This is from
Casey B. Mulligan, an economics professor at the
University of Chicago. You may read all of it
here at the New York Times.
In setting the 2015 calendar parameters for health plans and employers, Kathleen Sebelius, the secretary of health and human services, quietly did some creative but questionable arithmetic that forced taxpayers to give still more help to businesses and people who buy health insurance. ...
The average per capita premium for health insurance coverage increased in 2013, especially in the individual market, because the Affordable Care Act required plans to provide more benefits. For example, the eHealth price index was about 40 percent greater during the first quarter of 2014 than it was for calendar year 2013 (see this chart, in which the dotted red line is the 2013 average). This is no surprise – more benefits mean higher premiums – and I presume that Congress understood this. ...
But a political problem arises in that a premium increase that averages, say, 40 percent would require a 40 percent increase in the caps on what individuals with coverage can be asked to pay....
The Department of Health and Human Services needed a way to measure the average premium for health insurance without acknowledging what is actually happening to health insurance premiums.
The department explains the two principles behind its solution. The first principle is to estimate premiums with its own projections, rather than averaging actual premiums observed in the marketplace. The second principle is to limit its use of data to market segments where “the premium trend is more stable.”
Since only one year has passed since 2013, for now that means limiting the data used to market segments where the premium adjustments are sufficiently close to zero.
In particular, for now the premiums in the individual market will be ignored for the purposes of estimating changes in premiums. As a result, the secretary has declared that the premium adjustment percentage is but a fraction of 40 percent: 4.2 percent, when rounded off. ...
Perhaps taxpayers of the future will remember March 11, 2014, as the day when one cabinet secretary added billions of dollars to the deficit.
The emphasis added is mine.
