Massive Premium Increases Set for Obamacare

Image: Massive Premium Increases Set for Obamacare

Thursday, 21 Nov 2013 02:21 PM

By Jennifer G. Hickey

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The high cost of healthcare insurance under Obamacare will likely mean that fewer young, healthy people will sign up for coverage, and President Barack Obama's recent administrative fix to allow Americans to retain their current policies could ultimately lead to insurance premium "sticker shock" for many consumers.

The American Action Forum released a study last month showing that the lowest-cost health insurance coverage for a 30-year-old single male nonsmoker is set to increase by 260 percent between 2013 and 2014.

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"As a follow-up we have applied the same methodology to a 30-year-old single female nonsmoker purchasing the lowest-cost bronze level plan and the results – including an average increase of 193 percent – are just as shocking," the study disclosed.

Unfortunately it is this group of younger people the administration is depending upon for the success of the state-level insurance exchanges. An estimated 2.7 million 18- to 35-year-olds will have to participate for the Affordable Care Act to work as intended.

The outrage resulting from the millions of insurance cancellation notices prompted the Department of Health and Human Services last week to propose the administrative fix that would allow insurers to renew policies for current enrollees without adopting the 2014 market-rule changes.

But RAND Corp. economist Christine Eibner said the fix could result in fewer healthy people entering the new market. These enrollees are necessary to offset the costs associated with providing care to less healthy people who are joining the exchanges,and could lead to higher premiums and a destabilization of the insurance market.

"Insurers have already set prices for the exchange plans based on the assumption that old plans would be canceled, so premiums may be lower than necessary to cover the insurers' expenses. This could lead insurers to pull out of the exchange market, or to raise premiums next year," Eibner said in an interview with USA Today.

Following their recent meeting with the administration, the National Association of Insurance Commissioners issued a statement expressing concern that the "decision continues different rules for different policies and threatens to undermine the new market, and may lead to higher premiums and market disruptions in 2014 and beyond."

Karen Ignani, president of America's Health Insurance Plans, echoed those concerns.

"Changing the rules after health plans have already met the requirements of the law could destabilize the market and result in higher premiums for consumers," Ignani said in a statement.

"If due to these changes fewer younger and healthier people choose to purchase coverage in the exchange, premiums will increase in the marketplace and there will be fewer choices for consumers," she added.

The concerns are not unfounded.

Avik Roy of the Manhattan Institute recently released a comprehensive analysis of the impact of Obamacare on health insurance premiums in 47 states and the District of Columbia, and found the average increase in each state would be 41 percent, with the heaviest costs accruing to the healthy and the young.

The analysis also found that the primary beneficiaries of the subsidies will be those nearing retirement, sicker individuals, and those previously without insurance.

In California, as many as 600,000 people who purchase their own insurance may soon find their healthcare premiums increasing by as little as 5 percent to as much as 50 percent, the Sacramento Bee reports.

Janet Coffman, a professor at the Philip R. Lee Institute for Health Policy Studies at theUniversity of California at San Francisco, told the paper that the premium increases are "one of many areas in which the impact of the healthcare law on individuals and families varies widely."

Just as the administration was concerned with potential problems with the rollout of Healthcare.gov, documents obtained by CNN indicate that senior administration officials also worried about higher premiums.

Notes from an October 28 meeting of the administration's Obamacare "War Room" stated: "In some cases, there will be fewer options than would be desired to promote consumer choice and an ideal shopping experience. Additionally, in some cases there will be relatively high cost plans,”

Many Americans have already been hit with higher costs due to Obamacare.

The medical device tax – one of the more than 20 tax increases hidden in the ACA – went into effect at the beginning of 2013. It requires manufacturers to pay a 2.3 percent excise tax on certain medical devices, and the tax will likely be passed on to consumers.

While supporters claim the tax will generate an average of $3.2 billion a year over 10 years, the tax also is likely to harm the medical device industry through cuts in employment, decreased product innovation, and stunted competition, which will have an inordinate impact on smaller companies.

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Obamacare "sticker shock" also extends to small businesses, which are seeing healthcare costs rise, according to a recent survey by the National Federation of Independent Business. Almost 65 percent of 921 small business owners surveyed reported their per-employee health insurance costs were higher this year than they were in 2012.
 
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