What's Really Going On With Obamacare Insurance Premiums?



You might have seen headlines recently trumpeting Obamacare's success at restraining health insurance premiums next year. One analysis, relying on early rate filings in major urban areas, actually found a slight drop in "benchmark" plans—a particular category of mid-priced plans sold through the exchanges.

But the story with premiums is, at minimum, more complicated than that. A new report in The New York Times, which digs through early rate filing data, does a good job of teasing out the complexities.

For one thing, as the Times notes, it's not all that helpful to just look at average prices, because "individual consumers don't buy the average plan. And the federal government doesn't pay for the average plan." And when you look beyond the averages, the premium changes we're seeing so far don't look quite so rosy, especially for those who stick with their current plans. "In many places premiums are going up by double-digit percentages within many of the most popular plans," the Times reports.

Now, it's true that in one sense, we're seeing a remarkable restraint in premium growth: Prices for the cheapest plans in the law's "silver" tier—the middle of the plan hierarchy, which must cover 70 percent of average costs—are expected to drop in some states, and rise just 1 percent overall.

But the cheapest silver plan last year is not necessarily the same as the cheapest silver plan this year. So if you're already in the system, and you want to keep your premium from rising, that means you'll probably have to switch to a different plan, with a different payment configurations and a different network providers.

On the other hand, if you're on the cheapest plan from last year, and you want to stay in your plan—or if you bought through a federally run exchange and decide to accept the auto-renewal system that the administration has set up—then you're probably in for big price hikes. "Those prices are going up almost everywhere," the Times reports. "In some cases, they have increased by more than 10 percent. The average increase is 8.4 percent."

So you can keep your premium—or you can keep your plan. But in many cases, you can't keep both.

There are potential upsides here. In theory, it could teach people buying through the exchanges to shop around more frequently, which could create a more cost-effective, competitive health insurance ecosystem. The fact that the low-end of the silver tier is holding steady suggests that insurers may, in fact, be looking to compete with each other on price. Most of the inexpensive plans next year are new entrants, or are plans with fewer members, looking to price low in order to gain market share.

But how long can that go on? If low-prices exist only as teaser rates, designed to lure in customers whose premiums will be hiked later on, then what we're really seeing may not be meaningful cost-restraint so much as artificially low prices that aren't sustainable over time.

And to some extent, all the premium prices we're seeing right now are artificial, or at least experimental, because they are built on the expectation of a significant federal subsidy in the event of unexpectedly high claims costs. Obamacare's "risk corridors" program—often referred to as its insurer bailout—runs through 2016, and it allows insurers to experiment with potentially unsustainable low pricing. Insurance industry consultant Bob Laszewski recently wrote that he's heard "reports of actuarial consultants going around to the plans that failed to gain substantial market share suggesting they lower their rates in order to grab market share because they have nothing to lose" thanks to the way Obamacare covers insurer losses.

As Laszewski also notes, there's not much in the way of claims data so far, so insurers don't really have good information about the expected costs of the exchange population, which means the rates they are setting are heavy on guess work. 

The big picture here is that it's hard to tell what's going on with Obamacare premiums. Prices on popular plans are pretty clearly going up, but there does seem to be some effort to compete on price, at least for now. But how long will that last? And how big a success is it really if it requires hefty federal subsidies for both individuals and insurers? 

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  1. Even if premiums actually drop next year, that doesn’t make up for the 40% hike they’ve already gone through.

    1. I must type slow. Same thought, a second late.

      1. Shouldn’t have tried to brag about being first.

  2. Drop from where they would have been without ACS or a drop from the ACS original increases?

    Kind of like the “deficit reduction”. First double it… the make minor reductions after that.

    Seriously? Am I first?

    1. First double it… the make minor reductions after that.

      And shriek will be along to defend The President (PBUH) using exactly this “logic” in three, two….

