A new analysis by Brookings health policy researchers Loren Adler and Paul Ginsburg concludes that just as the Obamacare designers hoped, average health insurance premiums on the individual market are considerably lower than they would have been without Obamacare (Affordable Care Act, or ACA) . The researchers did not expect to discover this effect of the ACA.  

The people who designed the ACA wanted to create a transparent, regulated market to lower prices. That seems, in fact, to have happened — popular belief notwithstanding. Although health care in the US is still shockingly expensive, individual health insurance premiums would have been a lot higher with no ACA, according to these experts.

Various factors push insurance premium prices up or down post ACA.

Factors that make insurance cost less under the ACA, saving money for consumers, include:

• Transparency: All insurance policies must be described in a standardized way, allowing consumers to compare prices.
• Individual mandate: Everyone has to buy insurance, which brings inexpensive healthy people into the market to subsidize sick people.
• Medical loss ratio requirements: Now insurers must spend 85% of premium dollars on actual health care. (But the authors believe this has only a small effect.)
• Narrow networks: Narrow networks are cheaper. Consumers don’t like them, but nevertheless many consumers in the individual marketplace choose cheaper narrow networks over more expensive wider networks.

Factors that make insurance cost more under the ACA include:

• Guaranteed issue: Now insurers must give insurance to everyone of a certain age at the same price, no matter how sick and expensive the person is.
• Essential benefits: Every insurance policy must offer certain essential benefits like free vaccinations and a free yearly checkup.
• Yearly out of pocket limits: Nobody can pay more than about $6,000 in out of pocket costs per year.
• No lifetime limits: Insurers cannot impose lifetime limits in coverage; no matter how expensive a person’s costs are over their lifetime, the insurer must continue coverage.

It turns out that, according to the authors, that the money-saving provisions of the ACA win, and premiums are lower than they would have been without an ACA. (But insurance is still very expensive.) The researchers say,

According to our analysis, average premiums for the second-lowest cost silver-level (SLS) marketplace plan in 2014, which serves as a benchmark for ACA subsidies, were between 10 and 21 percent lower than average individual market premiums in 2013, before the ACA, even while providing enrollees with significantly richer coverage and a broader set of benefits. Silver-level ACA plans cover roughly 17 percent more of an enrollee’s health expenses than pre-ACA plans did, on average. In essence, then, consumers received more coverage at a lower price.

In other words, premiums are a lot less, and coverage is a lot better, than they would have been without the ACA. Importantly, note that this study compares ACA Silver policies, before subsidies, to all policies pre-ACA. The Silver policies cover more than the average pre-ACA policy, and they are also cheaper than the same policies would have been if there were no ACA. Many people who get Obamacare policies get subsidies, so they save even more.

The researchers supply many caveats. Insurance premiums are local, and vary a lot over different areas of the country. Since most of the effects that lowered prices were a result of competition between insurers, areas with few insurers should see higher prices than areas with more insurers. Moreover, although the authors don’t point this out, the ACA’s guaranteed issue provision means that some healthy consumers, especially older healthy consumers, are paying a lot more for insurance than they would have paid if they could have bought policies that excluded sick people. 

Health care in the US is still very expensive, but under Obamacare on average we get more coverage for less money.