If it sounds too good to be true… the math and logic behind insurance exchange premiums

2013

Let’s do a little math and see if it is possible for premiums in the new health insurance exchanges to be 50% lower than comparable plans on the open market. The following article is from a post on Health Insurance Illuminated, a blog I write for a Blue Cross-Blue Shield plan. Click on the link below and see how the claims for premium reductions may not stand up to simple math. What is more likely is that in Republican states the premiums are higher and in Democratic states they are lower … who knew?

If it sounds too good to be true…

Numerous media reports are making fantastic claims about how the Affordable Care Act, President Obama’s health care reform law, is working to reduce health care costs. A recent New York Times article even suggests New York residents premiums for individual policies on the soon to be opened healthcare marketplaces will be 50% lower than today. Other stories indicate individuals are benefitting from rebates and lower health insurance prices due to increased competition.

Be skeptical.

Let’s think about this. If, in fact, we were comparing apples to apples and premium savings were significant, where did the savings come from?

via If it sounds too good to be true….

We should note that because New York has open enrollment without regard to pre-existing conditions, it’s premiums now are considerably higher than most other states and without mandatory enrollment the adverse selection problem is critical thus driving up premiums.