The U.S. Government Accountability Office has released a new report that offers the most comprehensive data to date on the current costs of health insurance across all 50 states. At Wonkblog, Sarah Kliff used the report to compare the current costs of insurance to the predicted costs of insurance under the ACA (which, we’ve said, wonks should have been doing all along).Here’s what she found: “You’ll notice that the numbers in my chart [of current insurance prices] are significantly lower than those in HHS’s estimates of average premiums under Obamacare.” In other words, Wonkblog has admitted that Obamacare premiums, pre-subsidy, are probably going to be “significantly” more expensive than existing premiums. But, she continues,
I would caution against reading too much into that. Part of the difference is undoubtedly due to the Affordable Care Act: Premiums increase when sick people enter the market, and policies are required to cover more benefits. But another part of it is a less sexy issue of data formatting that makes the HHS and GAO data a bit of an apples-to-oranges situation. The HHS data are capturing both Obamacare policies and the cost of insuring older adults, and any comparisons to the GAO figures should probably be made with a massive grain of salt.
If we need a better comparison to accurately predict price differences, then wonks should be working hard at getting that comparison. In the meantime, as Kliff says, this is the best data we have, and it isn’t pretty.As it has become clearer to the public that (at least according to the best data available) Obamacare will raise, not lower, health care prices, ACA supporters have made two arguments. First, they note that existing plans may be cheaper, but they’re also “skimpy” and often come with high deductibles. So Obamacare is worth the higher costs it will impose. Second, they argue that even if premiums skyrocket, the subsidies will help make insurance affordable for most people.Related to this second argument, the WSJ published an illuminating piece on a key demographic for Obamacare: the healthy young. If they don’t sign up in large numbers, the measure will fail, but subsidies may not be large enough to make this happen:
Interviews here with more than two dozen single workers of modest income between 24 and 31 years old suggest that insurance plans will be a hard sell. Subsidies for 26-year-old workers range from $118 a month for someone earning under $16,000 to less than $1 a month for one earning $26,500, according to an analysis of insurance data.For [25-year-old Gabe] Meiffren, the cheapest available insurance plan he could buy with the subsidies would cost him $116 a month, with a $6,350 annual deductible. His subsidy would total $14 a month, based on his $25,000 annual income.
Because of this, Meiffren told the WSJ that insurance just “isn’t in the budget.” For all the optimistic talk of subsidies, they probably won’t be enough to keep many young people like him from reaching the same conclusion.