California Does NOT Fudge the Math on Obamacare

Over the past few days, fans of the Affordable Care Act have been celebrating the news that the expected premiums for California’s health care plans have come in well below expectations. Sarah Kliff summarized the story nicely on Wonkblog. Just a bit ago, former policy director for Mitt Romney, Lanhee Chen, wrote an article for Bloomberg View arguing that California did not compare plans correctly and that premiums would actually increase. Here’s Chen:

Covered California, the state-run health insurance exchange, yesterday heralded a conclusion that individual health insurance premiums in 2014 may be less than they are today. Covered California predicted that rates for individuals in 2014 will range from 2 percent above to 29 percent below average small employer premiums this year.

Does anything about that sound strange to you? It should. The only way Covered California’s experts arrive at their conclusion is to compare apples to oranges — that is, comparing next year’s individual premiums to this year’s small employer premiums.

I hadn’t seen any push back on the California numbers so this immediately intrigued me. Chen goes on to offer what he deems a direct comparison of California health care plans:

So, let’s make an actual apples-to-apples comparison for the hypothetical 25-year-old male living in San Francisco and making more than $46,000 a year. Today, he can buy a PPO plan from a major insurer with a $5,000 deductible, 30 percent coinsurance, a $10 co-pay for generic prescription drugs, and a $7,000 out-of-pocket maximum for $177 a month.

According to Covered California, a “Bronze” plan from the exchange with nearly the same benefits, including a slightly lower out-of-pocket maximum of $6,350, will cost him between $245 and $270 a month. That’s anywhere from 38 percent to 53 percent more than he’ll have to pay this year for comparable coverage! Sounds a lot different than the possible 29 percent “decrease” touted by Covered California in their faulty comparison.

I wanted to find out where those numbers came from so I dug into the Covered California report (PDF). Here’s the important table from page 39 of the report:

Covered California

The three most expensive plans range from $245 to $270 but Chinese Community Health Plan and Anthem both offer cheaper plans! That $174 plan is actually $3 per month cheaper than the current plan that Chen outlines. Am I missing something here or did Chen just deliberately choose the more expensive plans as examples to prove his point? If he did, it’s just blatant dishonesty. Otherwise, I’m not really sure why he excluded Chinese Community Health Plan and Anthem. I’m not an expert on health policy and certainly not one on the San Francisco area, but this seems pretty straightforward to me.