Health Premiums Skyrocketing Under Obamacare

Image: Health Premiums Skyrocketing Under Obamacare

Tuesday, 08 Apr 2014 09:08 AM

By Melanie Batley

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The United States has seen the sharpest increase in health insurance premiums in the last year than possibly ever, a new survey has found, and analysts have concluded the "increases are largely due to changes under the Affordable Care Act."

According to Forbes Magazine, a quarterly survey by investment bank Morgan Stanley of 148 brokers who sell insurance showed that premiums accelerated in the last quarter more than of any of the 12 prior quarterly periods, a peak which has coincided with the run-up to the Obamacare deadline.

The average premium increases for insurance renewals in the most recent quarter were over 11 percent in the small group market and 12 percent in the individual market where consumers buy coverage directly from health plans. By comparison, the September survey showed that increases in the small group market averaged 3 percent, and 2 percent in the individual market.

In some states, increases have been 10 to 50 times those averages, according to Forbes. For the individual insurance market, premiums have increased an average of 100 percent in Delaware, 90 percent in New Hampshire, 54 percent in Indiana, 53 percent in California, 45 percent in Connecticut, and 37 percent in Florida.

For the small group market, Washington had an average increase of 588 percent, followed by Pennsylvania at 66 percent, California at 37 percent, and Indiana at 34 percent.

The data shows that "rate hikes have accelerated as Obamacare's regulations have started to get implemented," wrote Scott Gottlieb, a Forbes contributor who analyzes policy, regulation and public health.

The analysts conducting the survey believe the rate increases are due to a combination of four factors triggered by Obamacare:

• New commercial underwriting restrictions
• Age restrictions that prevent insurers from pricing premiums differently between young and old beneficiaries to reflect the actual costs of providing coverage
• New excise taxes being levied on insurance plans
• New benefit designs

"Morgan Stanley's results echo what consumers are already seeing: the Affordable Care Act's intensive regulation of the insurance market is driving healthcare premiums up strikingly," the Daily Caller wrote.

The survey appears to validate recent predictions by other analysts that premiums will skyrocket due to Obamacare, with other factors also driving the increases. In some cases, insurance companies may have "low-balled" prices for 2014 to attract customers, while others will probably raise prices to boost profits or compensate for the costs of participating in the new law, The Washington Post recently reported.

Bloomberg has said that Obamacare's failure to attract the required threshold of young consumers will also be a factor driving up rates.

Related stories:

Obamacare Effects Begin to Hit Home

Congressional Report: Obamacare Leads to Skyrocketing Premiums, 200 Percent Possible




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