      *lights shriek signal*


      2. Peanut Gallery wrong once again! /shreektard

  3. What’s Really Going On With Obamacare Insurance Premiums?

    They’re fucking US citizens in the ass? Am I close?

    1. Without even the courtesy of a reach-around.

    2. And the jalape?o lube isn’t going to begin burning for a while??..

      1. Jalape?o lube? On a stick?

  4. In theory, it could teach people buying through the exchanges to shop around more frequently, which could create a more cost-effective, competitive health insurance ecosystem.

    With all due respect, aren’t the highly-touted “Navigators” supposed to help witHAHAHAHAHA! Sorry, couldn’t quite pull it off!

    1. don’t you kids ever get tired of embarrassing yourself?

      1. joshrendell|9.19.14 @ 3:46PM|#
        “don’t you kids ever get tired of embarrassing yourself?”

        Lefties have a hard time understanding; try again.

  5. Bait and switch:

    ‘Come get our low, low prices on our most popular model.’
    ‘OK, now how about the tires?’
    ‘Well, those are included in our co-pay program, or you can upgrade to…’

    Even the lefty rag Chron was bitching about how the plans don’t exclude anyone with existing (no, I’m not going to redundent-land with “pre-existing”) conditions, they just kick the co-pay and drug charges through the roof.
    Nothing is free.

    1. Someone was talking about that the other day. They characterized it as the premiums for someone with an existing condition amount to “how much money do you make?”

      Obama just said he would give sick people insurance. He never said they could afford it. Of course if they can’t afford it, they will be punished for that crime via the penaltax.

      1. is that your idea of an intelligent
        remark? what’s the matter? is fox news
        blocking comments again

        1. joshrendell|9.19.14 @ 3:47PM|#
          “is fox news
          blocking comments again”

          Is that your idea of an intelligent comment?

        2. joshrendell. Why do you hate poor people ?

  6. My brain is beginning to reflexively replace “Obamacare” with “chocolate ration”.

    1. Hey, what are the odds that the consulate in Benghazi was running weapons to the group in Syria that is now known as ISIS?

      “We have always been at war with Eastasia!”

      1. There is no way they weren’t. You tell me one reason to think the PC Muslim Brotherhood loving Obama White House made any effort to exclude radical Islamist parts of the Syrian resistance from getting US aid?

        1. It would certainly explain a lot of the stonewalling and coverup that they’ve been doing.


    2. ??? you have a brain?

      1. joshrendell|9.19.14 @ 3:48PM|#
        “??? you have a brain?”

        Yes. But lefty brain-deads usually find it hard to understand anything.

      2. You don’t. That’s why you are so astounded.

  7. Um, this is all very interesting, but I hope you remember to cover the most important issue of today:


    1. this all *be* very *interestin’*

    2. So we can combine Slap Ass Friday with Talk Like a Pirate Day.

      “ARGH!” *SLAP!*

      1. It be “ARRRR,” not “ARGH!” ye landlubber!

        1. “ARRRRR”

          1. Arrrr, that be the ticket, now swab the decks, or I’ll give ye all the “Jolly Roger,” if ye know what I mean and I be thinkin’ ye do.

    3. I’m waiting for Talk Like James T. Kirk day.

      1. Khaaaaan!

      2. With my …. extensive use of … points … of ellipsis … I’m often … CONFUSED …. with the good Captain. “I need more POWER, Scotty!”

  8. None of this would ever happen under a single payer system.

    Incidentally, I do support a single payer income tax system. One where we all pay the same rate. And that rate is zero.

    1. I’m sure most 4 year olds would agree with you

      1. joshrendell|9.19.14 @ 3:49PM|#
        “I’m sure most 4 year olds would agree with you”


      2. Actually, kids detest wealth redistribution when it is applied to their earned Halloween candy. So your comment is correct. It typically takes about a dozen years in a public school system to indoctrinate that out of them.

        Of course, reasonable adults also agree.

