Comparing Apples to Donuts

You will soon see claims from Governors and other officials that health insurance premiums in the new Exchanges are lower than expected or, as in New York, lower than current rates. Not so fast, Wabbit!

For example, Gov. Cuomo announced that health insurance plan rates that will be offered through New York’s Health Benefits Exchange have been approved. There was much made in the press about the fact that the rates that will be offered in 2014 are at least 50 percent lower than current rates.


He was referring to the current rates in the individual market. Really evaluating the exchanges takes a little deeper review of the figures.

Thanks to PPACA, we now have four defined levels of coverage (bronze, silver, gold and platinum) to consider. So to really see what we are getting you would have to be able to go back and sort all that coverage into the appropriate tiers and then price them out, which you probably can’t do.  Otherwise, you are comparing apples to donuts…both taste good and are good to eat (in moderation) but have decidedly different reputations in the food world.




Premiums will vary by geography, age, smoking status and income levels. Add to that choosing a plan that fits your budget and not even an actuary can come up with an acceptable comparison of now and then.

The point is that over the next few weeks, many more states will release their exchange rates and much will be made about whether there will be great savings or too high or good or bad in comparison to other things. In reality they are sort of just noise. Individuals and employers have to look at their costs and evaluate the offerings. Comparing the exchange rates to current health insurance premiums not a fair comparison.