If you like the “Tax Relief” that just extracted an extra $1,000 or $2,000 from your paycheck, you’re going to love how much Obamacare is going to “save” you. Obama and his minions strategically delayed the cost increases from Obamacare until after the election. Now you are going to get an Obama proctology exam like you aren’t going to believe. Good and hard. Read this story and weep. Insurance premiums are going to soar in the next year. Companies are getting notice now. Their choices are:
- Accept the 50% to 100% increases and allow their profits to be destroyed.
- Pass most of the increases onto employees.
- Fire some employees and pass a portion of the increase onto the remaining employees.
Bend over the Obamacare express is on its way.
ObamaCare’s Health-Insurance Sticker Shock
Thanks to mandates that take effect in 2014, premiums in individual markets will shoot up. Some may double.
By MERRILL MATTHEWS AND MARK E. LITOW
Health-insurance premiums have been rising—and consumers will experience another series of price shocks later this year when some see their premiums skyrocket thanks to the Affordable Care Act, aka ObamaCare.
The reason: The congressional Democrats who crafted the legislation ignored virtually every actuarial principle governing rational insurance pricing. Premiums will soon reflect that disregard—indeed, premiums are already reflecting it.
Guaranteed issue incentivizes people to forgo buying a policy until they get sick and need coverage (and then drop the policy after they get well). While ObamaCare imposes a financial penalty—or is it a tax?—to discourage people from gaming the system, it is too low to be a real disincentive. The result will be insurance pools that are smaller and sicker, and therefore more expensive.
How do we know these requirements will have such a negative impact on premiums? Eight states—New Jersey, New York, Maine, New Hampshire, Washington, Kentucky, Vermont and Massachusetts—enacted guaranteed issue and community rating in the mid-1990s and wrecked their individual (i.e., non-group) health-insurance markets. Premiums increased so much that Kentucky largely repealed its law in 2000 and some of the other states eventually modified their community-rating provisions.
States won’t experience equal increases in their premiums under ObamaCare. Ironically, citizens in states that have acted responsibly over the years by adhering to standard actuarial principles and limiting the (often politically motivated) mandates will see the biggest increases, because their premiums have typically been the lowest.
Many actuaries, such as those in the international consulting firm Oliver Wyman, are now predicting an average increase of roughly 50% in premiums for some in the individual market for the same coverage. But that is an average. Large employer groups will be less affected, at least initially, because the law grandfathers in employers that self-insure. Small employers will likely see a significant increase, though not as large as the individual market, which will be the hardest hit.
We compared the average premiums in states that already have ObamaCare-like provisions in their laws and found that consumers in New Jersey, New York and Vermont already pay well over twice what citizens in many other states pay. Consumers in Maine and Massachusetts aren’t far behind. Those states will likely see a small increase.
By contrast, Arizona, Arkansas, Georgia, Idaho, Iowa, Kentucky, Missouri, Ohio, Oklahoma, Tennessee, Utah, Wyoming and Virginia will likely see the largest increases—somewhere between 65% and 100%. Another 18 states, including Texas and Michigan, could see their rates rise between 35% and 65%.
While ObamaCare won’t take full effect until 2014, health-insurance premiums in the individual market are already rising, and not just because of routine increases in medical costs. Insurers are adjusting premiums now in anticipation of the guaranteed-issue and community-rating mandates starting next year. There are newly imposed mandates, such as the coverage for children up to age 26, and what qualifies as coverage is much more comprehensive and expensive. Consolidation in the hospital system has been accelerated by ObamaCare and its push for Accountable Care Organizations. This means insurers must negotiate in a less competitive hospital market.
Although President Obama repeatedly claimed that health-insurance premiums for a family would be $2,500 lower by the end of his first term, they are actually about $3,000 higher—a spread of about $5,500 per family.
Health insurers have been understandably reluctant to discuss the coming price hikes that are driven by the Affordable Care Act. Mark Bertolini, CEO of Aetna, the country’s third-largest health insurer, broke the silence on Dec. 12. “We’re going to see some markets go up by as much as 100%,” he told the company’s annual investor conference in New York City.
Insurers know that the Obama administration will denounce the premium increases as the result of greedy health insurers, greedy doctors, greedy somebody. The Department of Health and Human Services will likely begin to threaten, arm-twist or investigate health insurers in an effort to force them into keeping their premiums more in line with Democratic promises—just as HHS bureaucrats have already started doing when insurers want premium increases larger than 10%.
And that may work for a while. It certainly has in Massachusetts, where politicians, including then-Gov. Mitt Romney, made all the same cost-lowering promises about the state’s 2006 prequel to ObamaCare that have yet to come true.
