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Good article from one of my favorite economists, Tyler Cowen.
Is there ACA rate shock in California?
Is there ACA rate shock in California?
Is There ACA Rate Shock in California?
- Thread starter Sam
- Start date
- 8,448
I read Tyler's analysis and about 30 of the growing number of readers' comments. It's amazing how complicated and analytical many people are with this "Rate Shock" concept.
Here it is in a nutshell...
If John Doe exclaims while applying for an exchange plan, "Oh my God, I don't want to pay this much!!!" To John Doe, it is RATE SHOCK.
If his sister, Jane Doe is going through the process at her house, sees what it will cost her family and says, "Ah, this premium isn't bad at all!" To Jane, it is not RATE SHOCK.
It all comes down to an individual's personal circumstances. (Income, Health Status, etc.) It's in the eye of the beholder. We should know before the end of October which of the two camps most Americans will fall under.
Here it is in a nutshell...
If John Doe exclaims while applying for an exchange plan, "Oh my God, I don't want to pay this much!!!" To John Doe, it is RATE SHOCK.
If his sister, Jane Doe is going through the process at her house, sees what it will cost her family and says, "Ah, this premium isn't bad at all!" To Jane, it is not RATE SHOCK.
It all comes down to an individual's personal circumstances. (Income, Health Status, etc.) It's in the eye of the beholder. We should know before the end of October which of the two camps most Americans will fall under.
You are so much smarter than me, Sam. My favorite economist draws political cartoons and yours writes far above my intelligence level! My head hurts. I think Tyler Cowen is saying he doesn't know, but Avik Roy may be right, or Roy may be wrong, but Roy's argument did not follow statistically correct logic, which may or may not matter, but there will probably be rate shock anyway, which may be less important than other factors in the law, and less important than employee-dumping onto these rate-shocked premiums.
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Pretty well written, Allen. And, if John Doe is young and healthy, and does not enroll, yet Jane Doe is older or sick and happily enrolls, we have a collapse. I read the other articles that were linked inside the article that Sam posted above, and they did a good job of explaining why high rates, disappointing subsidies, and low individual mandate penalties may bring adverse selection. Of course, we already knew that.
I think one of the main reasons why the young and healthy may not enroll is that the subsidies are pretty heavily weighted towards families and older people. That is because the member must pay a percentage of their household income toward their portion of the premium. For young single people, the actual premium is lower than that, meaning their subsidy is zero. For older people or families they are more likely to get a subsidy. So, if young people do not enroll........ or contribute few dollars because they chose a cheapo plan..... or enroll only if they are sick..... then the PCIP disaster will be an appetizer for the meal coming up.
Last edited:
- 8,448
July 15, 2013
As expected, the CA state actuaries and regulators have approved the 2014 Exchange premiums.
State approves Covered California rates - Sacramento Business Journal
They feel that charging individuals the same premiums that small groups pay is a WIN for the consumer. The consumer has never paid premiums as high as what small groups pay. With California's higher incomes, the percentage of population qualifying for premium reducing subsidies will be much lower than the national average.
The sheet will hit the fan in "The Golden State" when people start caring enough to look into the real cost of Covered California health insurance.
As expected, the CA state actuaries and regulators have approved the 2014 Exchange premiums.
State approves Covered California rates - Sacramento Business Journal
They feel that charging individuals the same premiums that small groups pay is a WIN for the consumer. The consumer has never paid premiums as high as what small groups pay. With California's higher incomes, the percentage of population qualifying for premium reducing subsidies will be much lower than the national average.
The sheet will hit the fan in "The Golden State" when people start caring enough to look into the real cost of Covered California health insurance.
