Last week, Avik Roy, a former Romney healthcare policy advisor, wrote a post titled, “Rate Shock: In California, Obamacare To Increase Individual Health Insurance Premiums By 64-146%.” The post was picked up by large parts of the Republican blogosphere and has racked up over 1.2 million views in under a week. One part of Roy’s piece:
If you’re a 25 year old male non-smoker, buying insurance for yourself, the cheapest plan on Obamacare’s exchanges is the catastrophic plan, which costs an average of $184 a month. (By “average,” I mean the median monthly premium across California’s 19 insurance rating regions.) The next cheapest plan, the “bronze” comprehensive plan, costs $205 a month. But in 2013, on eHealthInsurance.com, the median cost of the five cheapest plans was only $92.
In other words, for the typical 25-year-old male non-smoking Californian, Obamacare will drive premiums up by between 100 and 123 percent.
Ezra Klein did the same searches Roy did. He found a plan for $109:
Click to buy the plan and eventually you’ll have to answer pages and pages of questions about your health history. Ever had cancer? How about an ulcer? How about a headache? Do you feel sad when it rains? When it doesn’t rain? Is there a history of cardiovascular disease in your family? Have you ever known anyone who had the flu? The actual cost of the plan will depend on how you answer those questions.
According to HealthCare.gov, 14 percent of people who try to buy that plan are turned away outright. Another 12 percent are told they’ll have to pay more than $109. So a quarter of the people who try to buy this insurance product for $109 a month are told they can’t. Those are the people who need insurance most — they are sick, or were sick, or are likely to get sick. So, again, is $109 really the price of this plan?
Ezra writes that Roy is not “just comparing apples to oranges,” he is “comparing apples to oranges that the fruit guy may not even let you buy.” Cohn piles on so bad you want to look away:
Insurance bids from eHealthInsurance are for new customers only. Insurers who sell to individuals—that is, insurers who sell in the “non-group market”—frequently raise rates dramatically, and unpredictably, because a particular group of customers have become too expensive to insure. In other words, if you buy on eHealthInsurance, you might get a reasonable rate the first year, only to experience eye-popping increases a year or two later. That won’t happen on the exchanges, because, under Obamacare, insurers can’t charge different prices to new and existing customers.
Roy responds to his critics:
The key thing to remember is that back when Obamacare was being debated in Congress, Democrats claimed that it was right-wing nonsense that premiums would go up under Obamacare. “What we know for sure,” Obamacare architect Jonathan Gruber told Ezra Klein in 2009, “is that [the bill] will lower the cost of buying non-group health insurance.” For sure.
In 2009, was Ezra saying that it’s ok that premiums will double for the average person, because a minority of people will pre-existing conditions will benefit? No.
I think it’s an unfair comparison to take the cheapest insurance program for the healthiest young adults today and compare it to rates in a system which is legally barred from discriminating in that way. So far, the universal rates seem to be coming in under expectations. We’ll see. Maybe there was some flim-flam about there being no trade-offs in Obamacare, especially for the young and healthy, back in 2009. But the real argument will take place when this is actually implemented. And it certainly won’t be fairly resolved by cherry-picking the cheapest plans now for the healthiest individuals and comparing them with predicted future costs.
The Dish will have our own experiment in buying Obamacare for our staff next year. We’ll keep you posted on what we find.