Bending the curve

The Aaron Carrol at the  Incidental Economist did some window shopping on the Indiana Exchange and discovered significant system wide curve bending:

Silver plans for an individual range from $278 to $301 a month (before subsidies). This is far less than what the state released a while ago. For a family like mine, silver plans range from $938 to $1018 a month (before subsidies). What’s more, even the gold plans range from only $1175 to $1329 a month.

Since we know that the average employer sponsored health insurance plan for a family in the US is $16,351, that means the most expensive gold plan on the exchange, at $15,948, is cheaper. Let me say that again: The most expensive plan I could find for a family line mine on the Indiana Health Insurance Exchange is less expensive than the average employer sponsored health insurance plan in the US.

Given Dr. Carrol’s life situation ( high end researcher with an M.D.) odds are that he would get little to no subsidies on the Exchange AND his current employer picks up a very high percentage of his employer sponsored health insurance, so he would be individually worse off going to the Exchange.  However most employer coverage ranges from high Bronze to high Silver, so if Gold plans total costs are coming in at or under average high Silver commercially provided costs, this is a massive cost savings.

39 replies
  1. 1
    Kay says:

    I’m sorry Richard, I didn’t see your post.

  2. 2
    Richard Mayhew says:

    No worries… your post has much more real world impact

  3. 3
    srv says:

    Gold Plan must be worse than what he already has then.

  4. 4
    Richard Mayhew says:

    @srv: Actually, being somewhat creepy, I just looked up the Indiana University HR benefit package and their highest benefit plan looks to be roughly a Gold benefit package (my wild ass guess is ~82 to 85% acturial value), so the Exchange Gold is roughly what he would be getting at the top benefit level. The payout matrix is a bit different, as the IU plan has a OOP max that is 3x individual OOP which is a bit unusual of a design. It is a good plan but not an oh my god amazing Cadillac tax triggering plan.

  5. 5

    Employers will tune into this really quickly and start demanding better rates for their employer plans. They won’t get it, because the exchanges aren’t really an option for employers, so they’re stuck. But it may set up pressure from employers to expand the exchanges to allow employers to provide the subsidy directly for their employees. Something like that is supposed to happen for small businesses in 2015, but not large.

  6. 6
    Elizabelle says:

    That is superb news.

    And having this and Kay’s post up makes for a good Friday afternoon.

    Balloon Juice is an embarrassment of riches today. Lotso threads.

  7. 7
    jenn says:

    Interesting, thanks for highlighting this!

  8. 8

    @Richard Mayhew: That’s a pretty shitty plan for a university, actually. We have no annual deductible and no % cost to the employee. There’s a per visit copay for different things – $10 for physician visits and prescriptions, $50 for ER. It’s all gratis after that. Daughter had an emergency appendectomy a few months ago – two nights in the hospital, ambulance ride, 12 hours in ER, cat scan, surgery, two prescriptions (deductible waived because we got generics): $50.

    These are the kinds of plans universities usually offer to attract faculty.

  9. 9
    catclub says:

    So are the people who post “My BCBS premium just went up 70%”, are they making that up?

  10. 10
    Percysowner says:

    @👾 Martin: I completely expect employers to try and get access to the exchanges by getting permission to subsidize their employees premiums for the individual on the state exchanges. I do think exchanges for employers makes sense as well. Once this starts to work it will save everyone money.

  11. 11
    Seanly says:

    My employer coverage for my wife and me is probably equivalent to a silver plan (maybe midway between gold & silver). After my employer’s share, we pay $485 a month for BC PPO (this is in Idaho). Rates jumped way up in 2013 so I am hoping the new suckers clients for BC Idaho allows the rates to stay where they are.

    I could use the high deductible plans and save a lot on premiums. However, wife is non-Hodgkin’s lymphoma survivor still needing to get quarterly scans and we’ve both got a couple of other pre-existing issues. At our open enrollment, we have a tool that we can use to estimate costs and the BC PPO was slightly less expensive in the aggregate.

    LOL, I can’t see what the exchanges would cost me in Idaho. The fed non-application site sends me to the Idaho site which sends me back to the application side of the fed website.

  12. 12
    Mr. Longform says:

    Who cares if your insurance is cheaper and you are healthier and your children’s lives are improved and the economy expands and everyone is better off and more jobs are created and there are better goods and services as a result? I want my freedom instead, communists!!

  13. 13
    Seanly says:


    Many of the people complaining about huge increases might’ve had catastrophic-only high deductible plans. Once you add in the potential deductibles & max out of pocket cost, even then they should be saving money if they use the healthcare.

    People don’t always view their expenditures in a rational way. So a plan that costs $25 a month, but might require a bankruptcy-causing deductible does cost less, but is it fair to compare that to much better coverage for a higher monthly premium?

