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A War on Sis? In California, Single Women Will Also Face A Doubling of Health Insurance Premiums Due To Obamacare

June 17, 2013

By Avik Roy

In 2014, Obamacare’s blizzard of regulations and mandates will transform the U.S. market for health insurance, among people who buy coverage for themselves. Of increasing concern is the phenomenon of “rate shock,” whereby many Americans face substantial increases in their health insurance premiums. Much of the debate has focused on young men, the “bros” who will bear the brunt of Obamacare’s rate hikes. But in California, women and men will see equally high jumps in the underlying cost of individual-market premiums.

This is because the Golden State already bars insurers from charging different rates on the basis of gender in the individual market. According to the National Women’s Law Center, 10 other states also do so: Colorado, Maine, Massachusetts, Minnesota, Montana, New Hampshire, New Jersey, New York, Oregon, and Washington. A twelfth state, Vermont, limits but does not prohibit gender rating.

In other words, the rate shock that I described in my three previous posts on California applies equally to men and women. If you compare the cheapest plan on healthcare.gov to the cheapest Bronze plan on the new Covered California insurance exchange, premiums for healthy 25-year-olds will increase by 147 percent—a median of $183 on the exchange vs. $74 today—and premiums for healthy 40-year-olds will increase by 149 percent—a median of $234 on the exchange vs. $94 today.

If you adjust these numbers for the one-quarter of the population that has to pay more for health insurance today, due to pre-existing conditions, the median rate increases are still quite high: 92 percent for 25-year-olds, and 100 percent for 40-year-olds.

What’s surprising about these figures is that we would have expected 25-year-olds to face a greater degree of rate shock than 40-year-olds. It’s not clear why the reverse is true in California. And the California exchange did not release information about expected premiums for older individuals.

Subsidies aren’t free

Progressives insist that we must take into account the impact of Obamacare’s subsidies on the net cost of insurance under Obamacare. I’ve argued that it is irresponsible to be unconcerned with the underlying cost of insurance, because subsidies don’t magically fall from the sky. They cost money, and they don’t benefit everyone. The taxpayers who pay for these subsidies will face a double-whammy of higher taxes and higher premiums.

Nonetheless, I’ve run the numbers; as I discussed last week, healthy 25-year-old Californians who are single and childless can expect to pay more under Obamacare, despite subsidies, if they make more than $18,558 a year.

I’ve now also run the numbers for 40-year-olds. I performed a slightly different analysis in this case; given that the average California household contains 2.90 individuals, I looked at the price of premiums, net of subsidies, for individuals who belong to households with 3 people. On that basis, healthy 40-year-olds in California will pay more for health insurance, despite subsidies, if their household income is more than $28,785 a year. (If you adjust the baseline rate for those with pre-existing conditions, the break-even point moves up to $31,914 a year, but that average is a fictional number in real life.)

While premiums will go up equally for men and women in California, women should benefit more from Obamacare’s subsidies. That’s because 40-year-old women have lower average incomes than men do. According to the Census, in 2011 the median income for 35-to-44 year olds was $36,724; however, for men it was $43,967, and for women it was $29,095.

Single, childless women will be most affected

That’s great news for women whose wages are below the national average, or whose households that are larger than the national average. But it’s terrible news for those with above-average incomes, along with those who are unmarried or childless. And it’s also bad news for the men who today pay for the disproportionate share of Obamacare’s subsidies. (Over time, the gender-based income gap is likely to narrow; for more than a decade, women have outnumbered men in American colleges, and educational status is highly correlated to income.)

Importantly, this analysis looks at the price of health insurance for a single individual within a household, instead of family-based insurance. While this situation won’t apply to everyone, it may apply to an increasing number of Americans, because Obamacare’s employer mandate only requires companies to cover insurance for their workers, and not their workers’ families.

The bigger problem, of course, is what happens if the people who face higher costs under Obamacare drop out of the system and pay the fine instead. Such adverse selection would make premiums even less affordable, and require a greater outlay of taxpayer subsidies.

Overall, it remains true that younger men will bear the brunt of Obamacare’s changes to the individual market of health insurance. Most states don’t currently require insurers to charge the same rates to women and men, which means that premiums will go up more on men in those states. Furthermore, more women than men will be eligible for Obamacare’s subsidies, due to their lower average income.

But in California, if you’re a single woman with a decent-paying job that doesn’t offer health insurance, you’re about to get hammered.

Original Source: http://www.forbes.com/sites/theapothecary/2013/06/17/a-war-on-sis-in-california-single-women-will-also-face-a-doubling-of-health-insurance-premiums-due-to-obamacare/

 

 
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