Health Insurance Premiums Projected To Soar in 45 States Under Obamacare


Reason 24/7

Well, now we know what's in it—the Affordable Care Act, that is—and that content is made up of hefty health insurance hikes for people in most states. According to a study by Heritage Foundation policy analyst Drew Gonshorowski, health insurance offered through Obamacare exchanges will cost more during the first year of the law than that offered beforehand for Americans in 45 out of 50 states.

From Town Hall:

A comprehensive 50-state study has found that insurance premiums will increase under the first year of Obamacare in 45 of 50 states. This finding flies in the face of President Obama's promise that his health care overhaul would cause premiums "for the typical family" to fall by $2500.

The study, done by the Heritage Foundation, uses a model to estimate what premium rates have been previously and what the new rates would be, using census data and averages provided by the Department of Health and Human Services. "Individuals in most states will end up spending more on the exchanges," policy analyst Drew Gonshorowski writes.

Costs vary depending on several factors, so Gonshorowski breaks down before and after premiums for 27-year-old adults, 50-year-old adults and families of four for better comparison. He finds that individuals and families in five states will, in fact enjoy savings as a result of the law. He writes, "This is because those states had already over-regulated insurance markets that led to sharply higher premiums through adverse selection, as is the case of New York."

To a large extent, the new law spreads regulations out beyond states that already adopted them, and attempts to conscript young, healthy people who previously skipped insurance into the system to subsidize older, sicker people's premiums—hence the assumption that already red-tape heavy states will benefit. Of course, the penalty for not buying health coverage is lower than the cost, so…

How this works out in practice, is that the monthly premium for a 27-year-old New Yorker before Obamacare is $500, expected to drop to $356 under the new law. Yay, savings—if the "young invincibles" show up. But in Arizona, monthly premiums for 27-year-olds average $102, expected to jump to $261.87 on the exchange. That's…not so bargain-ish. And Gonshorowski expects that to be far more representative of the national experience under Obamacare than the first-aid administered to the New York market's self-inflicted wounds.

Cost of buying health insurance before and after Obamacare
Heritage Foundation

Of course, premium cost projections are based on the assumption that you can actually get anything accomplished on one of the Obamacare exchanges. That's not such a safe bet.

Follow these stories and more at Reason 24/7 and don't forget you can e-mail stories to us at 24_7@reason.com and tweet us at @reason247.