Obamacare Is an Expensive Failure

Where's the affordable part of the Affordable Care Act?

A few months ago, Obamacare critics were pointing to alarming predictions that some insurance rates would spike when the law took effect – by as much as 41 percent in Wisconsin, 85 percent in Ohio, and so on. In Virginia, though, the potential increases are not all that bad.

Some are actually much worse.

Virginia’s State Corporation Commission soon will assume control over insurance policies offered through the new state-level exchange. That’s where those who don’t get insurance through their employers will shop for policies they will be forced by law to obtain.

Recently the SCC asked Virginia’s major underwriters to provide information on what they charge now and what they will charge starting Jan. 1, when Obamacare regulations take effect. Specifically, the SCC asked for rate estimates in both the individual market and the small-group market.

In the individual market, the SCC asked for the rate for the most popular insurance plan for a 29-year-old male; a 45-year-old couple with two children; and a 60-year-old couple. For the small-group market, the SCC sought quotes for a business with eight 29-year-old male employees; a business with four male and four female employees, all 45; and eight 60-year-old female employees.

Ready for the results? Brace yourself.

Aetna says its most popular policy for a 29-year-old man currently costs $118 per month in Richmond. Once Obamacare kicks in, the rate will jump to $225 – an increase of more than 90 percent.

Obamacare supporters say this is only natural, because one of the ideas behind expanding coverage is to get young, healthy people to help pay the health-care costs of sicker, older people. (Not exactly a point they stressed during debate over the bill, but never mind.) That’s why the law forbids charging the latter more than three times the rate charged to the former. Jacking up rates for “young invincibles” is supposed to help hold down rates for old vulnerables.

But it doesn’t appear to be working. Aetna says its rate for the family with two kids is liable to jump 36 percent, and the rate for the older couple is liable to jump 44 percent.

The CareFirst BlueChoice outlook is similar: Premium increases of 108 percent, 40 percent, and 36 percent, respectively. For Group Hospitalization & Medical Services (an independent licensee of Blue Cross and Blue Shield), the percentage hikes are: 113, 89, and 69.

Where’s the “affordable” part in the Affordable Care Act?

For small employers, things could be equally grim. Take Optima, whichoperates in the Hampton Roads area. Optima says the premium for a policy covering eight young male employees – a landscaping business, say – could jump 132 percent. A similar policy for Anthem’s Healthkeepers would double in price.

Not all the premium increases are this bad, and the increases for companies with female employees are smaller. Obamacare’s defenders may seize on that as proof that the president’s signature policy is working. There’s just one problem: It isn’t working according to the president’s own standards. “If you already have health insurance,” candidate Obama promised, “the only thing that will change for you under this plan is the amount of money you will spend on premiums. That will be less.” The law’s advocates echoed the talking point; MIT’s Jonathan Gruber, for instance, said “What we know for sure the bill will do is that it will lower the cost of buying non-group health insurance.”

To be fair, many people will be eligible to receive subsidies offsetting part of the bill, and some of them – though by no means all – might see lower costs year over year. But this does not reduce the actual cost, it only shifts some of it. And cost-shifting – such as a hospital charging ten bucks for aspirin to subsidize emergency-room care for the uninsured – was supposed to be something Obamacare would reduce, wasn’t it?

The ACA’s cheerleaders also might argue that what happens in the state exchanges is a sideshow, since most people get their insurance through their employers anyway. This is not an argument made gracefully by those who, during debate over the bill, lamented the 45 million Americans without health insurance. They were supposed to be the chief reason for the law’s passage. Some sideshow.

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  • Dweebston||

    Where’s the “affordable” part in the Affordable Care Act?

    It's right there in the title. It's like the Clean Air Act, the title says it all. Why do libertarians hate clean air and affordable healthcare?

  • ||

    Just like "Progressive." Why do libertarians hate progress?

  • Calvin Coolidge||

    Everyone is for Progress, but when you are headed in the wrong direction, the first one to stop and turn around is the most progressive.

  • ||

    Libertarians should just change the name of their political stance to "good". We're the good party, that supports good, instead of bad.

    That would be right up there with the marketing geniuses who came up with the title "progressive".

