05 Sep 2014

Health Insurance Premium Bask

Health Legislation 10 Comments

(Bask = Blog Ask for newcomers, not to be confused with a Bleg.)

There is a new wave of projections for increases in health insurance premiums for 2015 (relative to 2014), and they are not heart attack inducing. But I’m concerned that something fishy may be going on with some of these relatively innocuous analyses.

It’s one thing to look at how much a given insurance plan, with specified benefits, deductibles, caps, etc., increased in price because of the introduction of the Affordable Care Act (aka “ObamaCare”).

However, that type of analysis doesn’t really correspond to what most people think when they say, “Holy #)($*! My premiums jumped up x percent!”

For example, in my case my policy is going up about 50%. But I’m being forced to get a “better” policy. So I’m wondering if my type of situation would go into these studies as a 50% increase, or instead as a (say) 20% increase because that’s the premium hike for the new policy that I’m being forced to buy, compared to that same policy pre-ACA.

And then of course, how do you do a percentage calculation for the people who used to pay $0 for health insurance, not because they had a pre-existing condition, but because they were young and healthy and didn’t think it was worth the money? That’s an infinite percentage increase, though I understand it’s a tricky situation.

In any event, does anyone know of a scholarly treatment of these subtleties? I have never seen an actual study that made the above distinctions.

10 Responses to “Health Insurance Premium Bask”

  1. Yancey Ward says:

    Your increase is not 50%. Your instinct is correct- the premium increase for you will be calculated based on what the policy you buy now would have cost last year, even if you didn’t buy it last year. The same will apply to a person who didn’t buy a policy last year at all.

    I don’t know of any “scholarly” studies done on the premium increases- most of these are just from the press releases from the insurance companies themselves based on the policies they sell, but all of those are pretty explicit about the increases applying to an apples to apples comparison.

  2. Brian says:

    Actuarial/consulting firms such as Segal, Mercer, Aon, Milliman, and PWC publish reports that estimate premium increases and typically specify which methodology they use, and in some cases state both.

    The vast majority of Americans are not in your situation, as they get insurance through their employer. Most of these plans are not dramatically impacted by Obamacare in terms of plan design changes and costs because they were already heavily regulated (e.g., forbidding most pre-existing condition exclusions).

    Also keep in mind that health insurance cost trend has been decelerating for a number of years, prior to Obamacare.

    Sample: http://www.sibson.com/publications/surveysandstudies/2014TDsupp.pdf

    • Bob Murphy says:

      thanks Brian!

    • Joseph Fetz says:

      Brian comes with the goods.

      Just to add a bit, the same is true of union health plans. Though these plans (i.e. union plans) represent a minority of overall plans, they also got special treatment in terms of waivers when it comes to things that were not entirely compliant with ObamaCare. The major contributor of this waiver process was related to the Pension Protection Act (passed under Bush), such that many union Fringe Benefits Programs could use their pension’s under-funding as a token to ask for a waiver on the health plan.

      Basically, if a union’s pension funding is in the green zone, then not only can people retire, but they can also take advantage of the new union member’s dues in order to fund their medical needs. However, if the union pension is underfunded (in the red zone), then they get a waiver on the extra costs associated with ObamaCare (or if the new plan under ObamaCare is not more costly, then the differential between the medical plan costs and the underfunding of the pension plan), but also the newly retired pensioners get their pensions, as well as the benefit of new-member’s dues paying for their healthcare.

  3. Jason Bonner says:

    The small company I work for, 9 employees, had an Anthem employer plan until we went to renew our contract last year at this time and the premiums had risen 40%. We dropped that employer plan and everyone went out and got high end Premier PPOs from Anthem.

    My boss’s PPO Anthem plan is up now, and Anthem does not offer the same plan she currently has. The closest thing they have to her current medium deductible Premier PPO is now a high deductible HMO with a 110% premium increase. So her insurance is worse, its twice as expensive, and her deductible is through the roof. A few other employees, including myself, prolonged our contracts until January, so we’ll see how things play out then, but it certainly does not look promising in lieu of my Boss’s renewal.

  4. Gamble says:

    Higher deductibles, higher coin insurance, this is what small business face. Not to mention higher premiums.

    Better policy? Only if you use it, only if previous plan was somehow deficient.

    Is there an insurance market?

    • Gamble says:

      coinsurance, not coin insurance.

  5. Tel says:

    Somewhat off topic, but at least it mentions health:

    Lawyer Mick Batskos has been employed by the Health Department to mount a court challenge to Freedom of Information Commissioner Lynne Bertolini’s decision to grant the Herald Sun access to anonymous data revealing the ages and sex of those who have died, the type of procedure they were waiting for and the hospitals involved.

    The department claims this data is a matter of opinion, ­advice or recommendation, with the “potential to mislead the public”.

    The Herald Sun revealed in January that more than 840 people — 16 a week — had died waiting for surgery in Victoria in 2012-13, an increase of 246 — or 41 per cent — in three years.


  6. Innocent says:

    Side not and anecdotal. The insurance my company paid went from being $30,000 per month to $50,000 a month because everyone bought insurance who would not normally have bought insurance so they did not have to ‘pay the penalty’. In response the company I work for has gradually been shifting jobs over seas. Sure this is simply an anecdotal story but it is interesting to see it play out.

    They have now brought the costs down to around $35,000 which is now being mitigated by the lower costs of foreign employees…

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