J. D. Heyes
Jan 10, 2013
One of the primary drivers behind President Obama’s quest for Uncle Sam to take over one-seventh of the U.S. economy by engulfing the healthcare industry was that such a huge usurpation of the private sector would at least lead to lower insurance premiums for Americans.
Like so many other aspects of “Obamacare” over which the public was hoodwinked, now comes news that the promise of lower premiums will be, shall we say, elusive, for millions of consumers.
“Health insurance companies across the country are seeking and winning double-digit increases in premiums for some customers, even though one of the biggest objectives of the Obama administration’s health care law was to stem the rapid rise in insurance costs,” The New York Times reported recently.
Who are the most vulnerable to the increases? That would be small businesses and people who don’t otherwise have employer-provided insurance and who will be forced, thanks to a summer ruling by the U.S. Supreme Court upholding as constitutional the law’s individual mandate requiring everyone – and every business with more than a few employees – to buy coverage.
Face it – premiums are heading higher, period
In California, insurance giants Aetna, Anthem Blue Cross and Blue Shield are proposing to hike rates by 22, 26 and 20 percent respectively for some policy holders, according to the companies’ filings with the state for 2013. “These rate requests are all the more striking after a 39 percent rise sought by Anthem Blue Cross in 2010 helped give impetus to the law, known as the Affordable Care Act, which passed the same year and will not be fully in effect until 2014,” the Times reported.
In other states such as Ohio and Florida, insurance companies have managed increases of at least 20 percent for some policy holders – increases which can amount to as much as several hundred dollars per month.
Those compare with an average of about 4 percent increases for those with employer-based policies, said the Times.
The double-digit increases come even as some estimates put overall healthcare costs on the decline in recent years as more Americans put off treatment for a variety of conditions due to the economic effects of the Great Recession.
“Growth in health care spending in the United States has slowed considerably since 2009,” says a report from PricewaterhouseCooper, a financial consulting company. “PwC’s Health Research Institute projects medical costs will increase 7.5 percent for 2013, the fourth year in a row of relatively flat growth.”
So at a growth rate of 7.5 percent per annum – which is still high – why are insurance companies requesting double-digit rate increases? Well, insurers say that medical costs for some policy holders have risen much faster than the average.
And federal officials have essentially said, hey, rates would be even higher without the law.
Sick, older people cost more
But why are rates skyrocketing? Because the insurance companies are now being forced to cover more people – especially more sick people – thanks to the law. And covering sick people is expensive.
“We need these rates to even come reasonably close to covering the expenses of this population,” Tom Epstein, a spokesman for Blue Shield of California, told the Times.
Sally Pipes, president of the Pacific Research Institute, a public policy think tank, notes that during his initial bid for the presidency in 2008, Obama promised Americans that by the end of his first term health insurance rates for the average family will have fallen to $2,500 a year.
“Premiums have increased by an average of $3,065. And they’re about to go up even more, as Obamacare takes effect during the president’s second term,” she writes in Forbes.com.
Mark Bertolini, the CEO of Aetna, the third-largest health insurer in the country, predicted as much. He said as the full weight of Obamacare’s massive taxes and new regulatory burdens hit the medical industry by 2014, rates will have risen, on average, between 20-50 percent.
Don’t forget to thank the president and Congress
For some, rates will double. “We’re going to see some markets go up as much as 100 percent,” he told Bloomberg News.
“A shock?” writes Pipes. “Not to those who’ve been paying attention. When Obamacare was making its way through Congress, the Congressional Budget Office warned that premiums in the individual market would increase by 10-13 percent.”
Even those involved in crafting the law for the president admitted it would increase rates.
Jonathan Gruber, an economics professor at the Massachusetts Institute of Technology, one of the law’s primary architects, “estimated that premiums in Wisconsin would rise by about 30 percent by 2016 following implementation of the law,” the Times said. But that’s less than most of the state’s individual insurance market, which he estimated would rise by about 41 percent.
Part of the reason why is the law’s coverage mandates. Older folks tend to eat up more in health care costs, and since everyone has been tossed into the same blanket coverage, younger folks now have to pay the difference in costs for older – or sicker – Americans.
Says Pipes: “In other words, health insurance costs are going up. And for that, you can thank Obamacare.”
This article was posted: Thursday, January 10, 2013 at 6:07 am