ObamaCare price hikes hit 'red states' hardest
By Maxim Lott
Published November 05, 2013
Experiencing sticker-shock at the price of insurance on ObamaCare exchanges?
That's more likely if you live in a "red state" that didn't vote for Obama, according to price data compiled by the Heritage Foundation. In red states, premiums for 27-year-olds rose an average of 78% on ObamaCare exchanges, whereas in "blue states" that voted for Obama, premiums rose a smaller 50%.
Senate critics of ObamaCare say the difference is one way in which the bill is unfair.
"It’s unfair, outrageous and unacceptable," Senator John Barrasso, R-Wyo., who is also an orthopedic surgeon, said in a statement to FoxNews.com.
“After discovering that the President broke his promise that Americans can definitely keep their coverage, many red state Americans are now finding out that their rates will soar under ObamaCare. This... proves once again that the President’s health care law picks winners and losers across the country," he added.
Health policy experts say the reason red states got hit hardest is that they had fewer regulations to begin with.
"Think about it this way, what does ObamaCare do? ObamaCare imposes a one-size-fits-all regulatory scheme upon the insurance market. So if you're in a lightly regulated state today, all of a sudden it's going from a lightly regulated system to a heavily regulated system, and that drives up a lot of the costs," Avik Roy, a senior fellow at the Manhattan Institute who specializes in health policy, told FoxNews.com.
The increased regulations in question include requirements that insurers provide things like preventative care and contraceptives, which ObamaCare will now require in all states.
Asked about the numbers, the head of the pro-ObamaCare group Doctors for America pointed out that they don't take into account government subsidies that low-income people get under ObamaCare for purchasing insurance.
"The figures don’t take into account the subsidies... So it might be in a chart, but it’s not what people are actually seeing out there when they’re getting coverage," Alice Chen, Doctors for America Executive Director and a practicing internal medicine physician, told FoxNews.com.
Roy says that's a bad argument.
"The idea that somehow insurance cost increases don't matter because there are subsidies for people -- no, because subsidies are paid for by taxpayers. Subsidies aren't free. They don't fall from the sky. So if you're going to take subsidies into account, you also have to take the taxes into account that paid for these subsidies," he said.
Slightly more red state Americans qualify for subsidies than blue-staters: 8.3% of people, compared to 7.9% of blue staters, according to data provided by Roy which is also on the Manhattan Institute's "Know Your Rates" calculator.
Chen added that, thanks to ObamaCare's subsidies, the rate increases would not be a problem for most young people.
"A Department of Health and Human Services analysis came out last week which showed that 50% of young Americans would actually be able to buy a plan for $50 or less a month. Makes me wish I was in that age bracket!" she said.
"It's because the vast majority of young people can now enroll in Medicaid, which is effectively free. That's $50 or less. But Medicaid is awful insurance, and it has very poor health outcomes that are barely better than being uninsured. So yeah, you're going to get this "free insurance" that doesn't actually let you see any doctors."
A Republican Senate staffer who does health policy told FoxNews.com that the rate changes discussed so far aren't the only way in which ObamaCare transfers money from red to blue states.
"Red states are subsidizing the blue states' Medicaid expansion... What you have is a lot of the wealthier states, a lot of the bluer states, are expanding Medicaid. And the federal government has promised to pay 90 cents of every dollar to expand Medicaid to include childless adults," the staffer told FoxNews.com.
"I don't think it's intentional on the part of the administration," he added.
Due to ObamaCare, a few "blue states" such as New York will actually see health insurance costs fall. Experts say that's because of a law in those states known as "community rating", which in New York means that everyone must pay the same price for insurance regardless of age or health. Since healthy young people were being charged the same rate as a 64-year-old with health problems, many young people gave up on buying insurance. But now, ObamaCare will force them to get insurance, and insurers may then charge everyone a bit less because young and healthy people cost them relatively little.
"A lot of these young people who opted out of insurance in New York will be forced to opt back into the system due to ObamaCare, and that will bring down rates," Roy said.
While the advertised prices of insurance in red states will rise 78%, and in blue states a smaller 50%, Roy pointed out that people were not always charged the advertised prices -- sick people have generally been charged more, but that will be illegal under ObamaCare, and so their premiums will go down. Roy redid the numbers to account for that, and using his numbers, the price increases change to 66% in red states and 48% in blue states for 27-year-olds. For 40-year-olds, it's a 37% increase in red states and a 28% increase in blue states.
"Our numbers are more flattering to the Obama administration, because if you're a healthy person you're going to pay a lot more than our numbers show," Roy said.
Chen said that, even if rates rise in some places, it's because ObamaCare has forbidden dishonest plans.
"In those states where it has traditionally been easier for insurance companies to sell a plan where they can yank it back as soon as you get sick, it is possible that you’re going to have to pay a little extra to be sure that plan is going to be there when you need it," Chen said.
Roy said insurance companies yanking coverage is already illegal.
"It almost never happens. It's already illegal unless you've lied on your forms," he said.
Senators opposed to ObamaCare say the whole thing is another reason to scrap the bill.
"We need to suspend the entire law and replace it with what all Americans wanted all along – affordable, accessible care,” Senator Barrasso told FoxNews.com.