Will Health Insurance on Obamacare Exchanges Cost More Than People Are Paying Today?

I am not going to add to the confusion on this.  For a lot of people who already have health insurance, the answer will be "maybe".  Older folks and folks with health problems may see less expensive policies, and younger people will likely pay more.

I do, however, want to add two observations that are often lost in this discussion:

  • For the millions of people who have chosen not to buy health insurance and now will be forced to do so by law, they will certainly be paying more.  Anything is more than the "zero" which has been these peoples' preference to date.
  • A more interesting question is:  what will happen to premiums in the second year.  Right now, insurance companies are pricing as if all these young people who have not been buying policies will be forced to do so by the law (a key, maybe the key, funding source for Obamacare is forcing young healthy people to buy overpriced policies to subsidize older people).  What if they refuse?  After all, the penalties in the first several years are not very severe, and Obamacare removes any risk from not being covered, because if one gets sick he can just run and sign up then, like getting home insurance once your house is on fire.  The prices on the exchanges in 2014 will be very interesting.


  1. LoneSnark:

    I received a post card in the mail telling me my current individual policy will be discontinued on January 1st. I have no plans to sign up for anything else. I'm just going to rely upon the promise of being able to sign up whenever I need to.

  2. Joshua Vanderberg:

    I bet that the insurance agencies are underpricing relative to their internal estimates of participation. To price accurately would be political suicide. Obama himself would claim the Koch brothers are running their actuarial department.

    I think the insurance companies now realize the Faustian bargain they've signed up for and have accepted that they will probably have some heavy losses this year. Next year they'll reprice based on actual participation from the 2013 plan year. At least then the insurance companies will be able to say "Hey, we took a bath in 2013, and it's not our fault people didn't sign up".

  3. Joshua Vanderberg:

    The new Obama HSA. I'd bank your premium savings if I were you to cover out of pocket expenses.

  4. LoneSnark:

    I wouldn't be surprised if exchange premiums take savings into account.

  5. Nehemiah:

    The question is whether there will be private insurance companies around when the penalties for non-compliance finally become high enough to create an incentive to purchase insurance. I'm still betting we are on a fast track to single payer. Say 3 years, 5 at the outside (if there is a president Hillary). Anyone want to give odds on it?

  6. Joshua Vanderberg:

    Well, then stick it in your mattress. But seriously, HHS does not have the ability to validate everybody's savings accounts.

  7. Andrew_M_Garland:

    Why do we use the Left's phrase "single payer". This makes it seem like an accounting choice, no problem.

    In fact it is "totalitarian taxation for the central control of healthcare". The people will continue to pay for their healthcare through taxes and "insurance premiums", but will have no choice about what is provided to them.

    The British have had 30+ years to perfect the greatest socialist healthcare system in the world.

    A Doctor Describes the British National Health Service
    === ===
    [edited]  My time in the British National Health Service in the 1980s was a tremendous learning experience. England still has incredible clinicians who can do remarkable work with scarce resources. However, working at an NHS hospital is like going back 20 years. The infrastructure, equipment, surgical tools and medications are backward by comparison to any medium-sized hospital in the United States. The irony is that many nations afflicted with Obamacare systems have moved toward private, decentralized approaches.

    When teaching medical students about health care economics, I point out that the cell phone revolution began when President Ronald Reagan dismantled the market monopoly of AT&T.
    === ===


  8. sean2829:

    Odds on that? Harry Reid himself has reiterated several times that the ACA is a stepping stone to a universal single payer system. In fact, all the problems that are cropping up are a feature to move it in that direction as quickly as possible.

  9. sean2829:

    The insurance companies aren't stupid and won't design systems that will have losses built into them. Many of the new policies that are coming in at low cost have a lot of restrictions with respect to what doctors and hospitals are participating. I also suspect that when you go see a doctor to obtain some of the legislated "free" preventative care, there will likely be secondary tests and follow up visits that will lead to out of pocket expenses. When was the last time you went to Jiffy Lube and got out of there for the advertised price of the oil change?

  10. MingoV:

    The exchanges are a travesty. I live in Delaware. There are multiple authorized exchanges. All of them are internet-based. I cannot find an office location where we can meet with an agent. (Compare that with home or auto insurance.) We have a weird situation: family of three adults, one receiving Social Security disability, one getting Medicaid coverage, the third uninsured. Are we a family for PPACA and exchange purposes, or should the uninsured adult apply as an individual? How does our situation affect the penalty for not enrolling? We can't find anyone to ask.

    The certified exchanges must be making a mint off this enrollment process: big government contracts and, because they have no agent-staffed offices, low costs (just a web site linked to a database with extracted customer info forwarded to the insurers). Well, it's the government way: high costs, poor service.

  11. marque2:

    The really sad thing is that if you look at demographics, the older people get the richer they are, so we are going take money from a 27 year old, who has almost nothing and is trying to save for his first home, and give it to a 60 year old who has already amassed 400K in retirement savings and is almost done paying off the 700K home.

    It doesn't make sense. This is stealing from the poor to pay the rich.

    - (Note solar power is similar - rich get subsidies to put the things on their roof, and don't pay the utility company, but the utility company has to generate 92% of that power anyway - so they end up charging poor folk who can't put up 20K in panels, or esp apartment dwellers who couldn't put up panels even in the unlikely event they had the money. The poor and apartment dwellers pay more for electricity to cover the rich guys costs)

    So what is it with Democrats and all their proposals to take from the poor and give to the rich, while pretending the believe in the opposite?

  12. sean2829:

    The 27 year old has something. If he went to college, even odds says he's got $25K of debt to pay it off. If he makes $33K per year but doesn't have health insurance, there is no subsidy for him. Fortunately, the economy is so bad he's under employed and doesn't make that much so there might be a subsidy. But if he lives in the democratically controlled state, he won't get busted for marijuana use, his girlfriend will have free birth control and if its legal for him to try and improve his fortune at the local casino.

  13. Mark Brackett:

    You might want to Google "Obamacare open enrollment" before you rely on Coyote's mischaracterization of how enrollment works.... just sayin'.