Health Care Premiums Have Gone Down Under Obamacare

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Someone asked me on Twitter if health care premiums had spiked after Obamacare went into effect. That turns out to be a surprisingly hard question to answer. There’s loads of data on premiums in the employer market, where premium growth has slowed down slightly post-Obamacare, but not much in the individual market, which is where Obamacare has its biggest impact. However, a pair of researchers at the Brookings Institution rounded up the best evidence for pre-Obamacare premiums and compared it to premiums in 2014-17, when Obamacare was in effect. Here it is:

Premiums dropped in 2014, and are still lower than the trendline from 2009-13. So no, premiums didn’t spike under Obamacare.

Now, there are lots of caveats here. The pre-Obamacare estimates are tricky to get a firm handle on. What’s more, the Obamacare premiums are for the baseline coverage (second-lowest silver plan), while average pre-Obamacare policies might have been more generous in some ways (for example, deductibles and copays).

However, most of the pre/post differences suggest that Obamacare policies are better than the old ones. The old plans had an actuarial value of only 60 percent, while Obamacare silver plans have an actuarial value of 70 percent. The old plans were also limited to very healthy individuals. Obamacare plans are open to everyone. Finally, Obamacare plans mandate a set of essential benefits and place limits on out-of-pocket costs. These and other things suggest that premiums should have gone up under Obamacare.

But even with all these improvements, premiums still went down, and they haven’t caught up yet. Bottom line: Average premiums in the individual market went down after Obamacare took effect, and they’re still lower than they would have been without Obamacare.

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