Obamacare

One More Reason Why ObamaCare Will Make Health Insurance More Expensive

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Look, I promise it all makes sense if you just…if you just…look, just trust me, OK?

Last month, Bloomberg reported that many employers expect health insurance premiums to rise as a result of the PPACA. Today, John Goodman of the National Center for Policy Analysis points to one soon-to-take-effect provision that's likely to factor in to rising prices:

It is increasingly clear that the "experts" upon whom the politicians relied to write the bill didn't read or understand it either. A perfect example is the rule that health plans must offer coverage on a guaranteed issue basis, without excluding any pre-existing conditions, to dependents up to 19 years old, regardless of whether they have had continuous coverage before joining a new group.

This strikes fear into every health plan and employer, because it means that parents do not have to sign up for coverage for their dependents until after their kids have fallen ill. Most kids between the ages of two and 19 are very healthy. Then, when a kid gets diagnosed with leukemia or taken to the ER after a motorcycle crash, his parents' health plan must issue coverage without taking the illness or accident into account.

The provision takes effect on September 23, and is likely the biggest cause of the looming premium hikes that we are going to experience in next year's renewal.

Despite constant protestations that the PPACA would make health insurance more affordable, the bill's authors seem to have expected that rates would go up and planned accordingly, if not smartly. The law provides funding for state governments to review health insurance premium hikes, and thus, in those states that have given themselves the authority to do so, to reject those hikes if they are deemed unreasonable. But as we've seen in Massachusetts' ongoing battles with insurers, that can be an ugly process for everyone involved.

When they were first announced, the Bay State's caps on rate increases effectively shut down the health insurance market. Not long afterwards, the state's four largest health insurers all announced major losses, with three explicitly blaming the state's rejection of new premium rates. Since then, the state's insurance appeals board ruled that the rate hikes requested by one of those companies were, in fact, justified. The governor's office has angrily promised to pursue reinstatement of their original caps.

With both the Massachusetts overhaul and the PPACA, the combined policy/political strategy seems to have been to first demand that health insurers offer more extensive benefits, then threaten regulatory warfare if those insurers have the gall to raise premium prices accordingly.

NEXT: The Ruling Class

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  1. Yes, the health care bill will make health insurance slightly more expensive, precisely because it will make it a better product.

    No, you can’t have your half-assed insurance plans that are only useful for the healthy (who want to practice adverse selection and undermine the market). Get over it.

    1. Yeah, and Medicare was “slightly more expensive” than they first said lied.

    2. “insurance” doesn’t mean what you think it does.

      waiting until you are sick and then demanding a company pays for it, backed up by a government gun, is something (starts with a “c” ends with an “oercion”), but “insurance” ain’t it.

    3. Chad,

      You are like the President. You don’t understand the fundamentals of how what insurance works. I mean you should, you’re a college educated person but you are as clueless as a 12 year old.

      Yet, time and time again you’ve argued that insurance companies do impossible things e.g. the time you argued that insurance companies should raise premiums only after they’ve had to make higher payments because “that’s how all other businesses work.” You don’t even seem to understand the relationship between premiums and payouts.

      Here try this on for size: No, you can’t have your half-assed fire insurance plans that are only useful for people whose houses aren’t on fire (who want to practice adverse selection and undermine the market).

      Watching you have input on policy you clearly lack the bare fundamentals to understand is like finding a meth addled monkey at the controls of a reactor.

      1. Actually, Shannon, it is YOU who doesn’t understand that health insurance can NEVER work in a free market and remain insurance in any meaningful sense. The pre-existing condition / adverse selection problem has no solution other than for the government to keep sure that everyone is insured all the time.

        Everyone else on earth has already figured this out, and spends far less because of it. Why can’t you see the light?

        Fire insurance works because “pre-existing fires” are nonsense. You can easily insure against one-off events, but not chronic conditions. Unfortunately, most health care expenses are the latter.

        1. “Everyone else on earth has already figured this out, and spends far less because of it. Why can’t you see the light?”

