Premiums Under Obamacare: Who Pays More Or Less?

There’s a lot of talk coming from conservatives lately about Obamacare leading to a shocking series of premium increases in private insurance policies that will quickly produce another big political backlash and create momentum for a repeal effort in Congress.

Fortunately, Jonathan Cohn of TNR has done a detailed analysis of this “sticker shock” argument, noting that the two things conservatives tend to ignore is the existence of subsidies for many facing higher premiums and the better benefits virtually everyone will obtain:

As a general rule, the people who suffer the most under the current system will also benefit the most under the new one. If you are older or sicker and have been trying to get coverage in the non-group market, then you’re in luck because insurers won’t be able to jack up your premiums (or reduce or deny you coverage) anymore. If your income is moderate to low—say, less than $50,000 a year for a family of four—you’re also going to be a winner. The subsidies, which are larger for people with less money, will more than offset the higher costs.

But even the “losers” in the new situation–or more accurately, those who are reasonably happy with private non-employee-sponsored insurance–will realize positive changes as well:

That brings us to the people who really will see higher prices, the ones the Obamacare critics have in mind. They will tend to be younger, healthier, and more affluent—and they will tend to be men. These are the people who, today, benefit from medical underwriting: They pay low premiums, and tolerate tiny doctor networks or skimpy benefits, because they are unlikely to have medical conditions that require extensive medical treatment. These are also the people who, under the new system, will make too much money to qualify for large subsidies, enough to offset the cost of higher insurance….

[B]efore you decide Obamacare is a bad deal for you, remember that it’s not just about moral principle. It’s also about your self-interest. Today you are healthy. Tomorrow you may not be. You might have an accident or develop a serious illness—and up facing huge hospital bills. The coverage you get under Obamacare won’t be perfect, but if you’re paying more for it then it’s probably going to offer you more protection than you have now. Yes, you’ll be spending more money—but you’ll be getting something for it, too.

We sometimes tend to forget that the whole idea of “insurance” is to spread risk. Some people will always be financial losers in any insurance pool because they are medical winners. That’s important to keep in mind when looking at how this or that category of Americans will fare under a system designed to reduce risk for everybody.

Ed Kilgore

Ed Kilgore, a Monthly contributing editor, is a columnist for the Daily Intelligencer, New York magazine’s politics blog, and the managing editor for the Democratic Strategist.