Good News for Obamacare

From the Wonkblog we get this bit of good news about Obamacare.

In 2009, the Congressional Budget Office predicted that a medium-level “silver” plan ”” which covers 70 percent of a beneficiary’s expected health costs ”” on the California health exchange would cost $5,200 annually. More recently, a report from the consulting firm Milliman predicted it would carry a $450 monthly premium. Yesterday, we got the real numbers. And they’re lower than anyone thought.

As always, Sarah Kliff has the details. The California exchange will have 13 insurance options, and the heavy competition appears to be driving down prices. The most affordable silver-level plan is charging $276-a-month. The second-most affordable plan is charging $294. And all this is before subsidies. Someone making twice the poverty line, say, will only pay $104-a-month.

I checked my report for average health insurance premiums by state and the California number seems reasonable. Back in December I wrote the post, What if Individual Health Insurance Premiums do not go up as fast as expected, in which I speculated that lower than expected individual insurance premiums might be a likely result. It was based primarily on the fact that my health insurance premium was lower before Obamacare and doing nothing is a likely political compromise to avoid premium cost shock. For a large portion of the population the less we implement of Obamacare the better off we are. This was recently confirmed in a recent Fox News poll. So now I find myself in the odd position of rooting for increased incompetence in implementing Obamacare. Murphy rules and Obamacare supporters drool!

This month I wrote the post, Has Obamacare Started to Channel Jerry Macguire, when I noticed a pretty dramatic shift in health insurance premium estimates by the Kaiser’s Subsidy Calculator. I am still not sure why Kaiser changed their calculator but it does make Obamacare a lot more attractive to some people. It sure looks like Obamacare supporters have embraced the “Show me the money” mentality. Now we see the Washington Post report is echoing the same individual health insurance premium costs that I found in my previous posts.  So if we assume that all of these reports are true then we have a new set of questions to ask.

  1. What are large organizations going to do? In my post, Spending for Private Health Insurance in the United States, we can see that according to the NIHCM the price large organizations are paying for health insurance, $15,022, is much worse than the price being paid in the individual insurance market, $4,968. With further confirmation  by Kaiser and Milliman I was struck with the thought that somewhere along the way these large organizations are going to start believe that they are getting ripped off and their logical reaction will be to dump their employees into the exchanges. I don’t think the Obamacare supporters saw this one coming but the next logical step for these large organizations is to embrace a defined contribution approach to health care just like the small businesses who are using HRAs. It is time for large organizations to play a much smaller role in the health care for their employees. Zane Benefits has a plan to accomplish that. Isn’t that one of the major goals of health care reform?
  2. What are the high health care cost states going to do? According to the five highest health insurance premium states are Massachusetts, New Jersey, New York, New Hampshire, and Alaska. Their average health insurance premiums are much higher than California’s and Kaiser’s price. So if you are a resident of Massachusetts and your costs are $965 per month maybe it is time to ask your legislators for health care reform that lowers your cost. When your state’s health care costs stick out, it is likely someone in the state is going get  hammered.
  3. What is the health care industry going to do with the passive-aggressive health care consumer? One of the big differences between the people who are purchasing health insurance in the individual market versus the large group market is that they are savvy about health care prices. These consumers have mostly gotten over the health care hump and learned to shop for health insurance like they shop for auto insurance. It may be a shocker to some but they accomplished this without health care navigators. The large group participants on the other hand have not seen the health care hump let alone gotten over it. I expect they will exhibit a lot of passive-aggressive behavior until they get used shopping for health care in this brave new world. I cannot wait to hear the first reports of harried doctors complaining that their patients are asking them too many questions about costs and alternative treatments they cannot or do not want to answer. Life was so much simpler when no one cared about health care costs!