A Big Win For ObamaCare

The Unaffordable Care Act finally gets a good headline:

Health Plan Cost for New Yorkers Set to Fall 50%

I credit Barack. And Hillarity!

FWIW, my guess is that numbers are probably not rigged. As the Times eventually explains, NY State had already gone through the notorious death spiral in the individual market, so ObamaCare's individual mandate and subsidies brought them out [Sarah Kliff of WonkBlog concurs]:

Individuals buying health insurance on their own will see their premiums tumble next year in New York State as changes under the federal health care law take effect, Gov. Andrew M. Cuomo announced on Wednesday.

State insurance regulators say they have approved rates for 2014 that are at least 50 percent lower on average than those currently available in New York. Beginning in October, individuals in New York City who now pay $1,000 a month or more for coverage will be able to shop for health insurance for as little as $308 monthly. With federal subsidies, the cost will be even lower.

Supporters of the new health care law, the Affordable Care Act, credited the drop in rates to the online purchasing exchanges the law created, which they say are spurring competition among insurers that are anticipating an influx of new customers. The law requires that an exchange be started in every state.

Well, it is not the exchanges that are driving prices down. The explanation comes in paragraph seven:

“We’re seeing in New York what we’ve seen in other states like California and Oregon — that competition and transparency in the marketplaces are leading to affordable and new choices for families,” said Joanne Peters, a spokeswoman for the Department of Health and Human Services.

No, that isn't it either, but for Times readers, isn't it pretty to think so? One last try, paragraph eighteen and following:

For years, New York has represented much that can go wrong with insurance markets. The state required insurers to cover everyone regardless of pre-existing conditions, but did not require everyone to purchase insurance — a feature of the new health care law — and did not offer generous subsidies so people could afford coverage.

With no ability to persuade the young and the healthy to buy policies, the state’s premiums have long been among the highest in the nation. “If there was any state that the A.C.A. could bring rates down, it was New York,” said Timothy Jost, a law professor at Washington and Lee University who closely follows the federal law.

Mr. Jost and other policy experts say the new health exchanges appear to be creating sufficient competition, particularly in states that have embraced the exchanges and are trying to create a marketplace that allows consumers to shop easily.

Earlier in the story, these estimates were offered:

The new premium rates do not affect a majority of New Yorkers, who receive insurance through their employers, only those who must purchase it on their own. Because the cost of individual coverage has soared, only 17,000 New Yorkers currently buy insurance on their own. About 2.6 million are uninsured in New York State.

State officials estimate as many as 615,000 individuals will buy health insurance on their own in the first few years the health law is in effect. In addition to lower premiums, about three-quarters of those people will be eligible for the subsidies available to lower-income individuals.

So the mandate and the subsidies are greatly expanding the pool of buyers and ending the death spiral, in which only the sickest and the wealthiest bought insurance prior to an actual need. This is not a matter of creating new competition, it is a matter ofmandating (and subsidizing) new customers.

MORE: Avik Roy of NRO thinks the Times is misoverestimating the current cost of individual insurance in NY.

Comments

[MarkO]

Goody.

[NK]

Uh Tom-- there are fewer mandates in ObummerCare (and yes higher Taxpayer subsidies) than NYS had imposed, so ObummerCare is cheaper than SheldonSilverCare-- quelle surprise!

[jimmyk]

Is it cheaper for the people who now don't buy insurance but will be forced to or pay a fine? They are the ones who will be subsidizing those whose rates go down, if indeed they do. And let's not forget the explicit subsidies that will be paid by taxpayers.

[Porchlight]

The new premium rates do not affect a majority of New Yorkers, who receive insurance through their employers, only those who must purchase it on their own.

Wait until the employer mandates kick in. Then the new premium rates will affect a whole lot more people who will find themselves no longer insured by their employers, or no longer (fully) employed at all.

[NK]

That said JimmyK-- we do have to acknowledge that there are some "winners" from ObummerCare-- immigrant doctors and healthcare union workers who are the recipients of the massive MedicAid expansion, and mass employers like Costco who can dump their employees into exchanges. Crony 'winners' to be sure-- the rest of us worker/TPs, and retired Worker MediCare beneficiaries we're the losers-- big time.

[NK]

Porch-- in stupid health insurance markets like NYS (gigantic mandates and no out of state policies allowed so no competition) the effect of ObummerCare won't be on premiums, but the effect will be as you suggest, NYS employers dumping workers into the State Exchange or making the workers 30 hr 'part-timers'. The Lib sheeple here will be shocked at what happens to them-- especially 'Nonprofit' entity workers.

[Tom Maguire]

Uh Tom-- there are fewer mandates in ObummerCare ..

I infer that you mean that unlike New York State the Feds don't mandate gold-plated wheels and a mink-covered steering wheel on the Cadillac coverage, so the Silver and Bronze federal plans can be cheaper, excuse me, more value-oriented.

A good point. But forcing people to buy something (and subsidizing many who do) is still the main price driver here.

[NK]

TomM@12:09 -- acknowledged and agreed. As I mentioned in a comment to jimmyK, there are a few 'winnahs' in ObummerCare and NYS is one of them, because its pre-existing' State Insurance laws were screwed up more than ObummerCare.

