UPDATE: Obamacare Sticker Shock 2.0
| No Comments | No TrackBacks |

Doug Holtz-Eakin, president of the American Action Forum and former CBO director, is out with a new study confirming Obamacare's sticker shock. AAF surveyed insurers in 5 states to determine premium increases for younger, healthier workers and premium decreases for older, and less healthy workers.

The results while unsurprising, are very instructive: in the small group market premiums are expected to increase 149 percent on average for the younger population while they are expected to drop 26 percent on average for the older population. In the individual market the increase will be 189 percent for the young and the drop will be 18 percent for the older population.

Holtz-Eakin writes:

The results...indicate that there will be massive sticker shock to the relatively young and healthy in both the small group and individual markets.

While the sample may not be representative, and average premiums can be nudged one way or the other by high-or-low-utilization beneficiaries, uninsured 20-somethings have every reason to pay the $95 penalty and refuse health insurance come 2014.

But is there a fix?

One idea would be to allow the "community rating" (the provision that requires insurers to charge no more than three times more for an older person than a younger person - this drives a significant portion of the premium increases) provision of the health law to take effect gradually, over several years. This would achieve the goal of lowering healthcare costs through risk pool expansion, guaranteeing that younger people could still get preferential rates on health insurance. While initially there would be no statutory protection for premiums for the older population, by having a broader risk pool from the start, it would slow premium growth.

Others (including insurance companies) have called for a higher penalty to ensure that people don't skip out on insurance. This may resound with those on the left, but this would leave AAF's results unchanged.

Proponents of the ACA will, of course, argue that these aren't the actual costs people will be paying - and they would be correct. Much of the cost, especially for 20-somethings just starting out their careers, will be offset by premium subsidies. But the point is that these costs will still be paid by someone - there's no free lunch. Effectively, money will flow from non-health related industries into the healthcare sector - when people are forced to pay more money for insurance that leaves them with less money to spend on other goods and services.  

This guarantees that insurance costs will continue to rise; after all, when the government is paying your customer's bills, you're set for life.

No TrackBacks

TrackBack URL: http://www.medicalprogresstoday.com/cgi-bin/mt/mt-tb.cgi/518

Leave a comment

Related Entries:


keep in touch     Follow Us on Twitter  Facebook  Facebook

Archives