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Fred Sanders

(23,946 posts)
Wed Jun 14, 2017, 11:04 PM Jun 2017

Average health insurance premiums fell after Obamacare took effect, study says

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You might not believe it's true, but more cost less after Obamacare began, a new analysis claims.

The average premiums in the nation's individual health insurance market "actually dropped significantly" in 2014, the year that the Affordable Care Act took effect, "even while consumers got better coverage," according to two health-care analysts whose findings challenge a popular narrative about Obamacare prices.

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They also said that while it won't be surprising if premiums rise by a lot next year given the "financial difficulties" many insurers are having with Obamacare plans, "even if ACA marketplace premiums grow significantly in 2017, they will still be much lower" than individual plan premiums would have been without the ACA, on average.

http://www.cnbc.com/2016/07/27/average-health-insurance-premiums-fell-after-obamacare-took-effect-study-says.html

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Average health insurance premiums fell after Obamacare took effect, study says (Original Post) Fred Sanders Jun 2017 OP
Not a surprise. Igel Jun 2017 #1

Igel

(35,191 posts)
1. Not a surprise.
Thu Jun 15, 2017, 01:03 AM
Jun 2017

A lot more people were forced to enter the market and many were subsidized as they entered the market. At the same time, cheaper plans were mandated if an insurer was going to enter a market.


So before and after aren't really comparable.

Since it's looking at the average, of course the average is going down.

The year before the ACA took effect my policy was discontinued and its replacement was more expensive--so that increase and restructuring is built into the before-and-after comparison. The following year, it changed even more and became even more expensive. I guess it's better coverage--but I don't know anybody who's used the additional coverage. For the last 3 years or so it's been stable as far as content, but each year it's gotten more expensive as the provider figures out how, exactly, to apportion the costs for other policies that my premiums are helping to subsidize. After all, it's intended to be a redistribution scheme, with the government helping out companies that screw up their calculations and with subsidizes to individuals to help people get into insurance. So I'm paying more for better coverage I'd have declined, while the average is down because cheaper policies have become available.

So when it says that individual plan premiums are going to be lower than they'd be without the ACA, they really need to say "on average." Without the ACA mine would be lower for several reasons.

Averages are often pointless; more often they're deceitful, since people think they're saying something that they're not. You really need standard deviation, skewness, and preferably also kurtosis to get a good idea about what a distribution is like. So after the ACA passed, the standard deviation would have increased a lot as the range spread, and the extremes would have been both lower and higher. I'd assume that there'd be a fairly reasonable distribution pre-ACA, but after the ACA there were probably a lot of cheap "bronze" plans. Given the additional descriptors, it's harder to be mislead, even by oneself.

Similarly, the "average salary" in the US has decreased not because most people have had their wages cut but because for years most of the new jobs that came online were minimum wage. In other words, the standard deviation increased and skewness would have changed. Perhaps the distribution would have become bimodal. The average is misleading.

And SAT scores were declining for a while, leading people to think that students weren't being educated as well in reading and math. In fact, if you pulled out the type of students who'd normally have taken the SAT 20 years ago, their averages were sharply up. Education was improving? Or SAT test prep centers were doing better. Or something else. But at the same time as the average for one sub-pop was increasing, a lot of non-traditional students, students who weren't slam-dunks for college, were taking the test. They had really low scores, and they pulled the average down. Looking at the standard deviation over time would have shown it increased and then started to decrease. Skewness would also have given away that something funky was happening to the numbers. The bad averages were even being used as ammo in arguing for federal education policy changes, but the proposed policies were contradicted by looking past the simple average. That was tough for newspapers and news channels.

In both the salaries and SAT cases we see the same kind of "let's let incomplete characterization of the numbers mislead the reader" stories. The mistake's easy to make, hard to correct, and even once corrected it's easy to forget the correction and just remember the error.




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