The Sacramento Bee began to get this crucial point with a quote from California’s insurance commissioner, Dave Jones, who cautioned: “It is premature to hazard an opinion as to how these rates compare to rates in the individual market today or whether they are justifiable.”
One exception to the less-than-skeptical coverage came from Chad Terhune, an insurance reporter for the Los Angeles Times, who asked the key question “Compared to what?”
Terhune did some digging and found that the average premium last year for individual coverage sold in the state through eHealthInsurance, an online service, was $177 per month. The California exchange said that the average premium for the three lowest priced silver plans across the state was $321 a month—81 percent more. The silver plan will cover just 70 percent of a person’s medical expenses, but at the same time will offer the essential benefits that Obamacare requires.
In Politico’s piece, Lee defended the apples-to-oranges comparison, saying that current individual policies are not the right comparison, because their benefits are skimpier than those offered by the new policies. They’re closer to what small business employees get now, he argued. Politico reporter David Nather also interviewed Micah Weinberg, a policy adviser at the Bay Area Council, a public policy group backed by the business community. Yes, Weinberg conceded, some of the old policies do have crappy coverage. But that’s still the comparison most people use when deciding whether Obamacare made their rates go up. His observation is spot on.
In reporting the good-news story from the West Coast, reporters also neglected to ask the question about what coverage a persons get for the low rates—if indeed they are low. The “For What?” question about benefits is just as important as the “Compared to What?” question about rates.
Terhune at the LA Times went there, too, reporting that insurers were selling plans with networks that give consumers “far fewer doctors and hospitals to choose from.” For example, the prestigious Cedars-Sinai Medical Center so far is not in any of the networks of the insurers whose rates the California exchange has announced. Insurers are including in their networks for exchange policies only providers who are willing to give deep discounts—sometimes in the 30 percent range. If they can pay providers less, the theory goes, they can pass on the savings in the form of lower premiums. But there’s a trade-off between a cheap premium and going to your favorite doctor.
There are other trade-offs that did not make it into this round of rate stories, and reporters need to explore them in future pieces. I spent some time on the website of the Oregon Insurance Division, which listed rates for insurers selling one of the four standardized policies—the bronze policy, which will cover only about 60 percent of someone’s medical expenses. The monthly premiums for individual policies were indeed low, ranging from $169 to $422 per month, depending on a host of variables, for a single 40-year-old who doesn’t smoke.
The site also disclosed what a person gets for that low premium. The bronze plan comes with a $5,000 deductible for an individual ($10,000 for a family) and very high cost sharing for many services. For example, a person would have to pay 50 percent of the bill for a stay in the hospital, even to have a baby; 50 percent for emergency care, unless it resulted in an admission; 50 percent for diagnostic tests like CT scans and MRIs; and $120 for every urgent care visit. In other words, premiums may be low but that may be nothing to celebrate if you get sick or hurt.