          The United Kingdom of Britain and Northern Ireland: http://www.telegraph.co.uk/hea…..vices.html

          German Federation: http://online.wsj.com/article/…..52695.html

          The French Republic: (Link posted below)
          So we have the British NHS which is facing massive cuts that will result in things like knee surgeries to be rationed, just to keep the budget under control. Then we have the Germany, who are going so far as to consider making their “universal” health insurance plan a basic supplement to private insurance plans; they’re doing this because their universal healthcare program has a financial shortfall of $11 billion, which they think will get worse as more of the population retires and as the recession deepens. And then there’s France, who, even though they’re kicking and screaming about it, are forced to make cuts in their universal health care system as well; their universal healthcare system is in danger of becoming insolvent. I’d like to remind you that France has one of the most “universal” healthcare programs on the planet. Almost all medical expenses are covered 100% by the government, or were, rather.

          Keep in mind, this with the entirety of the European Union’s defense being subsidized by NATO. The Great Recession is forcing democratic socialist countries to make hard choices; one of these hard choices is moving to a market economy, without universal government healthcare.

        2. “pre-existing condition / adverse selection problem has no solution other than for the government to keep sure that everyone is insured all the time.

          Everyone else on earth has already figured this out, and spends far less because of it. Why can’t you see the light?”

          That’s bull. I’ver explained this to you before, so listen and learn. The insurance industry looooong ago developed ways to handle adverse selection: the fair pricing of a risk (so you can’t have community rating, other rating restrictions, etc.) and the use of rescission to deal with risks that were improperly priced due the withholding of necessary information during the underwriting process.

        3. Fire insurance works because “pre-existing fires” are nonsense. You can easily insure against one-off events, but not chronic conditions.

          The way fire insurance works is that they do an analysis, based on many different factors including condition of the structure, location, category of building, history of the owner, etc., to determine the likelihood of making a payout. The cost of the premiums then are higher or lower accordingly. So basically yes, you are actually taking into account the equivalent of “chronic conditions” in determining the premiums.

          The same principle applies in health insurance (at lease in the absence of government fiat). Someone older, or with negative medical indicators, will have higher premiums to reflect the greater risk.

          You can be 92 and with a heart condition and get a life insurance policy, you’ll just pay a higher rate.

          Actually, Shannon, it is YOU who doesn’t understand that health insurance can NEVER work in a free market and remain insurance in any meaningful sense.

          Actually health insurance can work very well in a free market and remain insurance. The problem is when the government orders companies to “insure” someone right now for premiums which are less than his current health bills, that is no longer insurance, it is welfare.

        4. You can easily insure against one-off events, but not chronic conditions.

          Exactly. Insurance cannot and will not ever pay for existing medical conditions just as it cannot ever pay for houses that have already burned down.

          Insurance is intended to mitigate the financial consequence of a risk. Insurance creates a pool in which everyone who is exposed to a particular risk pays a fraction of the cost of the risk against the eventuality that one member of the pool will get hit by the risk insured against. This is why insurance companies can be bankrupted and be unable to pay claims in the case of an unanticipated widely destructive event.

          The cost of treating a chronic illness is not a risk, it is a certainty.There is no point in insuring against a certain event because the cost of the premiums must equal to cost of the event in real time. It
          is just like building a house in a flood plain. The cost of the insurance is the cost of the mortgage. You would just send your premium to the insurance company and then they would put your check in another envelope and send it back to you.

          This is what I mean by you don’t understand what insurance is. You clearly believe that medical You think that insurance companies are evil because they don’t fix everyone’s health care problems. You are demanding that insurances companies pay every one’s health care cost even if those cost are not a risk.

          That is a mathematically impossibility. It simply cannot be done with insurance. Insurance can never, ever pay for certain cost.

          The honest way to approach the problem would be to just say that people with chronic conditions need a system of public or private charity and to leave the insurance companies out of it. Since Obama et al have not done that, we have to conclude they are either incredibly ignorant or actively malicious.

          I think it is the latter. They are intentionally attempting to destroy private medical insurance such that individuals will have no choice but depend on the political class for their life saving medical care.

          However the question remains about your motives Chad. Are you malicious or just stupid?

    4. You can’t have an insurance plan that allows for adverse selection, by definition. It’s not insurance in that case, it’s charity.

