By Dan Calabrese ——Bio and Archives--June 4, 2013
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But Mr. Lee and his fellow regulators were making a false comparison. They weren't looking at California's lightly regulated individual insurance market that functions surprisingly well. They were comparing ObamaCare insurance to the state's current small-business market where regulations similar to ObamaCare have already been imposed. In other words, California wasn't comparing apples to apples. It wasn't even comparing apples to oranges. It was comparing apples to ostriches. The conservative analyst Avik Roy consulted current rates on the eHealthInsurance website and discovered that the cheapest ObamaCare plan for a typical 25-year-old man is roughly 64% to 117% more expensive than the five cheapest policies sold today. For a 40 year old, it's 73% to 146%.And in a nearby piece, Stanford economist Dan Kessler offers more insight into why ObamaCare plans will cost so much:
This apples-to-apples assessment shows how much higher exchange-plan premiums will be. For example, a 25-year-old male who lives in San Francisco can purchase a "California 40/4000" policy from Kaiser today that has a $40 copayment for office visits after a $4,000 deductible, with a $5,600 out-of-pocket maximum, for $140 per month. Kaiser's most comparable exchange policy -- a "bronze" plan with the minimum benefits and the highest out-of-pocket costs -- has a $5,000 deductible with a $6,400 out-of-pocket maximum, although it allows three office visits per year that are exempt from the deductible. It costs $227, 62% higher than its current comparable plan, the California 40/4000. Oregon's exchange policies are about the same. Today, a 25-year-old male who lives in Portland can purchase an "Oregon KP 2000/20%/HSA/Rx" policy from Kaiser that has 20% copayments, a $2,000 deductible and a $5,000 out-of-pocket maximum. It costs $129 per month. The most comparable exchange plan, a "silver" plan, has 25% copayments, a $1,750 deductible, and a $5,000 out-of-pocket maximum. It costs $229 per month -- 78% higher.The real news here is how credulous so many people were in buying Peter Lee's analysis. The same people who scrutinize every word they hear from Rush Limbaugh or the Daily Caller for the slightest flaw simply accepted this piece of dreck without question, when it turned out it was very easy to demonstrate how misleading it really was. It comes back to simple economics. You cannot guarantee coverage to everyone, regardless of their health or pre-existing conditions, without causing premiums to rise. The whole "bending the cost curve" nonsense was always just that, and the only way to hide it now is to put out these apples-to-cinder-blocks comparisons that are explicitly designed to a) mislead people; or b) provide talking points for people who don't care what the truth is as long as it means a win for their team.
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