  • Calvin Coolidge||

    Well, they used to call themselves Progressives at the turn of the century, back when their main causes included alcohol prohibition and eugenics. This damaged the brand, so they retitled themselves as "Liberals", which lasted into the 1980s, when the brand again needed distancing from its policies and their results, so they went back to Progressive.

    In other words, those who claim that they consider the title more important than the results are absolutely correct.

  • Calvin Coolidge||

    And I have to laugh when I see Flo and her insurance company come up as the targeted ad next to this post.

    Maybe if I started the Libertarian Insurance Company, I could get my ad onto politics discussion boards as well.

    Libertarian Insurance. We don't pay benefits, but we do give you a pamphlet explaining how the accident was really your fault and why you should take responsibility for the consequences yourself.

  • Free Society||

    We're the liberals, Cal. They just took our name. And I hear your namesake supported the 17th Amendment, which is the only fault I've found with you.

  • Sevo||

    But 17,000 New York residents might get cheaper care; that makes up for everything!

  • Calvin Coolidge||

    Matt Yglesias at Slate declared it a "Triumph" for Obamacare.

    In the article, he acknowledges it is meaningless, without bothering with the details, then goes on to state that it is important in the big picture, because there are so many people in New York.

    Sometimes, I think he is a libertarian plant, trying to make Progressives look like idiots. Like when he, apparently in all seriousness, advocates a policy of having the government just print all the money it needs in order to give it away to poor people and solve poverty forever.

  • JWatts||

    Sometimes, I think he is a libertarian plant, trying to make Progressives look like idiots. Like when he, apparently in all seriousness, advocates a policy of having the government just print all the money it needs in order to give it away to poor people and solve poverty forever.

    You haven't met enough Progressives. I've had several "smart" Liberals try and convince me that Yglesias' ideas will work. Even if it's pretty clear to anyone capable of some level of competency that this is just an idiot ball waiting to happen.

  • Pro Libertate||

    So, when will Congress be voting to repeal this law, then?

  • Hyperion||

    Did you say 'repeal'? Hahaha, you made a funny.

  • Libertarius||

    They've already voted to repeal it like twenty times. Doesn't get anywhere with Obogus and the Senate.

  • Hyperion||

    If they thought it would actually get anywhere, they wouldn't try it, the pussies.

  • Calvin Coolidge||

    Republicans were too busy nominating people who think that, in case of rape, a woman can just shut that whole pregnancy thing down to be bothered trying to actually control the Senate.

  • Sevo||

    “If you already have health insurance,” candidate Obama promised, “the only thing that will change for you under this plan is the amount of money you will spend on premiums. That will be less.”

    Well, see, BUUUSH made the costs higher!

  • Raven Nation||

    I assume the Dems are going to use a variation of this in the coming years. That is, we DID write an affordable bill but the insurance companies (which, cough, cough, operate in the free market) have unfairly jacked up their prices. Therefore...

  • Sevo||

    An idiot in the LttE section of yesterday's Chron claimed he'd be toast without Obozocare, since his current insurance company was not going to sell product in CA any longer.
    What is this 'cause and effect' of which you speak?

  • Sevo||

    Oh, and I think CA has all of two insurance companies willing to sell through the exchange.
    That competition really drives the prices down!

  • Palin's Buttplug||

    Nineteen to be exact. Why would you start being accurate now though?

  • Fatty Bolger||

    I don't know how many are left, but UnitedHealth, Aetna, Cigna, and the latest to announce, Anthem Blue Cross, have all jumped ship already.

  • Palin's Buttplug||

  • Sevo||

    Anthem is out, effective last week.

  • Fatty Bolger||

    Anthem dropped. So now it's twelve.

  • CampingInYourPark||

    It is actually thirteen.

    And of the thirteen, there are regional providers.

    Many of the insurers will offer coverage only in certain regions of the state. As a result, people in the Bay Area will generally have a choice of four to six plans.

    http://www.thereporter.com/new.....h-exchange

  • Sevo||

    "Many of the insurers will offer coverage only in certain regions of the state. As a result, people in the Bay Area will generally have a choice of four to six plans."

    Sure wish I could find the source for the "two", but it's closer to that than 19.

  • Fatty Bolger||

    people in the Bay Area will generally have a choice of four to six plans.

