Obamacare: it might just work as intended

Way back in 2009, when the CBO was estimating how much people were going to pay for health insurance in the soon-to-be-created exchanges, they gave a pretty startling number: $433 a month per person, on average, for a silver plan.

A lot of studies looked similar, and critics started talking about "sticker shock" once the law was implemented. The Affordable Care Act would be forcing people to get expensive insurance that they can not pay, and so on.

Well, we are starting to see the exchanges come to life, and it turns out that the premiums are coming much lower than everyone expected. California just published the list of plans and premiums from their (gigantic) exchange, and the cheapest silver plan for a 40 year old male costs $276 a month, or a 63% of the expected cost. This premiums would be for unsubsidized plans; for individuals below 400% the Federal Poverty line, the costs would be actually much lower (in grey, the subsidy amount):

silver 40

¿Surprising? Well, sometimes it turns out that legislation does work as intended; a big pool of potential clients, plus standardized, comparable plans, plus plenty of competition between insurance companies translates into pretty affordable prices. Admittedly California is a huge market with more than seven million uninsured and their exchange have pretty detailed cost-control regulations, but the basic structure of Obamacare is sound, so it is not surprising that it might just deliver.

The most important bit of this prices, by the way, are not the premiums for forty-somethings; the success of the law lies in convincing low risk, young patients to enroll instead of paying the penalty. The premiums on that end are pretty affordable, all things considered. Here we have the cheapest bronze (less generous) plans:

bronze 21

Again, not too bad, and the subsidies make a huge difference. This legislation might just work as promised. And that´s very good news. The rates so far in Connecticut don´t look terrible, but we haven´t seen the insurance carriers competing yet. We´ll see.

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