WSJ: ObamaCare’s Health-Insurance Sticker Shock
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. (emphasis added)
Wow, who would have thunk it. Here are the actuarial principles violated…
- accept everyone who applies (guaranteed issue)
- cannot charge more based on serious medical conditions (modified community rating),
- include numerous coverage mandates that force insurance to pay for many often uncovered medical conditions.
Increases you can expect?
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.
And the increase in the individual market will vary from state to state. States that have fewer mandates and have abided by actuarial principles will have the largest increases. Here in Colorado, since the State already has numerous mandates will show a lessor but I’m sure still substantial increase.
Didn’t Obama promise lower premiums”? In fact, yes he did. Let me refresh your memory…
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.
How about that! Of course, the saving grace is the government subsidy in the form of a tax credit. Worst case (almost), if you purchase an exchange plan you should pay no more than 9.5% of your income towards health coverage premiums. Keep in mind this is based on the “Silver” plan available in the exchange, so if you elect to purchase a Gold or Platinum plan you may pay a higher percentage.