But unlike the federal government, health insurers can’t run perpetual deficits. Something will have to give, which will likely open the door to making health insurance a public utility completely regulated by the government, or the left’s real goal: a single-payer system.
Mr. Matthews is a resident scholar with the Institute for Policy Innovation in Dallas, Texas. Mr. Litow is a retired actuary and past chairman of the Social Insurance Public Finance Section of the Society of Actuaries.
ALEXISTAN says:
That’s what gold’s for. Black-market health care.
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15th January 2013 at 2:29 pm
JIMSKI says:
Talk about a moving target. My wife works for a large retailer and they have revised cost estimates for this fiasco upwards 3 times. Each time they re budget the cost estimate and write off the previous estimate. Total so far north of 3 million bucks.
FOR THE ESTIMATE
The actuarial tables do not exist for this shit. They are making it up as they go.
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15th January 2013 at 2:35 pm
Ron says:
I figured the idea was to put insurance companys out of buisness.The employers well just drop offering insurance and get on the guvment plan.
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15th January 2013 at 2:53 pm
napari says:
The insurance companies had both hands in writing the obamacare bill.
We cannot fix government without dismantling the third rail of government the medical lobbyists.
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15th January 2013 at 2:59 pm
Administrator says:
Ron
The insurance companies are the backbone of Obamacare. They will make gobs of dough. Their stock prices are soaring.
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15th January 2013 at 3:01 pm
Eddie says:
Ron, it isn’t like that. Doesn’t work that way. There is no government payer. Whatever health insurance one gets, there is a layer of corporate invovement ( Thanks to the insurance lobby.) With profits to be booked and bonuses to be paid ( to the guy whose job it is to stiff your doctor.)
It’s looking more and more like this may be the straw that breaks the camel’s back.
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15th January 2013 at 3:07 pm
Don Levit says:
In addition to what the article states, participants can choose new plans every year. All they have to receive is enough of a premium reduction to make the switch worthwhile.
Insurers will have to continue to look after new business every year, a costly endeavor compared to retaining most of their clientele.
The PPACA provides for “excepted benefits,” which is a separate plan that fills in the gaps of the present plan.
By providing, over time, an excepted benefits plan of $25,000-$50,000, which is paid up (no premiums due as long as claims are not made) one then enters the area of “no gaming allowed.” This is because not many people have $25,000-$50,000 lying around to be used in the event of a medical diagnosis of cancer, etc.
In the $25,000-$50,000 deductible area (which is filled, over time, by the excepted benefits plan), one enters the “no gaming” zone, in which catastrophic premiums are relatively the same, regardless of age or health. It is a savings of 60-80% off the base PPACA price.
Don Levit
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15th January 2013 at 3:23 pm
AWD says:
“The congressional Democrats who crafted the legislation ignored virtually every actuarial principle governing rational insurance pricing”
That’s because the Democrats didn’t write Obamacare, the insurance companies did. Who is surprised insurance premiums may double? Did healthcare costs suddenly double? Oh wait, health insurance companies are for-profit corporations that own the criminals in Washington.
A quick review of health insurance profits and claims paid show that they pay less and less in claims while raising premiums as much as they want. The organization in charge of preventing abuse and fraud, the government, is complicit in committing fraud.
Fear is the motivating factor that keeps people wasting thousands of dollars on health insurance every month. When you try to use your “insurance” you find out you’re stuck with 1/2 or more of the bill, and that’s after your deductible and copays. It’s the biggest scam and bunch of organized criminal behavior second only to politics and Wall Street.
Anyone with a brain will drop their health insurance and opt for an HSA (health savings account), which are tax deductible in some states. Quit sending your money to HMO’s, who keep it. They have 70,000 employees figuring out ways not to pay out money and make more profits. Make no mistake, they are in business to make profits, not provide you with healthcare.
67% of the 700,000 people that declared bankruptcy every year for health care bills had health insurance. Quite being a sucker. Put the money into an HSA account instead.
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15th January 2013 at 3:46 pm
sangell says:
The average citizen is not going to be able to deal with all this shit and that is where is going to fall apart. A few weeks ago a Harvard professor whose specialty is medical insurance wrote in the New York Times how she had made a catastrophically ( for her) bad choice in selecting a new insurance plan. She had a prior condition and found the new plan she selected prevented her from seeing a specialist she needed because he was outside the ‘system’ her plan allowed.
The unnecessary complexity our political leaders are making part of the average citizens lives will lead to the very violence that skinny simian in the White House is going to deplore tomorrow. When people learn their medical insurance is not fit for purpose after they paid thousands of dollars for it is going to cause people to go postal. I predict hospital waiting rooms and doctors offices will be the scene for some Sandy Hooks and Aurora, Colorado massacres in the coming years when people find they have no insurance or that it pays for nothing!
