While political slanting continues to dominate the public’s opinion on Obamacare, there is nothing like throwing a few facts into the mix to cause people to begin scratching their heads in confusion.
Any self-respecting conservative knows all too well that McKinsey is immune from attack as an organization committed to presenting a left leaning political slant as it remains a bastion of business advice and a company that simply cannot be painted with a blue brush.
So, how do we explain the McKinsey findings, which reveal some awfully good news when it comes to premium rates, as Obamacare begins its second year sign up period beginning November 15?
We explain it by simply pointing out that when your sole approach to a program is based on your preferred political point of view, the truth may sometimes disappoint—even when the truth comes in the form of some pretty good news.
Here are the bullet points of the study:
- Despite the cries of the Obamacare bashers that insurance companies would leave the exchanges in droves once they discovered how much money they are losing , it turns out that competition and choice are increasing as we head into 2015.
According to the McKinsey study, “In the 41 states releasing exchange participation carrier data, the number of health insurers increased by 26 percent between 2014 and 2015. In the 19 states with complete fillings, the number of products grew 66 percent, with most in the silver tier.”
- While 65 percent of existing policies will see an increase in premium costs for 2015, the medium increase will be just 4 percent
When was the last time we saw insurance premiums experience an annual increase of less than 5 percent? I cannot remember such a time and doubt that you can either.
What’s more, based on the popularity of the lowest priced policies in a given tier that we saw during the 2014 season, McKinsey expects that a number of people purchasing higher price plans in their preferred tier will move to either the lowest or second lowest plan in the chosen category. For those people, the study suggests the mean increase will be less than 2 percent.
To back this up, the report notes, “According to a recent ASPE report, 64 percent of the 2014 enrollees in federally facilitated marketplaces chose either the lowest-price or second-lowest-price plan in their rating area.”
To be sure, the range of prices, based on policy and regional influences are all over the place.
“Within the silver tier, the full range of proposed price changes runs from –35 percent to +36 percent. In most cases, the highest increases are being imposed on last year’s lowest-price plans—a median increase of 8 percent, or $258 annually for a 40-year-old nonsmoker (Exhibit 3). In contrast, the highest-price 2014 silver plans that have re-filed rates have a median premium decrease of 4 percent ($195 annually). As a result, premium price dispersion among renewal plans appears to be decreasing. “
- Cost of premiums for those being subsidized are all over the place with some likely to pay more and others likely to pay considerably less.
Using the 19 states that have already finalized its rates, the study suggests, “For 70 percent of those who are subsidy-eligible…the weighted average increase in annual net premiums is likely to be about $156. However, for 28 percent of all subsidy-eligible individuals, the increase in the lowest-price silver plan will likely be more than 10 percent.”
On the other hand, McKinsey estimates that 29 percent of all subsidy-eligible individuals will experience a net premium decline in the price of the lowest-price silvery plan with 10 percent of all subsidy eligible buyers seeing a decrease that could exceed 10 percent.
All in all, it is going to be quite a stretch for Obamacare opponents to turn this data into bad news. Increased competition among insurers means better prices and better policies. An increase in the number of policies one can choose from also means improvements in policy quality and premium costs.
And with a median increase of somewhere between 4 and 6 percent, it seems we have very little to complain about.
For the more suspicious among you, I will add that the study done by PriceWaterhouse Coopers also anticipates that the median premium increases for 2015 will come in at about 6 percent.
Writes Alex Wayne in Bloomberg:
“Obamacare premiums, once predicted to skyrocket in the second year under the government’s marketplace, have risen about 6 percent for 2015, according to an analysis of preliminary state filings. While foes of the Affordable Care Act warned of double-digit rate increases, the costs of premiums seen so far is more modest for the new year. One reason may be that insurers who came in high in 2014 found themselves beaten out for enrollments. At the same time, 77 new insurance plans will be competing for customers in 2015, U.S. officials say.”
So, if you are all about the politics of being anti-Obamacare, you’ll want to simply pretend you never read this article as any rational individual will find it hard to continue to terrify the nation with predictions of fewer policies, smaller competition, and double-digit increases in premium rates.
However, even if you are committed to bashing the ACA at all costs, do yourself a favor and go check out the policies available to you come November 15th. You are likely to find something to your liking at either a lower price or at a very small increase.
Should you find such a policy, buy it and be secure in the knowledge that the next time you trash Obamacare nobody will have to know that you benefited personally from the program.
It will be our little secret.