The Department of Health and Human Services released a report yesterday on expected premiums in the new federally-mandated health insurance marketplaces that are slated to open on October 1. According to the report, premiums on the exchanges will be lower than originally expected.
That sounds like good news, but if you’re one of the 9 million people seeking affordable coverage through the exchanges in 2014, it’s not.
HHS’s report says that “premiums before tax credits will be more than 16 percent lower than projected”. That doesn’t mean premiums will be affordable. It simply means that a 2012 estimate of the premiums was too high. The projections HHS’s report refers to are based on Assistant Secretary for Planning and Evaluation (ASPE)-derived Congressional Budget Office premiums. This report is comparing the premiums they are expecting (now) on the marketplaces with premiums they were expecting (in 2012).
In short, HHS is not saying that people will be paying lower premiums on the exchanges than they’re paying now. HHS is just saying that people will be paying less than HHS thought people would be paying. They’re trying to sell this as good news—people will not have to spend as much as HHS originally thought they would. However, when determining what’s affordable, what really matters is what people think they should be spending.
When we’re trying to figure out if the new premium estimates will be affordable for people, then, we can’t just set a federal standard—which is how the Affordable Care Act defines affordability. We should compare what people (to a large extent, in this case, the uninsured) think they should pay and what HHS says they’ll be paying.
HHS’s new report doesn’t mean premiums people pay will be affordable, or that people will be any better off than they are now when the marketplaces start up on October 1. It does mean that HHS is worried that things won’t go well, and they’re trying to put the best face on a bad situation.