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15th January 2013 at 4:39 pm
Muck About says:
The common plea of a U.S. Government employee: “Hello! Hello! Anyone here? Damn it’s dark in here and it smells bad too.”
Couple that with the normal graft, bribery, kick backs and handouts to insure maximum rip off of anyone working anymore and you have Obummercare..
Until we strip the medical community of all the monopoly protections (thousands of them) they now enjoy, cost will keep rising 7-9% a year —- which they can’t do — and they won’t do and pretty soon it’ll go bust with everything else.
I hope you are healthier than I am..
MA
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15th January 2013 at 4:39 pm
The CEO of Walmart says:
Dear American Soldier
I am proud to announce that Wal-Mart Stores will hire every returning US veteran who wants a job over the next five years. You went to some God-forsaken place risking loss of life or possible loss of limbs, brain damage, and horrible other shit mostly so that we can continue to import shit from China. And, oh, yea, Freedom. You guys have really been bent over and fucked.
Since you have expertise in this area, we will continue that tradition. We are glad to announce that you will be part of our beloved and trusted Associates! We’ll start you off at $8.43 cents an hour. With much dedication and hard work you can expect to be at $8.99 per hour within 10 years. Of course, with such a huge income we can only make you Part Time. You will instantly qualify for ObamaCare …. which will come in handy when you decide to cut off your own balls rather than spend another day in our family environment.
We’ll deposit your checks directly to the Bank of B.O.A. (Bend Over Asshole).
Welcome Aboard!!
http://www.nytimes.com/2013/01/15/us/wal-mart-to-announce-extensive-plan-to-hire-veterans.html?_r=0
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15th January 2013 at 5:12 pm
printmemoney says:
Who wants to join my insurance company? It’s called the Hippocratic oath!
To the doctors in the house….When I reach the point when I can no longer reach my shoes to tie them, does the Hippocratic oath mean you have to tie them for me?
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15th January 2013 at 5:44 pm
llpoh says:
Employers are still in wait and see mode. If the price of insurance goes up by 100%, those already providing insurance at a cost of perhaps $10,000 per year per employee will simply cancel insurance, pay the fine, and MAYBE give their employees the difference ($10k less the fine) to source their own insurance.
It ain’t gonna be pretty.
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15th January 2013 at 5:49 pm
OF says:
When the going gets rough, silver ounces will do for the black market doctor… There´re so many docs…
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15th January 2013 at 6:32 pm
Kill Bill says:
Of course the price of private insurance premiums have gone up
It is what Obomney care is.
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15th January 2013 at 8:41 pm
biggtmofo says:
Medical tourism should be a booming industry soon. You smart guys and gals can figure this shit out but I laugh in a sad way about congress passing the bill to see what is in the bill. The only folks who read the bill were the insurance and drug lobbyists who wrote the bill. Yeah no shit. Besides like most folks congress included who reads their insurance book? It’s in my file drawer under health insurance. I am on an HSA for the last three years because it makes sense for me. I figure I will roll the dice because the standard insurance will disappear in small companies very soon anyways. If your are under 50 employees I believe there is no fine for not having insurance. I can see bigger operations trying eventually dropping the insurance and paying the fine. Imagine if I could do that with auto insurance especially my former 20 yearl old self, I would be rich!! T
I think the new plan and procedure is to bag bodies over sick people and tell the family we’re doing all we can. Can’t get blood from a stone. Good luck suckers.
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15th January 2013 at 9:38 pm
taxSlave says:
Fuck.
I knew this would happen when Hillera Cliton had her secret meetings in the early 90s.
Anything the government touches turns to shit.
Separation of Government and medicine
Separation of Government and School
Separation of Government and Internet
Sorry I was dreaming for a moment.
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15th January 2013 at 11:00 pm
fool on the hill says:
ALEXISTAN might be the Chinese guy from South America???????
If so we were sure right!
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15th January 2013 at 11:14 pm
Hollow man says:
I prefer turn your head and cough. At least someone is touching your balls.
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15th January 2013 at 11:27 pm
Makati1 says:
I sit here in Makati, Philippines, no insurance, no health plan, no nothing in that area. Am I concerned? Nope! I lived a healthy lifestyle for my 68 years. I have no needed medicines or medical problems as of today. I take an 80mg aspirin every night and a vitamin/mineral tablet every morning. If I get sick, the cheaper healthcare here will be adequate or I will be gone. Either way, it doesn’t matter. I’m enjoying life day to day with some plans for the future if I get there. After almost 50 years in the American rat race, I have no stress, no debt, no worries, no regrets. I just sit back and watch the Empire implode.
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15th January 2013 at 12:55 am