  9. “There are potential upsides here. In theory, it could teach people buying through the exchanges to shop around more frequently, which could create a more cost-effective, competitive health insurance ecosystem.”

    I’ve gotta hand it to Suderman for being meticulously…fair to the opposition.

    Do you realize how hard he had to look for some way to say something nice about this–to be fair to his opponents?

    I think that’s great.

    It’s sort of like those Progressive insurance commercials.

    The bad news is your premiums are going up between 8.4% this year (on a silver plan), or you have to drop your plan every year and find another one, or, if you’re not in a silver plan, your premiums are going up by double-digits…

    …but the good news is you get to shop for a new insurance plan every year!


    1. Well, it wasn’t quite a silver lining; lead is all O-care’s got.

    2. Yeah, it is like saying the upside to food shortages is ending the obesity problem.

  10. So let’s review…

    Double-digit increases in premiums.

    Deductibles have risen by around 40%.

    What was ObamaCare supposed to do, again?

    1. And of the 40M uninsured, it’s looking like 2.8M now have insurance.
      If Obo isn’t lying to us.

      1. It won’t be reformed until after Obama is gone, but you gotta think this trend is likely to continue…

        Come November 2016, I doubt the Democrat candidate will be defending ObamaCare.

        …and they will be calling it “ObamaCare”!

        They’ll just have a competing reform proposal. There’s no way the Democrat candidate is going to want to defend this.

        If Liz Warren were the nominee, even she wouldn’t defend this crap.

        1. Exactly Ken. This monstrosity is going to be gutted and effectively repealed. And it will be the Democrats who do it. They just won’t call it “repeal” so that the various half wits who supported it can keep some of their dignity.

          The political compromise will be as follows, Obama care gets repealed in the form of some bipartisan reform that eliminates the worst aspects of it and in return it won’t be called “repeal” so the Obamabots can claim “Obama saved health care after we made a few tweeks”. The Republicans will take the deal because they will be under incredible pressure to do something positive. The Democrats will take the deal because it will allow them to get out from under being completely responsible for this disaster. A bipartisan gutting puts both parties on the hook again.

      2. So, I’m just guessing, but maybe the average middle class household is paying $5K more per year because of Obamacare? Across 50M middle class households that comes to $250B in extra cost to subsidize 2.8M additional insured, which is only $89,000 per new insured individual. Sounds like a deal to me.

        1. Between the two plans in our household, the increase was $4600/yr. And both plans are lesser products to what we had before.

    2. It was supposed to pave the way for government run healthcare. Thing is, it couldn’t work too good or nobody would accept changing it. So it had to have flaws. Combine the intentional flaws with the government’s ability to fuck up a wet dream, and this is what you get.

      1. Yeah, the problem with that plan, where the government runs things so badly, everyone will want the government to take it over completely, definitely has a flaw in it somewhere.

        1. I didn’t say it was a good plan, or had any chance of success. Remember that some of the people involved in this worry about islands capsizing. We ain’t exactly dealing with Machiavelli here.

          1. Yeah, I know.

            I’m agreeing with you.

            I didn’t have a seat at Obama’s planning meeting either…

            It’s just that the Obama people–if they really think like that–are either making a strategic mistake, or they think very little of American voters.

            I guess I don’t think much of progressive voters like Tony, either. …but I’d still like to think most people still aren’t so far gone.

      2. There is more than that. It was supposed to have a public option. That way when people lost their insurance and various companies got out of the medical insurance business, people would end up on the public option. Gradually, you get enough people on the public option and you hit a critical mass and you transition right into single payer.

        With the public option, all of this shit is a feature and part of the plan as it forces more and more people into the ever expanding single payer system.

        The problem is they couldn’t get the bill passed with the public option. So they stripped it out. The problem is that without the public option, the bill just because a giant machine that destroys people’s health insurance and replaces it with nothing.

