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Analysis: In Obamacare rate debate, price gets political

A combination file photo shows opponents (L) and supporters (R) of Affordable Healthcare Act rally on the sidewalk at the Supreme Court in W
A combination file photo shows opponents (L) and supporters (R) of Affordable Healthcare Act rally on the sidewalk at the Supreme Court in W

By Caroline Humer

NEW YORK (Reuters) - With the October 1 date for enrollment in the health insurance exchanges being created by Obamacare less than two months away, a war of numbers has been escalating.

Health insurance will cost way less. Or it will cost way more. It depends who you ask.

Residents of states that have embraced President Barack Obama's healthcare reform, including New York, California and Oregon, will save on health insurance, officials there say. In Indiana, Florida, Ohio and Georgia, where opposition to the healthcare law runs high, residents will suffer an unprecedented spike in costs, according to the states' insurance departments.

Fueling the divide is the creative use of statistics by states to support their political stance on Obamacare. And because there is no standard for how to compare premium prices for the new insurance plans, it is easy to turn the numbers into a political football, actuaries, exchange officials and health economists say.

"So much of what we are reading about these days is part of the ... back-and-forth of 'it's a disaster' or 'it's really going to be nirvana for consumers,'" said Jon Kingsdale, former head of the Massachusetts Health Connector insurance exchange and a managing director at the Wakely Group healthcare consultancy.

"For consumers, the real helpful information is going to come in October when they can get on the exchange and look at the full comparisons," Kingsdale said.

Enrolling enough consumers is key to making the healthcare overhaul work economically, with price considered the most important factor driving enrollment, according to insurance industry surveys.

"There is not necessarily one best way to do this," said Cori Uccello, an actuary who works as a fellow for the American Academy of Actuaries. "What is important when looking at these comparisons is understanding what the before and after are representing."

None of the figures account for the substantial government subsidies that are expected to apply to a majority of the uninsured who enroll next year. Also missing from the conversation is the makeup of each plans' doctor networks, the out-of-pocket costs like deductibles and co-insurance, and the exact premiums by age or location.

The Obama administration is counting on signing up 7 million uninsured Americans in the first full year of reform through the state exchanges, including 2.7 million younger and healthier consumers who are needed to offset the costs of sicker members.

STATE BY STATE DEBATE

States and the federal government are beginning marketing and education campaigns this month to win over the uninsured. At the same time, Obamacare's opponents are increasing calls to roll back the program. A government deadline this week to submit health plan prices for review has played into the battle, as individual states announce how prices are shaping up.

New York Governor Andrew Cuomo, a Democrat, said last month that prices for top-of-the line "platinum" and "gold" insurance plans would fall more than 50 percent compared to what individuals are paying for insurance they bought directly this year.

New York's insurance rates are currently among the highest in the country. The estimated decline in rates is based on an expectation that the number of New Yorkers who buy individual health plans will balloon from 17,000 people to 1 million in the next few years as the Congressional Budget Office has forecast, the state said.

Republican-led Indiana swung the opposite way, saying insurance costs would rise by 72 percent in 2014 compared with 2012. Indiana added to its model costs such as deductibles, prescription rates and co-insurance or co-payments, the only state that appears to have done so.

The federal government has also entered the fray, saying that prices in 10 states and Washington, D.C., on average will be 18 percent lower than what the Congressional Budget Office estimated for the mid-range or "silver" plans.

To get to the 18 percent figure, the Department of Health and Human Services compared proposed premium prices with a figure derived from a forecast by the CBO, the non-partisan research arm of Congress. HHS used the CBO forecast of an annual premium of $15,400 in 2016 for a family, and divided by 2.7 people to arrive at an estimate for an individual in 2014.

Douglas Holtz-Eakin, a former head of the Congressional Budget Office, says the HHS report relies largely on data from states taking an active role in implementing Obamacare, suggesting that the government has cherry-picked the results.

"It's not a random sample. It's from states that have set up their own exchanges and are sympathetic to the cause," said Holtz-Eakin, who now heads the center-right American Action Forum.

HHS declined to comment on the various ways that rate data are being presented. In the study, it said it aimed "to move from theoretical arguments to data-driven analysis."

But many observing the cost debate say that too many unknowns remain to say if the estimates are right - or wrong.

"I don't know whether this 18 percent is right or not," said Jay Angoff, a lawyer at Mehri & Skalet who previously worked at HHS as director of the Office of Consumer Information and Insurance Oversight, referring to the HHS report. "There are other factors than actuarial analysis that affect the rates. This is a huge new market that is going to be heavily subsidized."

(Additional reporting by Sharon Begley; Editing by Michele Gershberg and Leslie Adler)

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