As states release their approved health insurance rates that will be available for those shopping for coverage beginning in October, you will begin to read many newspaper articles, and expert reports that analyze how these rates compare to rates previously available to shoppers of individual and family health insurance plans prior to the passage of the Affordable Care Act.
When reviewing these articles make sure you understand how the author is calculating the comparison and whether the analysis is specific to a specific shopper profile.
After reading a few media reports released form various states, three things have become clear
1. ) There are dozens of ways that the analysis can be performed
2. ) At times there is still an agenda at play, and
3. ) The numbers can be manipulated to accentuate a positive or negative result.
Examples of Rate Comparison Methodologies
A few examples of how some states made their rate comparison calculations are summarized below
Ohio: Ohio calculated what the average rate that consumers pay in 2013 for individual health plans ~$236/mo. and compared that with what consumers will likely pay in 2014 ~$332/mo based on rates filed with the exchange. This yields a 41% average rate increase. What this analysis doesn’t consider is the income based federal subsidy that an estimated 80-90% of consumers will receive or the fact that the new health plans that consumers purchase will include a richer set of benefits that will save them money on out of pocket expenses throughout the year.
Florida: The state of Florida determined that rates would go up by 30-40% by taking the actual rates from a 2014 mid-tier silver plan and comparing it to what a fictional 2013 plan with the same set of benefits would cost. I’m Not sure how they determined what the rates of the fictional plan would be?
California: California enthusiastically announced that 2014 individual health insurance rates would decrease by 29% when compared to a similar product. However this analysis was only based on the rates for a 40 yr old non-smoker only. I wonder what this analysis might look like for a healthy 35 year old. Maybe it would be the same, but this analysis doesn’t seem very deep.
Indiana: The hoosier state’s analysis seems to be pretty reasonable. They projected a 72% average cost increase, and factor in total out of pocket costs for the customer not just monthly premiums. Outside of the inclusion of co-pays and other out of pocket costs, I’m not sure how Indiana came up with 72% rate increase, but given they are considered to be a Republican stronghold, my guess is that they might have used a methodology that accentuated this result.
The point of this article is to illustrate that there doesn’t seem to be a consistent methodology that states are using to make this year over year comparison, and that you should make sure you understand how your states comparison is being calculated, because the headline may be politically motivated and misleading.
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Written by Jeff Levy
Tags: ACA, health insurance rates, obamacare, ohio, rate comparison