One of the pleasant surprises of the Obamacare exchange roll-out has been reported premiums are coming in significantly below CBO projections. That means two things. The first is that more people will be able to afford coverage as the sticker price is lower, and the subsidy should drop out of pocket coverage costs even more. The second is that the subsidy cost is lower which means the total cost of the program should be lower than anticipated.
Hoocoodanode that markets actually work reasonably well when information asymetries are smoothed out, search costs are lowered, and there is a common framework of understanding?
Shocking. We’ll go below the fold to look at a major driver of lower than expected premiums.