Federal Obamacare exchanges cutting premiums by as much as a third

[Joe Republic]

Just like they were supposed to, and all via the tenets of capitalism; i.e. if you increase competition in the marketplace, consumer costs go down.  What exactly do the GOP have to hate about this aspect of the law again?

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[Marnetmar]

Oh yeah? Well well, well...You're just a gay communist heathen!

[bedstuy]

What exactly do the GOP have to hate about this aspect of the law again?e]

1.  They're all pawns of the insurance industry and big healthcare (pharma, pro-profit health systems, industry cartels). 
2.  Obama did it and he's black/Muslim/libtard/gay/poor incarnate.
3.  They don't know or care to know jack about healthcare or the insurance market.
4.  They have a black and white worldview where anyone who can't afford something doesn't deserve it.  It's basically the gospel of wealth and social Darwinism. 

[memphis]

Although you're right, you're arguing the wrong way, using key facts and historical examples. The Dems always do that and it gets them nothing. You need an overly simplistic analogy with shrill appeals to fear for the safety of children. Icing on the cake if you can tie in Jesus. That's the winning strategy in the real world.

[Lief 🗽]

Republicans don't give a flip about capitalism or free markets or competition or any of that nonsense. They just need a Big Lie to hide behind while they maim and murder poor people.

[DC Al Fine]

Just to clarify, are they talking about the average persons's out of pocket premiums or the out of pocket premium + subsidy when talking about how much it dropped?

[Sbane]

Just to clarify, are they talking about the average persons's out of pocket premiums or the out of pocket premium + subsidy when talking about how much it dropped?

The graphs above are for out of pocket premium without taking the subsidy into account. For some people who are near the poverty line, they might only have to pay $20-30 a month after subsidies.

[Torie]

Putting aside all the hyperbole on this thread, I would be interested in knowing how it is possible to cut premiums by a third (while presumably expanding coverage to meet the mandates for certain provisions to boot). If it is not subsidies, just how were the cost savings that large. What expenses were cut out, that insurance carriers normally pay?  How did it get to be such a big number? Oh, I see, it is by as much as a third.  I wonder what the average percentage number is. Is there some cherry picking going on?  Are these reductions going to hold?  If it is all real and true, and the cost cuts are really that large, than Kudos to that aspect of Obamacare. That would be just amazing.

[Joe Republic]

Putting aside all the hyperbole on this thread, I would be interested in knowing how it is possible to cut premiums by a third (while presumably expanding coverage to meet the mandates for certain provisions to boot). If it is not subsidies, just how were the cost savings that large. What expenses were cut out, that insurance carriers normally pay?  How did it get to be such a big number? Oh, I see, it is by as much as a third.  I wonder what the average percentage number is. Is there some cherry picking going on?  Are these reductions going to hold?  If it is all real and true, and the cost cuts are really that large, than Kudos to that aspect of Obamacare. That would be just amazing.

Did you look at the charts?  The more carriers there are in a single statewide exchange, the lower the average premium.  As I stated in the OP, more competition leading to lower prices for the consumer is one of the simplest aspects of free market capitalism.

[Mehmentum]

Forgive my ignorance, but wasn't the individual mandate also supposed to lower premiums?

[Linus Van Pelt]

What is actually being claimed, if you read the linked article carefully, is that rates on Obamacare exchanges in regions of the country with 10+ insurers offering coverage are 1/3 lower than rates on Obamacare exchanges in regions with just one insurer offering coverage. In other words, it is a comparison of current rates between regions, not a comparison of Obamacare prices to pre-Obamacare prices. For all that has been said here, there may have been interregional differences just as large between high-competition and low-competition regions of the country before the ACA as well.

[7,052,770]

Forgive my ignorance, but wasn't the individual mandate also supposed to lower premiums?

Yes, with guaranteed issue and subsidies for the poor,  the only people without insurance would be those who perceive themselves as healthy enough to risk going without it.
Therefore,  if they are required to be in the system too, they bring down the average claim per person.

