Californians who buy their own health insurance will see their premiums soar by as much as 146 percent as a result of President Barack Obama's health care law, according to an analysis in Forbes.
Despite the state's claim last week that its health insurance exchange set up under Obamacare would decrease premiums, Forbes contributor Avik Roy found that the reverse is true:
Last week, Covered California—the name for the state’s Obamacare-compatible insurance exchange—released the rates that Californians will have to pay to enroll in the exchange. “The rates submitted to Covered California for the 2014 individual market,” the state said in a press release, “ranged from two percent above to 29 percent below the 2013 average premium for small employer plans in California’s most populous regions.”
That’s the sentence that led to all of the triumphant commentary from the left. “This is a home run for consumers in every region of California,” exulted Peter Lee.
Except that Lee was making a misleading comparison. He was comparing apples—the plans that Californians buy today for themselves in a robust individual market—and oranges—the highly regulated plans that small employers purchase for their workers as a group. The difference is critical.
Roy compared plan costs for a 25-year-old male buying insurance for himself: Under Obamacare, the cheapest ("catastrophic") plan for an individual will cost an average of $184 a month; the next cheapest ("bronze") will be $205 a month.
The average cheapest plan before Obamacare? $92
Under Obamacare, only people under the age of 30 can participate in the slightly cheaper catastrophic plan. So if you’re 40, your cheapest option is the bronze plan. In California, the median price of a bronze plan for a 40-year-old male non-smoker will be $261. But on eHealthInsurance, the average cost of the five cheapest plans was $121. That is, Obamacare will increase individual-market premiums by an average of 116 percent.
For both 25-year-olds and 40-year-olds, then, Californians under Obamacare who buy insurance for themselves will see their insurance premiums double.
Image source: Forbes
Roy analyzed variations across the state, comparing the median price of the cheapest plan for most Californians under the health care law to the median price of the cheapest plans on eHealthInsurance.com. The San Francisco Bay area is likely to be hit hardest, he found, along with San Diego and Orange counties.
“It is difficult to make a direct comparison of these rates to existing premiums in the commercial individual market,” Covered California explained in last week’s press release, “because in 2014, there will be new standard benefit designs under the Affordable Care Act.” That’s a polite way of saying that Obamacare’s mandates and regulations will drive up the cost of premiums in the individual market for health insurance.
Read the full analysis in Forbes.