**Revision – See I Finally Figured Out Why The Health Insurance Rates Increased So Much in 30 Days for the explanation. In this case I think it is fair to say that the Department of Health and Human Services was incompetent rather than lying or in collusion with insurance companies.
For some time I wondered why the Kaiser Subsidy Estimator said I was not due a subsidy. The estimator said I should be able to find a plan for less than $4,750 a year but when I priced plans at www.ehealthinsurance.com it said the lowest bronze plan would cost a little over $12,000. This is not close! Although it is hard to find the web page on www.healthcare.gov, there is a web page that allows you to “window shop” the available insurance plans without logging in. I wrote about my experiences with the prices available in the post, Ohio Health Insurance Rates ”“ Curiouser and Curiouser. Once again I was puzzled why they had such low rates compared to www.ehealthinsurance.com and www.anthem.com. Then I saw an interesting report, Enrollment in Obamacare Exchanges: How Will Your Health Insurance Fare?, that said that the health care insurance for Ohio are going down compared to last year. If www.ehealthinsurance.com and www.anthem.com are correct then where were these people getting this erroneous data? Last week I solved the problem.
The source of the error was the Department of Health and Human Services. On September 24th, 2013, HHS released a table that “lists all health plans available in states where the federal government is operating the Marketplace”. So I downloaded the spreadsheet and looked up my data. It matched what the “window shopping” page said. For kicks I copied the prices from www.ehealthinsurance.com over to the spreadsheet and calculated how much the plans had increased in less than 30 days. Here is my report. It was 111%. When you round to the nearest integer every Anthem plan had gone up exactly 111%. Despite all of the differences between the plans the price increase was 111%. Hmm… that’s odd!
So I logged into www.healthcare.gov and copied the available policies for my family into the spreadsheet and calculated the price increase. Yeah, I got in. It helps if you have 30 years experience in IT. The first thing I noticed was that the price increase was 104% across twenty plans from five insurance companies. Wow, what a coincidence!
So what went wrong with insurance rates in Ohio in less than 30 days? I realize that climate scientists have set a pretty low bar for scientists but 104% in less than 30 days is a large, significant error. Why is the 104% price increase the magical number that all of the insurance companies agreed upon? Even though I am a skeptic I was at least hopeful that the Affordable Care Act would result in a more honest, bottom up pricing mechanism that would have resulted in some variation around 104%. Instead the price increase appears to be a top down decision with a rather large fudge factor added in. This top down decision making is what I see as the primary difference between a high cost state like Massachusetts and the rest of the country. Now we are left to ponder if this price increase is the risk premium that the Affordable Care Act brings to the table or Washington cronyism at its worst? It seems almost too convenient that many perfectly fine health insurance plans are being cancelled only to be replaced by a much more expensive plan with a higher deductible. Once again I am stuck with the question,
Was the Department of Health and Human Services incompetent, lying for political reasons, or something else when they released the insurance data one week before the exchanges opened?