NCPA - National Center for Policy Analysis

How Will You Fare in the ObamaCare Exchanges?

October 22, 2013

Enrollment in ObamaCare's health insurance exchanges has proven to be a somewhat difficult process amidst technical glitches and delays. Aside from the issues associated with actually purchasing health care, once an individual gets a quote for health insurance on an exchange, is the premium higher or lower than before, asks Drew Gonshorowski, a policy analyst in the Center for Data Analysis at the Heritage Foundation.

  • Gonshorowski research finds that for many states, the insurance on health exchanges will cost more than existing insurance.
  • His study illustrates that the general experience for individuals shopping on the exchange is that of increasing premiums from what was available to them prior to implementation of the exchanges.
  • Many families and individuals will face this reality as they apply for coverage, and the implications of experiencing sticker shock are important to consider if enough people choose not to sign up for coverage for various reasons.

Gonshorowski uses the Heritage Health Insurance Microsimulation Model (HHIMM), in concordance with insurer data compiled by Mark Farrah and Associates, to create a snapshot of what it looks like to shop for insurance prior to exchange implementation. This data is used to build weighted average premiums within the rating areas, similar to the process described in the most recent release from the Department of Health and Human Services.

  • Individuals in most states will end up spending more on the exchanges.
  • It is true that in some states, the experience could be the opposite.
  • This is because those states already had over-regulated insurance markets that led to sharply higher premiums through adverse selection, as is the case of New York.
  • Many states, however, double or nearly triple premiums for young adults.
  • Arizona, Arkansas, Georgia, Kansas and Vermont see some of the largest increases in premiums.

Gonshorowski's findings confirm that younger populations see larger percentage increases in premiums. A state that exhibits this clearly is Vermont, where the increase for 27 year olds is 144 percent and the increase for 50 year olds is still 60 percent, but far less. All states exhibit this relationship.

Source: Drew Gonshorowski, "How Will You Fare in the ObamaCare Exchanges?" Heritage Foundation, October 16, 2013.


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