NCPA - National Center for Policy Analysis

ObamaCare Increases Insurance Premiums Prices in California

June 6, 2013

Recently, the state of California claimed that its version of ObamaCare's health insurance exchange would actually reduce premiums. "These rates are way below the worst-case gloom-and-doom scenarios we have heard," boasted Peter Lee, executive director of the California exchange. But the data that Lee released tells a different story: ObamaCare, in fact, will increase individual-market premiums in California by as much as 146 percent, says Avik Roy, a senior fellow at the Manhattan Institute.

One of the most serious flaws with ObamaCare is that its hurricane of regulations and mandates drives up the cost of insurance for people who buy it on their own. This problem will be especially acute when the law's main provisions kick in on January 1, 2014, leading many to worry about health insurance "rate shock."

  • The ObamaCare-compatible insurance exchange released the rates that Californians will have to pay to enroll in the exchange.
  • "The rates submitted to Covered California for the 2014 individual market," the state said in a press release, "ranged from 2 percent above to 29 percent below the 2013 average premium for small employer plans in California's most populous regions."
  • That's the sentence that led to all of the triumphant commentary from the left.
  • "This is a home run for consumers in every region of California," said Lee.

Except that Lee was making a misleading comparison. He was comparing apples (the plans that Californians buy today for themselves in a robust individual market) and oranges (the highly regulated plans that small employers purchase for their workers as a group). The difference is critical.

  • If you're a 25-year-old male non-smoker, buying insurance for yourself, the cheapest plan on ObamaCare's exchanges is the catastrophic plan, which costs an average of $184 a month.
  • The next cheapest plan, the "bronze" comprehensive plan, costs $205 a month.
  • But in 2013, on, the median cost of the five cheapest plans was only $92.
  • In other words, for the typical 25-year-old male non-smoking Californian, ObamaCare will drive premiums up by between 100 percent and 123 percent.

Supporters of ObamaCare justified passage of the law because one insurer in California raised rates on some people by as much as 39 percent. But ObamaCare itself more than doubles the cost of insurance on the individual market.

Source: Avik Roy, "Rate Shock: In California, ObamaCare to Increase Individual Health Insurance Premiums By 64-146%," Forbes, May 30, 2013.


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