Is the Affordable Care Act bringing down the cost of health insurance?

Under the Affordable Care Act (ACA), individuals and families can buy private health insurance coverage through in state-sponsored markets (also known as "exchnages"). The markets open for business in October 2013. The insurance coverage purchased in those markets will take effect on January 1, 2014.

We posted earlier that health insurance premiums will be 50% lower than current premiums in New York's ACA marketplace. And, yesterday, NY Times columnist Paul Krugman wrote about a new Kaiser Family Foundation study showing that ACA marketplace premiums around the country appear to be lower than expected. In this regard, note that cost of coverage will be federally-subsidized (largely through tax credits) for some low- and moderate-income people — that is, the real cost to consumers in ACA marketplaces will be below the stated monthly premiums. The differences between the stated premiums and the net cost to consumers after subsidization can be very substantial.

If you are interested in more on this topic, read the Kaiser study itself, which looked at the premiums that will be charged in 18 juridicitions, with and without subsidies, and came to this conclusion:

As open enrollment in the exchanges begins October 1, 2013 for coverage starting in 2014, premium information for all states will soon become available. Exchange websites are expected to present unsubsidized premiums for each plan, and are also required to have a subsidy calculator so that low and middle income enrollees can determine how tax credits will affect what they will actually pay for coverage. This report – based on 17 states and the District of Columbia that have made data publicly available – provides a preview of how premiums will vary across the country, and how much consumers in different circumstances will actually pay after taking into account the tax credits available under the ACA. While premiums will vary significantly across the country, they are generally lower than expected. For example, we estimate that the latest projections from the Congressional Budget Office imply that the premium for a 40-year-old in the second lowest cost silver plan would average $320 per month nationally.10 Fifteen of the eighteen rating areas we examined have premiums below this level, suggesting that the cost of coverage for consumers and the federal budgetary cost for tax credits will be lower than anticipated.


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