3,137-County Analysis: Obamacare Increased 2014 Individual-Market Premiums By Average Of 49%

6/21/2014

There are hundreds of aspects of Obamacare that people argue over. But there’s one question that matters above all others: does the Affordable Care Act live up to its name? Does it make health insurance less expensive? Last November, our team at the Manhattan Institute published a study indicating that Obamacare had increased the underlying cost of individually-purchased health insurance in the average state by 41 percent in 2014, relative to 2013. We’ve now redone the study on a county-by-county basis, complete with a brand-new interactive map. Depending on where you live, the results may surprise you.

Our new county-by-county analysis was led by Yegeniy Feyman, who compiled the county-based data for 27-year-olds, 40-year-olds, and 64-year-olds, segregated by gender. We were able to obtain data for 3,137 of the United States’ 3,144 counties.

Buchanan County, Mo. sees 271% rate hike for men

Among men, the county with the greatest increase in insurance prices from 2013 to 2014 was Buchanan County, Missouri, about 45 miles north of Kansas City: 271 percent. Among women, the “winner” was Goodhue County, Minnesota, about an hour southwest of Minneapolis: 200 percent. Overall, the counties of Nevada, North Carolina, Minnesota, and Arkansas haven experienced the largest rate hikes under the law.

The best-faring county for both men and women was St. Lawrence County in northern New York, with premium decreases of 70 percent in 2014 relative to 2013. The New York City metropolitan area—the five boroughs, Long Island, and Westchester County—are the clear winners under Obamacare, with decreases in the 63 to 64 percent range.

Obamacare bails out New York’s death spiral

There’s a reason why New York does so well. In 1992, then-Gov. Mario Cuomo (D.) signed a law barring health insurers from charging different rates based on age, gender, health, or smoking status: what wonks call pure community rating. Naturally, older and sicker people thought this was a great deal, while younger and healthier people dropped out. As I detailed last summer, New York quickly became the poster child of the dreaded adverse selection death spiral.

Obamacare’s regulations are similar to Mario Cuomo’s, with two key differences. First, Obamacare has an individual mandate forcing young people to buy costlier insurance than they need. Second, many low-income people qualify for subsidies under Obamacare, encouraging healthy (but poor) people to sign up. Indeed, Cuomo’s successor George Pataki (R.) instituted a subsidized exchange called “Healthy New York” that did somewhat mitigate the Cuomo death spiral for those who were poor enough to qualify.

In addition, Obamacare allows a slightly wider age-rating band than New York; the federal law allows insurers to charge older individuals three times as much as younger ones. Since older people consume around six times as much health care as younger people, this is still a rip-off for the young in most parts of the country, but it doesn’t make a difference in the Empire State, which has deliberately chosen to maintain its requirement that age can play no factor in health premiums.

The Forbes eBook On Obamacare 
Inside Obamacare: The Fix For America’s Ailing Health Care System explores the ways the Affordable Care Act will affect your health care and is available for download now.

Women face rate hikes in 82% of U.S. counties; men 91%

Across the country, for men overall, individual-market premiums went up in 91 percent of all counties: 2,844 out of 3,137. For 27-year-old men, the average county faced 91 percent increases; for 40-year-old men, 60 percent; for 64-year-old men, 32 percent.

Women fared slightly better; their premiums “only” went up in 82 percent of all counties: 2,562 out of 3,137. That’s because Obamacare bars insurers from charging different rates to men and women; prior to Obamacare, only 11 states did so. Because women tend to consume more health care than men, the end result of the Obamacare regulation is that men fare somewhat worse.

Relative to men, the average rate increase for women was less extreme: 44 percent for 27-year-olds; 23 percent for 40-year-olds; 42 percent for 64-year-olds.

Methodology consistent with previous studies

To calculate these figures, we used the same methodology we’ve used in the past. We compiled an average of the five least-expensive plans in a particular county pre-Obamacare, adjusted to take into account those with pre-existing conditions and other health problems. We then did the same calculation with the five least-expensive plans in each county under the Obamacare exchanges. We then used these county-based numbers to come up with population-weighted averages pre- and post-Obamacare.

Remember that these figures represent the underlying, unsubsidizedhealth insurance prices. If you’re eligible for a subsidy—if your income is below 400 percent of the Federal Poverty Level—taxpayers will help defray a portion of these costs. Those subsidies will disproportionately help those in their late fifties and early sixties, because of the way the Obamacare exchanges interact with the subsidy formula.

A new report from the Office of the Assistant Secretary for Planning and Evaluation at the U.S. Department of Health and Human Services (ASPE HHS) indicates that among those who signed up for Obamacare exchange plans this year, subsidies covered on average 76 percent of the underlying premium. That is to say, the exchanges attracted the low-hanging fruit of those who had the most to gain from taxpayer-funded subsidies.

If you go to our interactive map, and click on the “Your Decision” tab, you can find out whether subsidies will help you. For example, in Texas, if you’re a 27-year-old man and you make more than $27,991, you’re likely to pay more under Obamacare, even if you qualify for a subsidy. If you’re 30 years old, with an average household size, you’ll need to make less than $36,409 to break even under Obamacare. 64-year-olds in Texas, on average, will see decreased rates, hence the table lists “$0” as the income at which net premiums increase.

Will Obamacare rate shock affect the 2014 election?

Our map only looks at counties, not Congressional districts. But it is certainly conceivable that there are competitive House races where rate shock will be an issue. And we will start to get more information about 2015 premiums starting this summer. Thus far, it’s not clear how 2015 premiums will look relative to 2014; reports from insurers like WellPoint and Aetna have been mixed.

If the polls are any guide, however, most voters haven’t benefited from the law. Remember that President Obama often promised that his plan would “lower premiums by up to $2,500 for a typical family per year…by the end of my first term as President of the United States.” It’s an understatement to say that this has not happened.

Those who face higher premiums, higher taxes, or both, appear to outnumber those whom the law has made better off. That alone isn’t a test of the law’s virtue—but it is a measure of the law’s failed promise.

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UPDATE: In a follow-up post, I respond to certain left-wing critics who claim that rate shock doesn’t matter, because certain individuals will have their higher premiums offset by taxpayer-funded subsidies.

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INVESTORS’ NOTE: The biggest publicly-traded players in Obamacare’s health insurance exchanges are Aetna (NYSE:AET), Humana (NYSE:HUM), Cigna (NYSE:CI), Molina (NYSE:MOH), WellPoint (NYSE:WLP), and Centene (NYSE:CNC), in order of the number of uninsured exchange-eligible Americans for whom their plans are available.

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