    Yeah, but the Bay Area is just a small backwoods of seven million people or so. I'm sure it will be much better in the big cities.

  • Free Society||

    The companies almost unanimously supported Obamacare's passage, but that's only so long as the individual and employer mandates weren't in jeopardy.

    If ever there would be doubt as to that provision's enactment or it's enforceability, you'd see every health insurance carrier jumping ship faster than Democrats at a job interview.

  • Sevo||

    I admit I cannot find the source for that; the best I've found is:
    "According to Covered California, 13 carriers are participating in the state’s exchange"
    http://www.forbes.com/sites/th.....by-64-146/
    And that includes two companies that are not going to do so:
    "UnitedHealth, Aetna and Cigna opt out of California insurance exchange"
    http://articles.latimes.com/20.....e-20130523
    Got a cite on 19?

  • CampingInYourPark||

    Got a cite on 19?

    Looks like there are 12, with 2 of them bring actual statewide providers.

  • CampingInYourPark||

    "bring"...errr being

  • Fatty Bolger||

    And note the size of the companies that have dropped out. I bet those four account for well over half of the policies written in California.

  • Free Society||

    The companies almost unanimously supported Obamacare's passage, but that's only so long as the individual and employer mandates weren't in jeopardy.

    If ever there would be doubt as to that provision's enactment or it's enforceability, you'd see every health insurance carrier jumping ship faster than Democrats at a job interview.

  • ||

    It will be the same when they try fixing prices. It's never the laws that are wrong. It's the silly people who insist on economic rationality. They're the ones causing the shortages and surpluses.

  • Sevo||

    The HOARDERS! The ones who won't share! The ones not paying their fair amounts!

  • ||

    I mean, how can governments possibly be blamed, when corporations are unwilling to produce supply at a loss? Shouldn't production not need profit?

  • ||

    It's about people man, not profits. That's why you can't trust health care to the free market. We need single payer.

    (Be prepared to hear this in thunderous choruses when Obamacare is transitioned to an NHS style single payer system after being scapegoated for being "too free market")

  • Free Society||

    I wish our health care system existed in a free market. It hasn't since the late 60's when the AMA and Medicare assumed price-fixing roles.

  • Night Elf Mohawk||

    Well, he was partly right. The amount of money I spend on my current plan will go to $0 because I will no longer be eligible for a high-deductible plan, thanks to Congress' keen insight into my insurance needs.

  • JWatts||

    No, it's Eval Rethuglican obstructionism. Oh, and it's all based on Republican ideas, so if it fails, it's clearly a failure of right wing ideas. So, obviously we need government provided health care!

  • Anders||

    Open Enrolment in Fall is going to be when people's jaws finally drop.

    I suspect even Democrats are going to be upset to see just how affordable their policy becomes, if it even still is on offer.

  • Hyperion||

    Probably. I also suspect that they will continue to vote for the same people who created this mess.

  • Anders||

    I'd say so.

    I've met people who sucked up a 20+% hike last year. Some were not happy, some said they accepted it.

    Let's see how many people can or will suck up an 80%+ year on year hike.

  • Sevo||

    "Let's see how many people can or will suck up an 80%+ year on year hike."
    So long as the messiah decrees it, they will bow and accept!

  • ||

    At least the trains run on time!

  • JWatts||

    Because "subsidies" will save the day!

    If the cost goes up by 80%, no big deal, your out of pocket costs are based on a % of your income. So, you don't pay any additional out of pocket money! Why? Because the Federal government is picking up the tab.

    And if the Republican House refuses to pony up the funds, why that's proof that Republican's hate you and are trying to steal your health insurance.

    It's all Bread and Circuses at this point.

  • Spoonman.||

    Sure hope it doesn't mess up my awesome health plan. I have a high deductible, but my company puts some money in my HSA every year.

    So the pharmacist looked at me with horror when she had to charge me $200 for antibiotics yesterday (three weeks for Lyme disease, anybody want to buy my house?), but it was free to me.

  • AlexInCT||

    Been there, done that. Lyme disease sucks ass.

  • Tim||

    How can this be? He met with people wearing white coats.

