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Just how much will individually insured people's premiums go up under Obamacare?

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That's just what they were arguing about on Fox News Sunday; the Examiner is here to investigate.

In an interview, Chris Wallace pitted Neera Tanden, an Obamacare program architect at the Center for American Progress, against James Capretta with the Ethics and Public Policy Center.

It is clear that people are starting to focus on the long-term implications of Obamacare and get past the short-term problems with the website. The damage to the program and the President's credibility has been done, and people are beginning to move on to fight over what the larger implications are.

On Fox News Sunday morning, that's exactly how they approached it. After briefly discussing the possibility that the back-end of the system had been uncoupled somewhat from the front-end, enabling enrollment but probably causing errors when it comes time to issue policies and transfer money, they jumped on the more serious long-term issues.

There were three major points of contention:

1) How much will premiums go up on average for people who currently have individual health insurance, before and after tax subsidies under the plan? 2) How much will premiums go up on average for similarly situated young adults between the ages of 21 and 29? 3) Are people who presently have individual health insurance plans going to get better health insurance coverage under Obamacare?

What is the expected average change in premium for people who currently have individual health insurance?

First, James Capretta claimed that people were seeing average increases of 30 to 50 percent, and that the coverage they were receiving was worse. Neera Tanden rejected this, saying that it did not account for tax credits, and stating "that's an inaccurate statement." James Capretta reiterated that the 30 to 50 percent figure included the impact of tax subsidies.

So, it appears that they did not disagree too much about a figure of 30 to 50 percent, but they did disagree as to whether that was net of tax-subsidies.

To investigate, the Examiner went to insurance industry and actuarial sources to find answers. Although it was not a formal estimate and is provided by the authors and not the American Academy of Actuaries, Kurt Giesa and Chris Carlson, in Contingencies, the magazine of the academy, said that the some estimates had predicted that average increases due to Obamacare would be between 10 and 20 percent (Contingencies, January/February, page 30).

It would appear that these figures included the tax subsidies. We are in the process of confirming that. Furthermore, the authors went on to state that this figure only included out-of-pocket expenses for premium. They went on to state that it did not include changes in out-of-pocket expenditures for health care. What they are getting at here is that the imposition of Obamacare will change the levels of coverage offered. So, if on average coverage improves in terms of deductibles and co-pays, then out-of-pocket health care expenditures should go down, and that would partially offset the 10 to 20 percent figure. (Update, December 7, 2013: The Examiner contacted the authors of the article and it turns out that the 10 to 20 percent figure is before expected tax subsidies. While this is a further indication that Ms. Tanden's statements may be closer to reality, we won't know for sure until we have collected empirical evidence.)

So it would appear that Ms. Tanden's assertion falls in line with expectations. What the Examiner will be investigating in further reporting will be what the empirical evidence is suggesting the actual increases are turning out to be.

How much are average premiums for young healthy people going to go up?

Turning back to the Fox News interview, James Capretta went on to state that "people who are young and healthy are going to see 50 to 100 percent premium increases." Steve Wallace then tried to pin Ms. Tanden down on the premium increase issue. For the most part she dodged the question and talked about the quality of the coverage improving. Basically ceding the point, she stressed that the people in the individual market that were being discussed were only 5% of the system. Steve Wallace pointed out that that is 15 million people. The response was not reassuring.

Neera Tanden:

I appreciate that. And you're saying that some people may have to pay a little bit more (emphasis added). And the idea of the Affordable Care Act is that they have to have a much better health care plan...

Although she said, "a little bit", Steve Wallace interrupted her and probed further on the cost issue to prevent her from veering away from the question of cost: "It sounds like what you're saying is younger healthier people are gonna pay more to subsidize older sicker people."

Neera Tanden:

I'm not saying they're going to pay more. It depends on their income and a whole variety of issues. A lot of younger people are seeing a much better deal in this whole system. The problem is you're talking about issues where it's highly - there's a big question about whether younger people should actually have a much better deal in the system. Because they're going to get pooled with a lot of other people. That's why they should be better system.

So how much more will the average 21-29 year old in an individual plan pay under Obamacare?

First, it is telling that Ms. Tanden spent a lot of time dodging the question. She did not respond to Mr. Capretta's claim of 50 to 100 percent increases for young adults. But she did claim that Mr. Capretta's figures of 20 to 50 per cent figure for the average person was before tax subsidies.

So what do people in the insurance industry say? The Examiner went looking for answers.

The authors of the Contingencies article found that for 21-29 year old young adults who did not qualify for premium assistance, premiums would increase an average of 42%. This is due to "age band compression," increases in the average level or quality of coverage purchased, and increases due to including more unhealthy people into the pool. Many individuals in this cohort would qualify for the tax credit assistance.

Again, we stress that this increase is for out-of-pocket premiums. If on average the coverage is better in terms of out-of-pocket expenses, then some of those premium increases will be offset.

For a 21-29 year old, the Contingencies authors found the break-even point was at about 225% of the Federal Poverty level, or about $25,000. So if you are 21-29 and earn more than $25,000, you can expect an increase. If you earn less than that you can expect a decrease. Again this is for premiums, not for total out of pocket expenses.

Quality of Coverage

We will be looking at quality of coverage issues in the near future. At this point, it bears mentioning that Obamacare programs must cover preventive care. Many existing plans do not. So there will often be a reduction in out of pocket expenses and better health care outcomes as a result. The co-payments on the most affordable Obamacare plans are quite substantial - 40%, however. Examiner will be analyzing that in the near future.

Future Reporting

The Examiner will be following up on these questions. In particular, we will be focusing on what is known as age-band compression, which forces younger people to subsidize older generations, as well as potential structural weaknesses in Obamacare. We will also be looking at California and local empirical evidence, rather than actuarial projections. This will involve review of the actual rate filings made to the Department of Insurance. We will also be looking at coverage quality and changes in out-of-pocket expenses. Stay tuned.



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