[Torie]

Putting aside all the hyperbole on this thread, I would be interested in knowing how it is possible to cut premiums by a third (while presumably expanding coverage to meet the mandates for certain provisions to boot). If it is not subsidies, just how were the cost savings that large. What expenses were cut out, that insurance carriers normally pay?  How did it get to be such a big number? Oh, I see, it is by as much as a third.  I wonder what the average percentage number is. Is there some cherry picking going on?  Are these reductions going to hold?  If it is all real and true, and the cost cuts are really that large, than Kudos to that aspect of Obamacare. That would be just amazing.

Did you look at the charts?  The more carriers there are in a single statewide exchange, the lower the average premium.  As I stated in the OP, more competition leading to lower prices for the consumer is one of the simplest aspects of free market capitalism.

The charts don't give me an average or median percentage. Yes, I understand competition is good, and indeed the Pubs wanted more competition, and do (although the way they get there doesn't work well in practice given all the different state rules), but I am amazed that under the current regime, apparently the barriers to entry within states are so high some places, that the market is oligopolistic enough, and apparently the size of insurance carrier excess profits high enough, or the amount of expense fat within so gross, that prices were artificially pushed up by 30% or whatever the percentage is on average, over what would obtain in a non  oligopolistic market. I am further amazed that it failed to hit my radar screen that the distortions were that large, suggesting that heretofore they have not been written about much. Maybe some of the state rules were that horrifically bad in part.

[This user has not been convicted of 34 felonies]

Oh yeah? Well well, well...You're just a gay communist heathen!

[Torie]

Oh yeah? Well well, well...You're just a gay communist heathen!

I'm batting 2 out of 3 on that one.

[King]

I'm worried people still don't understand it even as they see it.

I have a fairly poor uneducated friend complain yesterday that when he tried to buy insurance for him, his wife and daughter the premium was a whole $200/month AND THEN he has to pay some $125 tax subsidy!?!?!   YOU 0BAMA I DON'T WANT TO PAY FOR WELFARE QUEENS

I managed to explain to him that a subsidy is something he gets paid.  He still wasn't convinced.  He can't be the only one.  Especially the poor ignorant anti-Obama crowd who is coming into this with the disposition that they don't want it anyway.

[jimrtex]

Putting aside all the hyperbole on this thread, I would be interested in knowing how it is possible to cut premiums by a third (while presumably expanding coverage to meet the mandates for certain provisions to boot). If it is not subsidies, just how were the cost savings that large. What expenses were cut out, that insurance carriers normally pay?  How did it get to be such a big number? Oh, I see, it is by as much as a third.  I wonder what the average percentage number is. Is there some cherry picking going on?  Are these reductions going to hold?  If it is all real and true, and the cost cuts are really that large, than Kudos to that aspect of Obamacare. That would be just amazing.

They may have mixed up cause and effect.   First take a look at the Florida chart here.

http://about.bgov.com/2013-10-08/exchange-competition-cuts-health-insurance-costs-bgov-insight/

Then go to here, Select Florida, and the age of 40, which is the age the chart is based on.

Health Insurance Marketplace Premiums for 2014 Databook

Each state has a number of "rating areas", which in Florida appear to be identical to counties.   Rating Area 43 is Miami-Dade, which has 9 issuers.  Collectively they are writing 40 Bronze policies.  The cheapest is $198.42.   Go back to the chart and find an orange square at (9, $198.42).

Why are they using the cheapest price?  The minimum price for the 40 bronze plans in one county is most likely an outlier, and non-representative.  Even the rating areas with a single issuer have 6 bronze plans.  Why is one cheaper than the other 5?

The rating area with 9 issuers is Miami-Dade.  Those with 8 providers are Broward and Palm Beach.   The next with 6 plans include Hillsborough, Pinellas, and Pasco in the Tampa area, where the lowest cost plan is the same in all three counties, likely by the same issuer.  Other areas with more issuers, include the Orlando area.

21 of the 64 counties have a single issuer, likely Blue Cross/Anthem.  Now if you are an insurance company executive, why wouldn't you go into these more rural areas where you have only one competitor?   Most likely reason would be lack of providers.   If you have enough patients, why would you sign up to take insurance payments from an issuer that is low-balling premiums and low-balling payments for services?