  • Sevo||

    He had people in white coats standing around him! People in white coats know all about how people in white coats should be paid! They should be paid a lot and the money to pay them should grow on trees!
    We're just not tending the orchard, that's all.

  • Anders||

    Your mockery of Central Casting actors is not very kind.

  • Calvin Coolidge||

    If you look closely, those white coats have long sleeves and straps in the back to hold them.

  • Matrix||

    All these policies and regulations are just the cost of doing business. If you can't handle these costs, then you just shouldn't be in business. That's what the free market is all about, right?

    /Progtard

  • The Late P Brooks||

    Yeah, but thanks to Obmacare, those evil insurance companies won't be able to cap lifetime payouts, so everything is free forever!

  • Adamsmith1776||

    Until they go bankrupt.

  • Calvin Coolidge||

    We will just ban this. Problem solved.

  • Mizchief||

    It will be backdoor social fascism just like with the banks, airlines, auto industry, and with energy soon to follow.

    The big guys will start offering cut rates for shitty service and when they go belly-up their friends in DC will just bail them out in perpetual 8 year cycles.

  • Gorilla tactics||

    MAGIC!

  • JWatts||

    Until they go bankrupt.

    Well then the Federal government just steps in and bails them out.

    And then rids the company of all the greedy capitalists and places Top Men on the new board to ensure the company is run correctly in the future.

  • Adamsmith1776||

    Being in the individual market, I cannot wait to get my first bill from CareFirst here in old' Virginny. Immediate invoice going out to Senator Warner and my congressman for the upcharge.

  • JWatts||

    Ah yes, but you should get a whopping big subsidy, compliments of the Federal government and its never ending supply of Free money.

    http://kff.org/interactive/subsidy-calculator/

    Plug in your numbers to see how much moo la you'll be getting from Uncle Obama.

  • Tak Kak||

    I wonder if Cuccinelli can use this to hold back the sweeping blue tide here.

  • DarrenM||

    Obamacare Is an Expensive Failure

    A government program CANNOT fail. All government programs are benign and have no adverse consequences and are ALWAYS better than any possible alternative. /left

  • Mizchief||

    Anyone else misread that as "Obama is an expensive failure"?

  • ||

    the leaders from three of America’s biggest unions, including the Teamsters’ James Hoffa, wrote to the administration complaining that “you pledged that if we liked the health plans we have now, we could keep them. Sadly, that promise is under threat.”

    These might be the most delicious salty ham tears I have ever tasted.

  • Gorilla tactics||

    didn't he already fuck the unions with keystone xl though?

  • Nymoshigh||

    Don't forget that the tax deduction rate for medical expenses will rise from 7.5% to 10% of adjusted gross income. Also, Flexible Spending Account contributions will now be capped at $2500 by law. Some companies were allowing up to $5k.

    All this equals affordable care for whom? This will surely raise bankruptcies due to medical expenses.

  • GLK||

    A failure by design. After this ticking time bomb destroys the entire American Healthcare system the Government will sweep in and take over everything. Once they have every citizen's healthcare in their pocket they will have total control over a huge chunk of our very existence. Boxed in by laws that say it is illegal not to have healthcare you will have nowhere to turn, except to them. You are just a dumb reckless animal that cannot be trusted to make your own decisions.

  • Freddie||

    For the debacle of Obamacare, I blame conservative, supposedly free market politicians and pundits who completely botched the health care debate. They played defense instead of offense, falling into the trap of defending a status quo that was not theirs to defend.
    A strong case could have and should have been made that long before Obamacare, government intervention in the health care marketplace - most notably, tax preferences that tie health insurance to the workplace - created the very real problems of rising costs and uncertain access to health care. But instead of taking the initiative with market-based reforms, the conservatives just hunkered down and looked silly screaming about "socialized medicine" and "big government".

  • Gorilla tactics||

    how many repubs made an honest effort to allow health insurance to be purchased accross state lines?

GET REASON MAGAZINE

Get Reason's print or digital edition before it’s posted online

  • Video Game Nation: How gaming is making America freer – and more fun.
  • Matt Welch: How the left turned against free speech.
  • Nothing Left to Cut? Congress can’t live within their means.
  • And much more.

SUBSCRIBE

advertisement