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Yes, Premiums Will Go Up
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Issue
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| Contributor | Imperator |
| Last Edited | Imperator Jun 19, 2013 06:39am |
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| Category | Analysis |
| Author | James C. Capretta |
| News Date | Wednesday, June 19, 2013 12:00:00 PM UTC0:0 |
| Description | Last month, the Manhattan Institute’s Avik Roy — joined by Lanhee Chen, Yuval Levin, and Dan Kessler — set off a firestorm by audaciously challenging the prevailing Obamacare-friendly story about what will happen to premiums when the law’s implementation begins in earnest in 2014. Specifically, Roy and the others disputed the initial news stories coming out of California, fed by state officials, which indicated that the premiums paid by state residents enrolled in the Obamacare exchange would be lower in 2014 compared with 2013. Indeed, according to state officials, the premiums charged by plans in the exchange would be an amazing 2 to 29 percent lower than comparable coverage in 2013. A true Obamacare miracle! The law’s apologists were exultant at the news, and said so in numerous columns and blog posts.
Of course, this never should have been believed by anyone. Obamacare is imposing a minimum benefit for insurance that is in excess of what many consumers purchase on their own today. And the law is imposing many new rules on what insurance companies can and cannot take into account when setting premiums. There is no experience anywhere indicating that these kinds of changes will lower premiums. And there’s an abundance of evidence from state experiments indicating that these changes will increase premiums, and probably quite substantially.
So Roy and the others were rightly suspicious of the spin coming out of California and decided to take a look themselves. What they found is that California officials were comparing the Obamacare exchange premiums with small-employer plans, not the existing individual market in the state. This was a completely inappropriate comparison. It is the enrollees in the individual insurance market who will have little choice but to get their coverage from the exchange next year. Employees of small businesses can still get their insurance outside of the exchange, and do so on a self-insured basis to avoid getting pooled |
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