Good news, so-so news, bad news, and a path forward.

The good news is that Obamacare’s base premiums are 16% below projections. That means that the Congressional Budget Office, when it has estimated the federal cost of the program, has been overestimating the expenditures.

The HHS report at the link is a sign that Obamacare will likely reduce the federal deficit far more than originally thought.

The so-so news is that these federal savings don’t translate into consumer savings. 88% of the currently uninsured will qualify for premium support or Medicaid; only 12% of people will pay the base rate. The premium support is written into the law: your premium will be between 2% and 9% of your income, depending on how much you earn. While it’s great for the federal deficit, it doesn’t mean very much for consumers.

The bad news is in the same report, which lists some premiums for each state. As I’ve reported earlier, Ohio’s subsidies are among the least generous in the country. As a result, Ohio consumers will generally face higher premiums than the rest of the country.

Ironically, this is because our Silver plans have below-average premiums. The lowest-price Bronze plan1, though, has an above-average base rate. Here’s a sample of prices for a 27-year old making $25,0002. The Silver plan is $145 in each state.

state exchange type Bronze plan rank (out of 46)
Vermont state-run $0 1
New York state-run $62 2
Louisiana federal $71 4
Mississippi state-run $75 5
Texas federal $83 10
Michigan federal $89 16
average federal $93
Ohio federal $110 42
Oregon state-run $116 45

For people looking to spend less money, Ohio’s plan is the 4th most expensive in the country. This isn’t a product of age; Ohio has the 4th highest Bronze premiums for a family of four.

Now, the $17/month difference from the average is by no means the end of the world. However, Ohio’s cheapest plan is 77% more expensive than New York’s. Why, I’m so old, I can remember our Lt. Governor saying Obamacare needs to be stopped because it’ll raise rates by 88%!

Luckily, there’s a path forward.

As is fairly obvious from the chart, the premiums are generally much lower in states that set up their own exchange. Even Mississippi, where state leaders describe in Obamacare apocalyptic terms, have post-subsidy prices lower than the average.

To increase federal subsidies (saving consumers money and generating expenditures in Ohio) an exchange wants a sizable price difference between Bronze and Silver plans.

What other states have done (and Ohio hasn’t) is to strategically exclude lower-end Silver plans from the exchange. If, for example, Ohio were to drop Kaiser from the exchange (or get them to improve their Silver plan so that it costs more) then everybody’s subsidy would increase by $20 and everybody’s premium would decrease by $20.

I’m not advocating that we imitate Vermont (where subsidized enrollees pay nothing, but unsubsidized enrollees pay double what Ohioans pay). However, if it’s the case that the wealthiest uninsured persons refuse to buy from the exchange, then keeping low base rates will cost Ohioans a ton of money while saving money for almost nobody.

Keep in mind that lowering premiums by $20 a month is more money than Kasich’s tax cut plan.

In order to do this, we need a governor who is willing to perform the job description he’s running for, and set up a state-based exchange. Once we have a governor who’s willing to do the work, we can very easily drop our exchange prices to the national average.

Beautifully, this will be an ongoing process. Simply by administering the exchange and being tough on insurance companies, every Democrat can say “I want to make your premiums lower”, while every Republican will have to say “lowering premiums for private insurance is tantamount to Satanism”.


1 This will be the most popular plan by a long shot, which is why insurers have been trying to lower rates on their Bronze plans.

Within each metal rank, the plans are basically the same. Since they’re the same, there’s no reason to spend more money unless you want to stay in a particular network.

Bronze plans have lousy prescription coverage, though, so nobody with a Bronze plan is going to care about the network. They’re all going to get the least expensive premium.

2 I’ve added some oranges to this list of apples by including Kaiser data about state-run exchanges. The Kaiser data is for a 25-year old who earns more than the 27-year old, so it’s close enough.

The rank excludes 4 states for whom I couldn’t find data (MA, KY, 2 others). I also excluded Alaska, who has a different poverty level (!) than the rest of the country, so Alaskans get more subsidies than everybody else.

You learn something new every day.