[Gus]

Was this actually an ONION story?
It's either a joke or the person responsible or this story "is retarded sir".

[Captain Hate]

Is there ever anything but lies that come out of Cuomo linguini hole? Like father, like son.

[Captain Hate]

"out of A Cuomo linguini hole"

[N. Y. Nick]

it could have been worded a little better to accommodate the petty. But do I get your gist, except that, well, it is so oblique that it begs the question, what's your point? :P

[Gus]

Out look DublinDana, the alliteration queen.
DuDu, Kaka, Bubu, etc etc etc.

[jimmyk]

Of course there are always some "winners" when government gets involved in micro-managing a market. The usual pattern is a small number of well-connected big winners (supporters of the party in power), and a large number of modest losers, many of whom may not recognize the true source of their losses.

[N. Y. Nick]

*** But I do get your gist, *** (argh!!!)

[jimmyk]

I meant to add: I put "winners" in quotes because the gains may be short-lived (as with the people who thought they'd won in the subprime mortgage scam), and essentially a bigger piece of a shrinking pie (see Greece).

[Extraneus]

Because the cost of individual coverage has soared, only 17,000 New Yorkers currently buy insurance on their own.

Yay, rates will fall for less than 0.1% of New Yorkers!

[Danube on iPad]

Unexpected: real wages have fallen 3% since Obama took office: Youths and ow-income workers hardest hit.

[jimmyk]

That's for those who still actually get a wage, which has fallen by more than 3%.

And inflation in June was at a 6+ percent annual rate. I'm sure that's not a harbinger of anything to come. Just a blip, nothing to see here.

[NK]

JimmyK-- Ben B and NY Fed pres Bill Dudley say energy/food prices are transitory, and Tablet prices are down, so inflation? NOT TO WORRY-- QE may taper someday, but it will continue to infinity and beyond!

[Rex]

I unfortunately live in NYS, and we pay (through my wife's employer) $300/mo for family, not individual, insurance, but we only pay 20% with the employer paying the other 80%. That means that the monthly cost of our family plan (which can't be varied; it's not a cafeteria plan) is $1,500 per month, or $18,000 per year.

And this is GROUP insurance, which everyone knows is cheaper than individual insurance.

So I have to wonder where Avik Roy is getting his numbers from. Individual plans can't be THAT much cheaper than family plans.

[N. Y. Nick]

Which do you think that Tray von Martin's parents would rather have; him ...., or the $1,000,000.00 that was awarded to them? Betchu they're chanting praise be to Allah!

[Ignatz]

What are the odds this story is just as accurate as the very similar one about CA rates a few weeks ago?
You know, the one that was a complete lie.

[Gus]

Well his Mommy was out of the picture, and Daddy lived 200 miles away from him, so, I'd say this was just a shake down.
Thanks for playing N.Y.DANA.

[narciso]

Crikey, not Timothy Jost, again.

[Dave (in MA)]

DuDu, Kaka, Bubu, etc etc etc.

Every time someone refers to "BuBu", I'm reminded of this that I ran across a few years ago.

[narciso]

They realized they were being 'much too silly indeed;

http://legalinsurrection.com/2013/07/asiana-airlines-reverses-decision-to-sue-tv-station-over-fake-pilot-names-broadcast/

[Captain Hate]

They realized they were being 'much too silly indeed

What number do I call to make a claim? If they crash into Gavin Newsome's house or Pelosi's I'll consider the debt paid in full. I can be flexible.

[Carl B]

Umm, maybe the numbers are rigged. If they are forcing new entrants into the marketplace, then the health plan cost for them just went up (unless 100% subsidized). I suspect if you include all those zeros in the equation on the pre-ACA side, then health plan cost on average, or median, would not be falling 50%.

[Carl B]

Another idea in non-static analysis: I'm guessing another major source of new individuals in the individual plan market are those whose employers dropped their coverage and are now forced to buy on their own. So the market is getting much bigger from both newly mandated insured, and those formerly insured by an employer plan.

[Carl B]

Interesting that the $1000 pre-ACA will fall to "as little as" (so, not average) $308. That's about 1/3rd. Interesting because the community rating ratio set by ACA is 3:1 (old/sick vs young/healthy). So the cheapest plan (for all those young people) can be no less than 1/3rd of what those higher-risk older people currently in the individual market (with guaranteed issue in New York) will pay.
Boom, force a ton of new people in the market with 1/3rd of the cost (statically, in reality the bottom and top rates will find some new equilibrium) and average costs go down 50%. But I doubt that people currently in the market will see their rates go down 50% -- I bet 20-30% at most, and primarily thanks to the new community rating ratio holding the maximum levels down.

[cathy_f]

The other question is whether the Times talked to the realistic insurance companies -- you know the ones who are NOT ramping up operations in the state because they have figured out that the uninsured are just going to pay the fine and there isn't going to be any big group of healthy uninsured who are going to sign up to pay premiums...

[Txantimedia]

The solution to this problem is obvious. Have all these brave, open-minded liberals walk down the streets of Chicago in the middle of the night to demonstrate how magnanimous they are. We would solve two problems at once; prove them wrong and rid the world of a few idiots.

Even Jesse Jackson isn't that stupid.