You may have seen the headlines, such as this one from the Washington Post:
“California’s likely health insurance rates under new law are lower than expected”
California announced to great fanfare that insurance premiums in 2014 would range from 2% higher to 29% lower than in 2013.
This was greeted with surprise by many of the economists that were predicting higher rates in 2014. I was pretty skeptical myself. And of course, many of the supporters of the healthcare reform law were crowing.
And as it turns out, it was a fraud.
What the state actually did was compare 2013 small group rates, to 2014 individual rates. Group rates are always much higher than individual rates. An analysis by Lanhee Chen published in Bloomberg.com, showing that the actual rate increase a 25-year-old male might expect for comparable coverage is 38 to 53 percent.
The other under-reported news out of California is that several prominent health insurers have decided not to participate in California’s market. These include the nation’s largest health insurance company, UnitedHealth, along with Aetna and Cigna. Generally speaking, less competition will lead to higher premiums.
There is about to be a massive public relations campaign, where certain government officials and their advertising agencies will spend our tax dollars to convince everyone what a good deal they are getting – and reminding them the punishment they will face if they refuse to participate.
The fact that the state of California would have the audacity to put out this kind of fake comparison – simply in order to make things look better than they really are – hints at the kind of spin and distortion that is likely to be coming our way very shortly.