But what about Miami.  There is likely more competition, including doctors educated in other countries.  So consumers who sign up with the cut-rate provider may have to go to a doctor who speaks Guarani, or pay extra for an out of network doctor.

[Sbane]

Putting aside all the hyperbole on this thread, I would be interested in knowing how it is possible to cut premiums by a third (while presumably expanding coverage to meet the mandates for certain provisions to boot). If it is not subsidies, just how were the cost savings that large. What expenses were cut out, that insurance carriers normally pay?  How did it get to be such a big number? Oh, I see, it is by as much as a third.  I wonder what the average percentage number is. Is there some cherry picking going on?  Are these reductions going to hold?  If it is all real and true, and the cost cuts are really that large, than Kudos to that aspect of Obamacare. That would be just amazing.

I don't know what they were comparing it to, but an average 27 year old even without subsidies won't pay much more than $200 a month for insurance. There is no way you can disagree with that.

[Sbane]

Putting aside all the hyperbole on this thread, I would be interested in knowing how it is possible to cut premiums by a third (while presumably expanding coverage to meet the mandates for certain provisions to boot). If it is not subsidies, just how were the cost savings that large. What expenses were cut out, that insurance carriers normally pay?  How did it get to be such a big number? Oh, I see, it is by as much as a third.  I wonder what the average percentage number is. Is there some cherry picking going on?  Are these reductions going to hold?  If it is all real and true, and the cost cuts are really that large, than Kudos to that aspect of Obamacare. That would be just amazing.

Did you look at the charts?  The more carriers there are in a single statewide exchange, the lower the average premium.  As I stated in the OP, more competition leading to lower prices for the consumer is one of the simplest aspects of free market capitalism.

The charts don't give me an average or median percentage. Yes, I understand competition is good, and indeed the Pubs wanted more competition, and do (although the way they get there doesn't work well in practice given all the different state rules), but I am amazed that under the current regime, apparently the barriers to entry within states are so high some places, that the market is oligopolistic enough, and apparently the size of insurance carrier excess profits high enough, or the amount of expense fat within so gross, that prices were artificially pushed up by 30% or whatever the percentage is on average, over what would obtain in a non  oligopolistic market. I am further amazed that it failed to hit my radar screen that the distortions were that large, suggesting that heretofore they have not been written about much. Maybe some of the state rules were that horrifically bad in part.

No one wanted to participate in the individual market before. That was the problem. Now, with the threat of the tax penalty, and perhaps more importantly, the subsidy, many more people are joining the individual market. Many of those people are healthy (before only those who were unhealthy would be interested in finding insurance in the individual market) which is lowering rates. More people are in the market, thus spreading the risk, which is lowering rates. It will remain to be seen whether the insurance companies priced things correctly. If they didn't, and many healthy people still don't join the market, then prices will go up next year. Unfortunately the penalty is so low this year that it might happen. In the long run I think things should be fine. I still don't understand why you hate Obamacare so much, since you seem to agree with so much of it when you are pushed on what you would propose (except for age rating, to which you seem to have a religious objection).

[Sbane]

Also, I do appreciate Jimrtex's post in this thread. Keep up the fear of the "others" pubbies! It will help you lose many, many elections!

[Torie]

I don't want to talk about Obamacare tonight sbane. I'm high and happy and looking forward to Dan's return, so why spoil the mood?  You pointed out the lack of flexibility, I pointed out the HMO model issue, and I don't want to think of the whole list right now. I don't hate Obamacare, I just worry about its fiscal impact in the way it is designed (don't like the employer waiver for a year either). But it is far better than the cf we had before, which was an impertinence and an outrage.

I have this fantasy that if I were in Capitol Hill, I could have cleaned up the Pubs act some, even if only by embarrassment. There is some merit to the Dem's claim, that it has been all politics all the time with the Pubs on this issue, particularly inasmuch as they never produced a coherent alternative, except on his own, speaking for himself, the Ryan plan, which even as amended was flawed. So there you go. Be merciful. It is all just so complicated (F, I learn something seemingly every few days, the good, the bad and the ugly). I am sure given the problems in getting it going, the Administration would agree as well. Some of it is just unavoidable, particularly given the issue of absorbing those with pre-existing conditions.

