The cost of Obamacare varies wildly by state

October 13, 2013

The feds will spend just about $10,000 subsidizing health insurance costs for a poor, middle-aged man who lives in Georgia - and just $3,000 buying the same guy in nearby Tennessee a near-identical plan.

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This is the weird world of financing the Affordable Care Act, where the prices that the insurers charge for health care directly impact how much Obamacare will cost the federal government.

John Graves, a researcher at Vanderbilt University, has spent some time toying around with data on premium rates across the country. The federal government has made this data accessible through the HealthCare.gov site. It will show you the premiums for a moderate level plan for each county in the 35 states where the federal government is running the marketplace.

The health law guarantees that, up to 400 percent of poverty level, shoppers on the marketplace won't have to spend more than a certain percent of their income on insurance premiums. The higher you get up the income scale, the larger chunk of your income your expected to kick in.


Someone who earns 100 percent of the poverty line (right now, $11,490 for an individual) is only expected to spend 2 percent of his or her income on health coverage, or $19 for a monthly premium. If the insurance plan charges more than that - and there's a good chance it does - the federal government has to kick in the difference.

In a state like Wyoming, for example, the cost of a medium level plan (or, for the wonks, the second-lowest cost silver-level plan) is $743 per month. Since the enrollee is only putting up $19 per month, that leaves the federal government footing a bill of $724 per month or $8,688 annually.

It's not totally clear why certain pockets of the country - Southern Georgia, for example, or the whole state of Wyoming - ended up with significantly higher premium costs than the rest of the country. Graves thinks that some of it has to do with this being the first year of insurers bidding on the new marketplaces, and having to do a bit of guesswork on what premiums ought to be.

In Wyoming and Georgia, where there are only two plans selling on the marketplace, those guesses came back especially high.

"To some extent, this might reflect the way they're going out of their current population to figure out who the exchange enrollees are going to be," Graves says. "The fact that this process was so blind, that they've never dealt with an insurance expansion this side and don't know what other insurers in the state are going to do, that leads to guess work."

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Ezra Klein · October 13, 2013