        I honestly think their plan was to pass it then and then come back later and re-insert the public option. This is why they put off it going into effect. It gave them time to go back and fix it and put in the public option. They believed their own bullshit and thought passing it was going to be a huge political boon and after they cleaned up in the 2010 midterms, they would go back and put in the public option.

        The problem is they didn’t clean up in 2010. They got killed. So putting in the public option and fixing it was no longer an option. Everything that has happened since then has been the Democrats trying to either live in denial of the impending disaster or somehow push it back a little more.

        1. Everything that has happened since then has been the Democrats trying to either live in denial of the impending disaster or somehow push it back a little more.

          I think they’ve been taking advantage of the opportunity to harvest the email addresses of much of the country.

    3. it’s obamacare or single payer, goober

      1. Single payer as in each single person pays their own (free market) bill? Sweet!

      2. joshrendell|9.19.14 @ 3:50PM|#
        “it’s obamacare or single payer, goober”

        Predictions from brain-deads aren’t worth shit.

      3. Goober huh. You are a fucking racist.

      4. joshrendell|9.19.14 @ 3:50PM|#
        “it’s obamacare or single payer, goober”
        And that single payer is *so* good, right, asshole?

        “Legal aid groups sue state over Medi-Cal approval delays”
        “Medi-Cal – which previously covered only families with children, pregnant women and the disabled – was expanded to low-income single and childless adults under the new federal health care law, with the federal government paying nearly all the costs. But California, which started accepting applications in October, has struggled with a cumbersome approval process and a huge waiting list.”

        But not to worry, asshole, just like England and Canada, they’ll promise to get that worked out in the next 70 years (and counting!)

  11. Barack Obama.: Do you have health insurance, Phil? Because if you do, you could always use a little more, right? I mean, who couldn’t? But you wanna know something? I got the feeling…[whistles]… you ain’t got any. Am I right or am I right? Or am I right? Am I right?

    1. +1 Used Car Salesman-in-Chief

      1. That is an insult to used car salesman. No way anyone would buy a car from Obama. He wouldn’t last two days as a car salesman.

        1. True. He would just expect people to buy cars from him (because who wouldn’t want to buy from him after all?) and would get angry with them if they didn’t.

  12. If low-prices exist only as teaser rates, designed to lure in customers whose premiums will be hiked later on, then what we’re really seeing may not be meaningful cost-restraint so much as artificially low prices that aren’t sustainable over time.

    Cf. Minnesota’s exchange, where the carrier that provided 60% of Obamacare enrollees at rock-bottom prices just PULLED OUT.


    Gnashing of teeth at the greedy capitalists ensues at Daily Kos:


    1. Market failure!

    2. Fund it with electronic pull tabs. 😉

  13. my classmate’s ex-wife makes $86 every hour on the internet . She has been without work for 6 months but last month her paycheck was $19672 just working on the internet for a few hours. have a peek at this website …..

    ???????? http://www.jobsaa.com

  14. Suggested Obama strategy for dealing with ISIS: force them into Obamacare. It’ll destroy their morale and bankrupt them.

  15. Suderman asks how long this pricing scheme will last.

    Since insurers are competing for clients based on their quoted price, while thier losses are socialized via Obamacare taxes, it becomes a question as to whether politicians and voters will accept insurance company bailouts and to what extent.

    Three possibilities:

    1. We go down the road to free insurance for all, at taxpayers’ expense
    2. Voters reject Obamacare bailouts and watch prices rise or Obamacare is repealed
    3. Politicians continue to meddle in the insurance and medical marketplace, picking winners/losers and letting some insurance companies lose money to keep the unhappiness of voters to an acceptable level.

    Given the statist tendencies of the RINOs, I expect option 3 will result. Voters will have to wake up and be willing to give up government “entitlements” to get our freedom back.

  16. It sounds very interesting. I have heard that there are also nonprofit insurance companies which create good opportunities for people with low income. Since health insurance is a must people have to get money wherever it is possible taking different loans and even installment credits. This reduces social level of living and government maintenance is really needed.

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