[Sbane]

Haha, yes be high and enjoy. Discussing politics in these times is just a downer, unfortunately. Keeping politics aside for a second, I think the Obamacare exchanges will be a success if the penalties for not having insurance are kept high enough. Of course, that doesn't mean that it is perfect. I think allowing people more choices is a good thing, whether it be in terms of coverage (which would have to be clearly spelt out to people by law) or in terms of deductibles/copayments/coinsurance. Those who don't foresee getting sick should have more choices, or should be able to have a more comprehensive prescription plan if that is what they will use, with higher deductibles for a medical/hospital plan.

More choices are good, and I like Obamacare because it gives people, especially those stuck in the individual market, more choices. That doesn't mean it is perfect and that the people couldn't be given more choices.

[jimrtex]

What is actually being claimed, if you read the linked article carefully, is that rates on Obamacare exchanges in regions of the country with 10+ insurers offering coverage are 1/3 lower than rates on Obamacare exchanges in regions with just one insurer offering coverage. In other words, it is a comparison of current rates between regions, not a comparison of Obamacare prices to pre-Obamacare prices. For all that has been said here, there may have been interregional differences just as large between high-competition and low-competition regions of the country before the ACA as well.

First, the comparisons are based on the cheapest plan in each rating area.  Even in rating areas with a single issuer there can be multiple "bronze" plans, etc.  There must be some difference.

In Florida the rating areas are the same as counties.  Many of the more rural counties have one issuer.  It exaggerates the effect to include all of these counties.  With relative few providers, there is less competition.  If an insurer tries to low-ball the doctor, the doctors will refuse to take patients from that insurer.  It there are no doctors who will take your insurance, the issuer won't sell many policies.

In Miami-Dade, there are 9 issuers, and 8 in Broward and Palm Beach.  We don't know that they have lower cost policies, we know one issuer had a low cost policy.  Miami likely has doctors from outside the US, who might be willing to work for less.  But if you don't want these doctors, you are going to be paying out of network charges.

Texas has 26 rating areas, 25 corresponding to metropolitan areas, and one the rest of the state (177 counties).  This 26th region supposedly has 10 issuers (the most for any other is 7 issuers).  I suspect that these issuers are not issuing policies for the entire state, and so there is really not the cutthroat competition that one would expect with a large number of issuers.

There is a strong regional variation, with the cheapest rates in Brownsville, McAllen, Laredo, and El Paso, and the highest in North Texas, including Dallas, Sherman, and Wichita Falls.  Beaumont is also high.

Austin which has 7 issuers is among the higher cost plans.

Overall, the relationship in Texas is quite muddy, with a correlation between cost and number of issuers a negligible 0.08.  The trend line estimates that the cost increases $0.64 (64 cents) per month per issuer in the market.  I could get a much stronger correlation by doing like Daniel Patrick Moynihan and using distance from the border as the independent variable.

[jimrtex]

Just like they were supposed to, and all via the tenets of capitalism; i.e. if you increase competition in the marketplace, consumer costs go down. 

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Horrible methodology.

Use of the cheapest policy is about the worst way to compare areas, since it is likely to be the least representative.   For example in Palm Beach County, FL, the gap between the lowest priced silver and 2nd lowest priced silver is 31%, even though there are 46 silver plans by 8 issuers.  This suggests that one issuer has a low-ball policy that no one will want, or perhaps they or the HHS entered their plan incorrectly.  

The HHS has what appear to be data flaws.  In Florida, most single-issuer counties have 27 policies.  But a few have almost twice as many.  Did the single issuer suddenly double its policy offerings, or is there a second issuer.

Comparisons between states are worthless because they are being offered under each state's insurance regulations.  Alabama's rates are lower than Florida's, yet there are few issuers in Alabama (1 or 2).

The least costly premiums in the Minneapolis suburbs of Wisconsin are more than double those in Madison, is this because of the number of plans, or because the Wisconsin plans will be paying doctors and hospitals in Minnesota?