- A new analysis by the Kaiser Family Foundation finds that, on average, premiums for Obamacare's benchmark silver plan are falling by 0.2 percent across 48 major cities.
- Behind that average lurks huge variation: premiums are rising by 28 percent in Anchorage, AK, and falling by 24 percent in Jackson, MS.
- The fall in premiums will also save taxpayers money, because subsidies are tied to the cost of the benchmark silver plan.
- Prices for Obamacare's skimpier, less popular bronze plans are rising by 2.7 percent.
- Obamacare's next open enrollment period begins on November 15.
Obamacare's exchanges are working better than expected
In September, the Kaiser Family Foundation looked at insurance premiums for Obamacare's benchmark silver plan in 16 major cities and found, to their surprise, that prices were falling by 0.8 percent on average. On November 11, they updated the analysis with data for 32 more cities — and found that the initial finding held. On average, prices are falling by 0.2 percent.
"Falling" is not a word that people associate with health-insurance premiums. They tend to rise as regularly as the morning sun. And, to be fair, the Kaiser Family Foundation is only looking at 48 cities, and the drop they record is modest (though this is the same methodology they used in 2014, and to good results). But this data, though preliminary, is some of the best data we have — and it shows that Obamacare is doing a better job holding down costs than anyone seriously predicted, including Kaiser's researchers.
"I expected premium growth to be modest in most of the country," Larry Levitt, a co-author of the report, told Vox's Sarah Kliff in September. "But what we saw were some decreases instead."
Prices aren't falling everywhere...
Keep in mind that the 0.2 percent drop is the average across all the measured cities. There are places where prices are skyrocketing (like Anchorage, AK, where they're rising by 28 percent; or Minneapolis, MN, where they're rising by 18 percent) and places where prices are plummeting (in Jackson, MS, prices are falling by 24 percent; and in Denver, CO, they're falling by 15.6 percent).
So the average here masks considerable variation. Someone going to buy insurance in Minneapolis isn't going to feel like Obamacare is holding down costs — because it isn't. But someone going to buy insurance in Denver is in for a very pleasant surprise. On average, though, Obamacare is holding down insurance costs — and that's a surprise.
...Or for all plans.
Obamacare's benchmark silver plans are its most important. The silver plans — which cover 70 percent of expected health-care costs — are the most popular plans in the law, and the benchmark silver plan is what the law's subsidies are tied to.
But there are other plans in the law, too. The bronze plans are, for many, Obamacare's cheapest option: they only cover 60 percent of expected health costs, so premiums are lower. But Kaiser's analysis found that premiums for bronze plans will, on average, rise by 2.3 percent.
Obamacare's surprising cost control
Obamacare is doing better at a lot of things than anyone seriously expected. The law's initial premiums came in cheaper than the Congressional Budget Office projected when the law first passed. In April 2014, the Congressional Budget Office said the unexpectedly low premiums meant Obamacare would cost $104 billion less than they previously thought. If Kaiser's estimates hold nationally, Obamacare's cost will have to be revised downward yet again.
The fear about government programs in general, and government health-insurance programs in particular, is that they are overly generous because they spend other people's money. But Obamacare's competitive insurance marketplaces are actually doing what they promised to do: forcing insurers to compete for customers by cutting costs. The Congressional Budget Office explains that Obamacare's premiums are cheaper than expected because its insurance features "lower payment rates for providers, narrower networks of providers, and tighter management of their subscribers' use of health care than employment-based plans do."
That is something of an extraordinary statement: Obamacare is forcing insurers to run leaner than employers are.
Obamacare's next open enrollment period begins on November 15
The Obama administration is hoping to enroll 9.1 million people, which is 30 percent fewer people than the Congressional Budget Office originally predicted.