance exchange—released the rates that Californians will have to pay to enroll in the exchange.

“The rates submitted to Covered California for the 2014 individual market,” the state said in a press release, “ranged from two percent above to 29 percent below the 2013 average premium for small employer plans in California’s most populous regions.”

That’s the sentence that led to all of the triumphant commentary from the left. “This is a home run for consumers in every region of California,” exulted [Covered California executive director] Peter Lee.

Except that Lee was making a misleading comparison. He was comparing apples–the plans that Californians buy today for themselves in a robust individual market–and oranges–the highly regulated plans that small employers purchase for their workers as a group. The difference is critical.

So what’s the difference?

Well, the absolute cheapest coverage a single young person can get through Covered California, the “catastrophic” plan, averages $184 per month, which itself equals the current median monthly insurance premium throughout California.

But if you want more — as in, comprehensive coverage you may already be accustomed to from any employer-sponsored plans you’ve held in the past — the price starts to jump. Comprehensive coverage through Covered California averages $205 a month.

For a single, healthy 25-year-old, the current average rate for basic coverage in California is $92 a month. A year from now, the $184 figure kicks in. And, once you pass age 30, you’re not eligible under Obamacare for the cheap “catastrophic” policy; you have to upgrade:

[I]f you’re 40, your cheapest option is the bronze [comprehensive] plan. In California, the median price of a bronze plan for a 40-year-old male non-smoker will be $261.

But on eHealthInsurance [in 2013], the average cost of the five cheapest plans was $121. That is, Obamacare will increase individual-market premiums by an average of 116 percent.

At the time the Affordable Care Act was passed, insurance company experts who foresaw the price surge Obamacare’s market-restricting regulations and qualifiers would bring about were eviscerated by the Obama Administration when they protested the changes. Insurers were portrayed as greedy monopolists whose stranglehold on artificially high rates was about to come to an end.

But it’s becoming clear that market greed pales in comparison to the hunger for power that fuels Obama’s most ambitious social experiment.

Ben Bullard

Reconciling the concept of individual sovereignty with conscientious participation in the modern American political process is a continuing preoccupation for staff writer Ben Bullard. A former community newspaper writer, Bullard has closely observed the manner in which well-meaning small-town politicians and policy makers often accept, unthinkingly, their increasingly marginal role in shaping the quality of their own lives, as well as those of the people whom they serve. He argues that American public policy is plagued by inscrutable and corrupt motives on a national scale, a fundamental problem which individuals, families and communities must strive to solve. This, he argues, can be achieved only as Americans rediscover the principal role each citizen plays in enriching the welfare of our Republic.

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