  14. 14
    maximiliano furtive, formerly known as dr. bloor says:

    @catclub: Safe to say that if anyone really was taking that kind of a hit for equivalent coverage, it would be a 24/7 story at Faux and the other usual suspects.

  15. 15
    maximiliano furtive, formerly known as dr. bloor says:

    @catclub: Safe to say that if anyone really was taking that kind of a hit for equivalent coverage, it would be a 24/7 story at Faux and the other usual suspects.

  16. 16
    DaveinMaine says:

    Yeah, but socialism…Hitler…no freedom…

    Can’t wait for two years from now when Republicans try to take credit for the cost savings the ACA brings to the budget.

  17. 17
    Richard Mayhew says:

    @catclub: Not neccessarily.

    IF someone is young, male and has absolutely no medical history, and was in the individual market, they are getting reamed on community rating AND enhanced required benefits. They don’t benefit from maternity coverage (they’re male), they don’t benefit from seeing max deductibles go from $25,000 for an individual to $6,300, they don’t benefit from a 3:1 age rating gap etc. They have to pay for it, but they don’t benefit. So yes, a 23 year old triathelete is probably paying more.

  18. 18
    feebog says:

    So yes, a 23 year old triathelete is probably paying more.

    Unless of course, like about 3 million other 18 to 26 year olds they stay on their parents coverage.

  19. 19
    Maeve says:


    “So are the people who post “My BCBS premium just went up 70%”, are they making that up?”

    Some younger, heathy people with individual plans now pay more because they were in a plan that cherry picked and only sold to young, healthy people. Employer plans cover everyone.

    For looking up estimates you can go to

    In Alaska as a single, 55 yo. No smoker I’d pay over $7974 for a silver plan, 6350 for bronze, and because that’s too high a percent of salary would have the option of a catastrophic plan. That’s without subsidies, but I have employer insurance.

    Alaska does have the 2nd highest exchange premiums for understandable reasons, Wyoming is highest. And the subsidies do seem to be tied to actual local cost of living. If I made 34,000 per year, I would pay 2582 in Alaska with a 5393 subsidy, but in Oklahoma I would pay 3190 out of pocket with 1024 subsidy for a total of 4214. Having lived in Oklahoma, so I’d actually pay less in AK than OK. Having lived in OK, I can tell you it doesn’t make up for the cost of living difference, but it makes it possible. It also doesn’t distinguish between Anchorage and rural Alaska which have major differences in cost of living,

    Both AK and OK are on the federal exchange and have not expanded Medicare. There are only two carriers on the AK exchange.

    It’s when the subsidy cuts out that there is major cost. But a lot of those without employer insurance are currently going naked or maybe have catastrophic, which the exchange seems to make available if bronze exceeds a percent of your income.

    My employer insurance has a BCBS network, but I officially live “out of network” so I can go to any local healthcare provider for in network care and would have to fly out for anything major anyway. I would hope the exchange plan do that in Alaska because that’s the only way it would work here.

  20. 20
    Tractarian says:

    B-b-b-b-but I got an error message when I tried to go to the website! How can I expect the government to give you health care when they can’t even set up a simple damn website properly! This is never going to be fixed! And so forth.

  21. 21
    TAPX486 says:

    What is it about Obamacare and Obama that drives the right into a reality that is several dimensions removed from where the rest of us live. This is a quote from the neurosurgeon Ben Carson.

    You know Obamacare is really I think the worst thing that has happened in this nation since slavery,” Carson said Friday. “And it is in a way, it is slavery in a way, because it is making all of us subservient to the government, and it was never about health care. It was about control.”

    Since he is African-American it can’t be all about race. There is no middle ground when dealing with these folks.

  22. 22
    Fake Irishman says:

    Richard, I’m glad Aaron put this up — I found some pretty similar things comparing the University of Michigan’s plans (which are good insurance) with what I can get in Houston, Texas on the exchanges. See here:

    Please keep up the good work here; these posts are really intelligent.

  23. 23
    PJ says:

    For what it’s worth, the exchange has lowered the cost of insurance by more than 70% for me. I am a single, non-smoking male in his 40s living in New York City. When I looked at getting insurance on the market as an individual for 2013, the cheapest rates for a silver plan were over $1400/mo, and gold plans were over $1500/mo. I signed up this week on the New York Exchange for a gold plan through the New York Co-op Health Republic (w/ $250 deductible, no out of pocket for preventative care) for $438/mo (silver plans were around $387/mo.)

  24. 24
    nastybrutishntall says:

    @catclub: In rural SW Colorado, unfortunately – prolly because of lack of competition (two! plans) – things got more expensive over the grandfathered plans for lots of folks. Don’t know if this has anything to do with anything except pure market forces.

