ObamaCare Marketplace Launch: Day 14
Today marks the 14th day since the Obamacare health insurance marketplaces opened for enrollment. By the end of the first week, only 51,000 individuals had signed up for the health plans, which are required to include 10 essential health benefits. And as of today, the success of these marketplaces seems doubtful in the minds of the public. Just 7% of Americans are completely satisfied with the enrollment process thus far.
Ahh, the wheels begin to grind.
By March 2014, the Obama Administration hopes that 7 million individuals will sign up to purchase health plans through these newly established regulatory bodies. 40% of these participating individuals must be low-risk, young, healthy citizens between the ages of 18-34.
Why?
The federal health law mandates that high-risk individuals cannot be charged more than three times the amount of a low-risk individual’s premium. This concept, known as community rating, is key to the Obama Administration’s promise that high-risk individuals and individuals with pre-existing conditions will be offered affordable health plans.
These "invincibles" are becoming more of a hot commodity lately, because the 3:1 community rating ratio can only be executed successfully if the right number of the young and healthy low-riskers sign up. The old and sick will benefit at the expense of the young and healthy, since the low risk individuals will be paying higher premiums to subsidize the health care costs of the higher risk ones. Before Obamacare’s implementation, individuals in the high-risk population were paying five times the amount of low-risk individuals’ health insurance premiums.
Rate Shock
Based on the above information, insurance rates will surely jump for young and healthy North Carolinians. How high?
After Blue Cross and Blue Shield released their marketplace premiums at the beginning of September, we compared pre-Obamacare plans with post-Obamacare plans.
The comparison utilized data from the Manhattan Institute, in which it computed the average of the 5 cheapest health plans sold in North Carolina. We compared these average premiums offered to individuals of three ages (27,40,64) to the cheapest bronze plan BCBS sells on the exchange to similar ages.(25,40,60).
The results: 27 and 40 year-olds may see up to an 80% increase in premiums. This potential out-of-pocket spike may vary, as the subsidy amount an eligible consumer receives depends upon his annual household income.
You can access the Manhattan Institute’s rate calculation methodology here.
Recent Updates
If anything, this 80% increase may be an underestimation. A few days before the marketplaces opened for enrollment on October 1st, the Health and Human Services Department (DHHS) finally released premium rates for the cheapest bronze, silver, and gold plans in federal exchanges for 27 year olds and "the average age participant," meaning an individual in his mid-thirties.
With this limited data, the Manhattan Institute published 2 more comparisons:
- Cheapest plan Pre-Obamacare vs. Cheapest plan post-Obamacare offered to 27 year old men and women
- Cheapest plan Pre-Obamacare vs. Cheapest plan post-Obamacare offered to 40 year old men and women
Avik Roy, contributor to Forbes, writes:
Worst off is North Carolina, which will see individual-market rates triple for women, and quadruple for men.
