Ezra Klein: Obamacare got some very good news on Thursday.
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.
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.
Sparer plans are even cheaper. A young person buying the cheapest “bronze”-level plan will pay $172 — and that, again, is before any subsidies.
California is a particularly important test for Obamacare. It’s not just the largest state in the nation. It’s also one of the states most committed to implementing Obamacare effectively.
We’re beginning to see competition drive down proposed rates in some exchanges around the country. Remember Maryland, where CareFirst grabbed headlines with a shocking 25 percent proposed increase in rates? Kaiser Permanente is only increasing its rates next year by 4.3 percent, a modest increase that will make CareFirst’s proposal almost impossible to sustain. My guess is when the exchange actually opens in October, CareFirst will have dropped its price substantially. If they don’t, then Kaiser and others will grab all the market share.
The way this competition can drive down rates is already evident in Oregon. There, one insurer came in with monthly premium costs in the $169 range, while other insurers asked to charge more than $400. But then, seeing what their competitors were charging, two insurers came back to the state’s regulators and asked if they could refile at lower rates. Otherwise, they wouldn’t be competitive in the exchange. The Obama administration was ecstatic to see this: It’s exactly what they’re hoping will happen across the country.
Of course, California and Oregon are managing Obamacare particularly well. Imagine it’s the end of 2014. California now boasts a working, near-universal health-care system. Nothing perfect, but clearly a a success after the first year of implementation.
Texas, meanwhile, is a bit of a mess. They didn’t allow the Medicaid expansion so the state’s poorest residents got nothing. They didn’t help with the exchanges, or the outreach, so there aren’t many choices, and premiums aren’t as low one might hope.
Viewed in isolation, Texas’s problems would be deadly for the law. But viewed next to California, they might mainly be a problem for the political class in Texas, which has failed to implement a clearly workable law.
Friday, May 24, 2013
Obamacare Slashing Rates in Exchange. High Bidders resubmit to compete.
The title says it all, or at least, is a good lead in to the Washington Post's Ezra Klein article lifted from his email to me. States the went kicking and screaming into health care exchanges will shortchange their citizens. Maybe businesses will relocate to healthier, less costly states? Ya think? Here's Ezra: