Individual Health Insurance Premiums Rose 24.4 Percent in 2014

A new paper written by Professor Amanda Kowalski of Yale University, the National Bureau of Economic Research (NBER), and the Brookings Institution examines the effect of Obamacare on premiums in the individual market for health insurance in 2014 versus 2013. Her analysis includes policies sold in the individual market off the exchanges, as well as those sold on Obamacare exchanges:

Across all states, from before the reform to the first half of 2014, enrollment-weighted premiums in the individual health insurance market increased by 24.4% beyond what they would have had they simply followed state-level seasonally-adjusted trends.

Further, Kowalski divides states by how they responded to Obamacare. Five states (Alabama, Missouri, Oklahoma, Texas, and Wyoming) declined to exercise any authority with respect to implementing Obamacare. Beneficiaries in those states’ individual markets are estimated to be worse off by $245 in 2014, versus other states. These states were anti-Obamacare, and therefore Obamacare likely enrolled more unhealthy people than in other states.

The fifteen states which instituted their own exchanges were pro-Obamacare, so enrolled more healthy individuals than other states. However, six of these exchanges had severe “glitches” that likely reduced enrollment by healthy people. Beneficiaries in those individual markets are estimated to be worse off by $750 in 2014.

Interestingly, Kowalski also estimates that states which expanded Medicaid might have done slightly less harm to their individual markets. However, this was likely because more sick people became dependent on Medicaid, leaving a marginally pool of individual beneficiaries. So, their costs were simply shifted entirely to taxpayers.

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