  25. 25
    nastybrutishntall says:

    @nastybrutishntall: FYWP! While my previous comment is in moderation, I’ll try to rewrite it. catclub wonders if those of us seeing a big increase in the ACA exchanges is some kind of trolling. I’m in that boat. 39, healthy, divorced. High debts from the 2008 crash / child support cancelling out my $70k self-employment salary, so no premium support. But yeah, for the same bronze plan I have now, I’d pay $350 month (6.5k deductible) for what I pay $175 for now. Since I’m a fucking socialist, I don’t want to pay BCBS any more than those greedy bastards are getting now. I’d rather pay that kind of money directly to the government in exchange for a better plan. But not to Anthem. I can barely afford to buy shoes or dental cleanings as it is. I know my situation is not super common. But enough people are gonna see similar things that you’ll hear stories. The world is not perfect.

  26. 26


    So are the people who post “My BCBS premium just went up 70%”, are they making that up?

    Sort of. You can get really cheap policies, with super-high deductibles that are no longer allowed under ACA. So long as you never got sick, they were cheaper. The moment you actually need something non-trivial done, they become massively more expensive.

    So, in exchange for higher premiums they actually got a usable policy, but yeah, their premiums went up.

  27. 27
    nastybrutishntall says:

    @👾 Martin: see above. Same 6.5k deductible, twice the price. The ACA is not perfect. As Richard says, community pricing is gonna hit the healthy. I know I’m being sacrificed for the greater good. But not every bro is gonna react the same way, so we need to be prepared for the avalanche of libertarian triathlete douchecanoes complaining about their premiums skyrocketing.

  28. 28
    TAPX486 says:

    @nastybrutishntall: It only takes one illness to go from ‘I’m healthy so why am I being penalized to thank FSM I could afford that plan’. Take it one step further why pay insurance at all since you are young and healthy.

  29. 29
    Fair Economist says:

    It’s to be expected that the exchanges are cheaper. They get good economies of scale, cost advantages from standardization, and most importantly, there’s no need to try to figure out what a particular person “should” pay, over and over, for every enrollee. Finally, because it’s competitive, the insurance company can’t game the negotiations.

    It’s just a matter of time now before everybody is on the exchanges. Probably not much time, even.

  30. 30
    jenn says:

    @nastybrutishntall: Yeah, I heard that the Colorado implementation is particularly bad.

  31. 31
    johio says:

    In my case, it looks my premiums drop between 200 to 300 per month. I have a preexisting condition and only Anthem would cover me (in SE Ohio) with a truly crappy plan before. Looks like I have actual choices in 3 to 4 companies now. If I go with bronze plan I can save up to 400 per month. Even the Anthem plans are a lot less. I would call this the effect of competition, but then what would an obvious socialist like me know.

  32. 32
    Violet says:

    People have suggested that the ACA and the exchanges are going to affect how people see their work compensation because healthcare costs will be on paychecks and people can compare. Also that it wil habe an upward pressure on salaries. Could someone elaborate on that. I don’t understand that thinking.

  33. 33
    dedc79 says:

    Richard, This story out of South Carolina is all over the right wing nutjob blogs today, where they are claiming the ACA apocalypse is arriving and we’re all going to die. If you get a chance, would appreciate hearing your take on whether this is actually a signficant development

  34. 34
    TAPX486 says:

    @dedc79: I work for a major bank and have a company health plan. My healthcare deduction goes up every year. As often as not the bank figures out ways to shift more of the cost to me. Over the years I have had to change doctors because the ones I used were not part of the network.

    Why is any of this news to people. Sure some people will have to make changes as a result of ACA but medical plan change has been a fact of life for years. During the debate on Hillarycare there were very effective ads telling people that they would have to go to the government approved doctor. Well just at the same time the bank was going to a managed care plan and most tof the people I worked with, me included, had to change one or more doctors or hospitals.

  35. 35
    TriassicSands says:

    There is no way the PPACA is going to save anyone money. It can’t. It won’t. It isn’t possible. No way. There is no way that Obamacare will do anything but bankrupt this country and kill millions of people, not to mention Freedom. It can’t happen. Never. . Nie. Niemals.Jamais. Nunca. It’s just not possible.

    I’m going to hold my breath until every socialist in America agrees that Obamacare will never save anyone even one penny.

  36. 36
    Ken says:

    Do you think it would help to point out to the 23-year-olds who complain that they are subsidizing the 55-year-olds that they will be 55 some day?

  37. 37
    mclaren says:

    Unfortunately, this post demonstrates that Richard Mayhew doesn’t have a ghost of a clue what “bending the cost curve” actually means.

    “Bending the cost curve” does not mean a one-time reduction in health insurance or medical procedure or medical device costs. What bending the cost curve really means is reducing the rate of increase of medical costs over the long term.

