Washington Examiner: Philip Klein: Obamacare's rate shock hits the Buckeye state
Ohio Department of Insurance officials announced last week that average premiums in the Buckeye state would soar 88 percent once President Obama’s health care law kicks in. The news added fuel to an already raging debate over Obamacare’s effect on insurance costs.
Ohio’s insurance department disclosed that a total of 14 insurance companies had proposed rates on 214 plans to be offered through the federally run insurance exchange set to open on Oct. 1 and begin providing benefits in January.
“The department’s initial analysis of the proposed rates show consumers will have fewer choices and pay much higher premiums for their health insurance starting in 2014,” said Ohio’s Lt. Gov. Mary Taylor. Specifically, the study showed that the average monthly cost of insurance would rise from $223 to $420.
Supporters of Obamacare were quick to dismiss the news, noting that Taylor was a Republican and arguing that the study was misleading. The New Republic’s Jonathan Cohn, one of the most prolific defenders of the health care law, insisted that it wasn’t fair to compare average premiums, because that doesn’t account for differences in the quality of the plans.
For instance, he described that under the current system, one of the cheapest bare bones plans in Ohio costs just $29 per month, but could stick enrollees with annual out of pocket expenses as high as $25,000. Under Obamacare, out of pocket costs are capped at $6,350 for the cheapest “bronze” level plan.
But in his analysis, Cohn is doing what he often accuses critics of Obamacare of doing — cherry-picking a plan that results in the most outrageous number to demonstrate a point — in this case, $25,000 out of pocket costs. But even if we give up the idea of comparing average premiums, the announced Ohio rates don’t present a pretty picture for Obamacare.
Ohio regulators also announced that, “Projected costs from the companies for providing coverage for the required essential health benefits ranged from $282.51 to $577.40 for individual health insurance plans.” That means that the cheapest plan available under Obamacare in Ohio will be $282.51.
But according to a search of eHealthInsurance.com, a 26 year-old living in Cleveland, Ohio, could currently purchase an Anthem SmartSense Plus plan for $89.45 per month. That’s less than a third of the cost of the lowest Obamacare rate, as reported by Ohio regulators, and the annual out of pocket expenses for the Anthem plan are $6,000 — which is less than Obamacare’s bronze option.
In fact, under the current system, the same hypothetical 26 year-old could purchase a Medical Mutual plan with a $2,500 annual out of pocket limit, for $188.41 per month — still significantly cheaper than the least expensive Obamacare option.
Obamacare naturally drives up the cost of insurance because it requires insurers to cover those with pre-existing conditions and mandates that insurers offer a wide array of benefits, whether or not consumers want them. It also institutes a tax on health insurance.
To his credit, Cohn eventually acknowledges that, “Obamacare’s requirements really will make insurance more expensive relative to what it would cost otherwise” meaning that some people will end up paying more.
In general, if the law works as intended, older and sicker Americans who qualify for subsidies will find it easier to obtain affordable health coverage, but younger Americans with lower health care costs who do not qualify for subsidies will end up paying more.
Through the individual mandate, the federal government is hoping to coax enough healthy Americans into buying much more insurance than they’re likely to need, thus providing a windfall of profits to private insurers, who can then afford to cover sicker Americans.