More On Premium Predictions

Meanwhile, I have obtained some information on the Gruber estimates--sorry for not updating in the post, but we're having some technical difficulties that make it impossible to update cross-posted entries.  Gruber says he started with the CBO's figure of $4700 (he says $5,000 but I assume he used the correct figure in his model) for a single policy, discounted it for inflation, and then multiplied it by 2.7 to get to the family numbers.  I still can't make his numbers work unless I use different inflation rates for different types of policies, but I'm not sure how much that matters.

But I'm not comfortable with the decision to ignore the CBO's family numbers, which are considerably less rosy than his.  The CBO presumably has reasons for picking the multiples it did, including expected changes in the composition of the family market--in fact, their estimate specifically states this:

Compared with family policies that are expected to be purchased in the exchanges, family policies purchased in the current-law nongroup market cover fewer dependents, on average. That difference largely explains why the ratio of single to family premiums differs across those settings.

Of course, covering more family members is presumably valuable for people.  But the fact remains that they're going to have higher premiums, and no choice about paying them.

Update:  I can get something very close to Gruber's numbers if I assume 6% annual inflation for 6 years, rather than the seven I was counting between 2009 and 2016, and that young, healthy workers get virtually no discount in the current system over what Gruber estimates they would receive in a mandated, community rated system.  So mystery solved, except for the part where we have 6% annual inflation.

The problem with ignoring the CBO's family estimates remains, however.


But I'm not comfortable with the decision to ignore the CBO's family numbers, which are considerably less rosy than his. The CBO presumably has reasons for picking the multiples it did, including expected changes in the composition of the family market--in fact, their estimate specifically states this:

Compared with family policies that are expected to be purchased in the exchanges, family policies purchased in the current-law nongroup market cover fewer dependents, on average. That difference largely explains why the ratio of single to family premiums differs across those settings.

Of course, covering more family members is presumably valuable for people. But the fact remains that they're going to have higher premiums, and no choice about paying them.

Presented by

Megan McArdle is a columnist at Bloomberg View and a former senior editor at The Atlantic. Her new book is The Up Side of Down.

How to Cook Spaghetti Squash (and Why)

Cooking for yourself is one of the surest ways to eat well. Bestselling author Mark Bittman teaches James Hamblin the recipe that everyone is Googling.

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register.

blog comments powered by Disqus

Video

How to Cook Spaghetti Squash (and Why)

Cooking for yourself is one of the surest ways to eat well.

Video

Before Tinder, a Tree

Looking for your soulmate? Write a letter to the "Bridegroom's Oak" in Germany.

Video

The Health Benefits of Going Outside

People spend too much time indoors. One solution: ecotherapy.

Video

Where High Tech Meets the 1950s

Why did Green Bank, West Virginia, ban wireless signals? For science.

Video

Yes, Quidditch Is Real

How J.K. Rowling's magical sport spread from Hogwarts to college campuses

Video

Would You Live in a Treehouse?

A treehouse can be an ideal office space, vacation rental, and way of reconnecting with your youth.

More in Business

Just In