    But of course there’s no evidence that the ACA will or can reduce the rate of increase in medical costs over the long term, since most of the provisions of the ACA haven’t even been implemented yet. There is some evidence about the way the ACA will affect long-term medical costs from the Massachusetts program on which the ACA is modeled. The evidence currently suggests that the ACA will strongly boost the rate at which medical costs increase.

    See the Washington Post article “Danger ahead? Massachusetts health costs are rising — fast,” 9 February, 2013.

    Representatives from the state’s nonprofit health plans as well as national for-profit insurers doing business in Massachusetts estimated the “medical cost trend,” a key industry measure, will climb between 6 and 12 percent this year — higher than last year’s cost bump and more than double the 3.6 percent increase set as a target in a state law passed last year.”

    Let’s pre-emptively debunk the lies and smears that will be hurled against this article and against me. First, the usual smear that “the articles mclaren links to actually prove the opposite of what he says.” That’s a lie, and it’s easy to prove it’s a lie — read the article. Next, the lie that “these links come from highly partisan sources that can’t be trusted.” Really? Sarah Kliff? One of Ezra Klein’s associates? At the Washington Post? That’s a “highly partisan source that can’t be trusted”? Try again, crackpots.

    Now comes the fallback position complete with the next round of lies — various ignorami will screech that “it’s only one article! It doesn’t prove anything!” So we come to the next piece of evidence, the Boston Globe article “No easy answers for containing health care costs,” Boston Globe, 22 September 2013.

    Lastly, we reach the final fallback position as the obots frantically try any lie, any smear, any contortion of illogic and denial of facts in their hysterical effort to prove that the ACA is actually a magnificent reform of America’s broken medical system, rather than the kick-the-can-down-the-road non-reform it actually is. “Those articles are out of date! Things have changed since those articles were written!”

    This last lie is the easiest to disprove — September 2013? Out of date? Please. Try again, obots — you really need to improve your lying skills. Look to Karl Rove and Joe mcCarthy for lessons; you’re just not doing it right.

    Now, enraged far beyond the capacity for rational thought, the obots will abandon any effort to argue with the facts or logic I’ve cited about the ACA and will predictably resort to vacuous name-calling. I’m insane, I’m off my meds, I’m evil, I’m a troll, and so forth and so on.

    Finished with the name-calling? Good. Let’s continue to discuss the actual facts about the ACA.

    Fact: the ACA does nothing to control underlying medical costs, and the fundamental problem with the cost curve in America is underlying medical costs. Ezra Klein has done such detailed work showing comparison costs between America (500% to 1200% times the typical cost of a medical procedure or drug in Europe or Japan) and the rest of the developed world that any effort to deny the problem is the cost of the procedures and medicines used in America fails the straight-face test. See Klein’s posts “21 graphs showing America’s health care costs are ludicrous,” “This is why controlling health care costs is almost impossible,” and “Why an MRI costs $1,080 in America and $280 in France” all from the Washington Post this year.

    Specifically, the ACA does nothing to rein in the exponential increase in medical costs in America, for the obvious reason that the ACA leaves medical care largely in the hands of for-profit business interests that operate like all businesses — charging whatever the market will bear. This leads to $20 cotton balls, $10 aspirin tablets, disposable plastic surgical implements that cost 50 cents to manufacture but get billed to the hospital for $40 and which the hospital then turns around and bills the patient for $1200. Massive ongoing bribery by big pharma companies which offer deals to doctors like “get a new car if you prescribe enough of this high-priced drug.”

    Richard Mayhew will of course dismiss and deny these inconvenient facts, just as he will deride and derogate the inappropriate logic which concludes that the only way to control the rate of cost increase in American medical care is to remove the profit motive. That is what essentially every other first world country has done. But of course that cannot be done in America, because in America, everything (including health care) must be treated as a rapacious cannibalistic laissez faire business which must be free to charge whatever the market will bear, no matter how many lives it destroys or how much wreckage it inflicts on America.

    And so we see that Richard Mayhew and the commenters on Balloon Juice are in fact Tea Party fanatics, eager Ayn Rand loons committed to maintaining the sacred right of doctors to charge $3180 for a CAT scan which (using the exact same machine) costs $250 in Germany. Profit is what it’s all about. That sacred Ayn Randian need to rip off the customer, to gouge the public for every last penny America’s vampiric medical industrial complex can squeeze out of its impoverished dying victims.

  38. 38
    xian says:

    @nastybrutishntall: are to obligated to drop your current coverage and buy on the exchange? If not, how are bein harmed? If so, why?

  39. 39
    xian says:

    of course the mclaren ignores IPAB, outcome-based reimbursement models, inefficiencies (corporate subsidies) removed from Medicare, etc.

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