      1. I don’t think you’re allowed to use the name “Joe” and make posts that make sense.

    5. it is not insurance when there is 100% certainty at issue time that the premiums will be less than the payouts, it is welfare

  2. Had the Democrats not admitted in public that the plan was intended to lead to single payer, this might be news to me.

    1. Actually, James, single payer would have made the most sense. It would have covered 100% of the people, cost $400 billion less, and allowed those not happy with it to buy a Gold plan the good, old-fashioned, free-market way… with cash dollars. But it also would have provided a bare-minimum “floor” of coverage, and SAVED businesses of this cost and attracted more of them to stay in the US.

      But we found out that the D’s are as corrupt as the R’s. They’ve just been better at hiding it over the years.

      Jack Lohman …
      http://MoneyedPoliticians.net

  3. Darth Vader is filtering the water before putting it in his bottle. What’s nonsensical about that?

    1. I’ve seen this picture, and I wonder why Darth Vader’s breath mask wouldn’t include a water filter. Or, barring that, why he couldn’t just exterminate any bacteria or fungi with the Force.

    2. Because Vader could have his minions do that for him. He doesn’t filter his own water, fool!

      1. Besides, Vader is so evil that even bacteria fear him and flee in terror.

    3. the britta filter will not remove salt, so he’ll be drinking salt water and that’s not good

      plus, why is he standing in the surfm getting wet?

  4. I am an administrator for a $350 million medical plan and for 2011 ObamaCare will increase our cost by 1 percent and in 2014 it will increase in 3.7 percent. For 2018 it will be much greater. These increases will be passed along to the emplpoyees. Needless to say some of them are getting wind of the increases are none to pleased. I bet this is getting played out throughout the country.

    1. wait until all the new regulatory bodies begin issuing edicts on what must be covered, and your costs will increase much more

  5. Needless to say some of them are getting wind of the increases are none to pleased. I bet this is getting played out throughout the country.

    And are they getting wind of the benefits, such as, you know, not being dropped if they contract a hang-nail or forgot to cross a “t” on page 47 of their application? Or being able to keep their kids on their plan through college? The lack of lifetime caps? Guaranteed preventative care and appeals processes? No more worries about pre-existing conditions? The insurance company transparency provisions?

    You know what? I’ll gladly pay a bit extra for all that.

    Of course, if libertopians were in charge, we would all be stuck buying unregulated “insurance” from a P.O. Box in South Dakota.

    1. Nope, if libertopians were in charge, we’d have an actual free market in health care which would drive down costs, examples of which can be found here and here. Lasik surgery is another example.

      Insurance, meanwhile, would be used only for catastrophic events, just like it was intended before the government introduced the health insurance tax deduction which led to the insane linkage between employment and health insurance and exacerbated the third payer problem inherent in insurance. Paying for regular doctors visits with insurance makes about as much sense as paying for an oil change with auto insurance.

    2. “You know what? I’ll gladly pay a bit extra for all that.”

      You can do that now.

    3. Stop with this tired tropes. These issues with pre-existing conditions, dropping, etc. pretty much only apply in the individual market and the small group market. That is, a tiny fraction of the industry. Problems in a small area don’t justify revamping the entire system.

  6. if the government had to essentially nationalize over the health care sector of the economy, a Canadian-style single payer system would have been better

    unfortunately, people in the US think that would mean the quality of what they get now but for free

    in Canada, the system works because:

    1) there is harsh HARSH rationing of care, which involves severe limits on the number of doctors, very limited hospitals outside of major population centers, long waits for treatments of debilitating but not immediately fatal problems (ie hip or knee replacements), greater reliance on hospice care rather than actually treating late stage cancers

    2) no ridiculous torts system jacking up the cost of healthcare

    3) much more efficient government

    4) different demographic / ethnic makeup in the population

    another key element is that most privately provided healthcare is illegal

  7. Not to mention the fact that part of the cost was stripped out and moved elsewhere (the “doc fix”) to make the cost look lower. There is noticeably a bunch to identify about this. I feel you made some good points in features also.
    .

  8. Not to mention the fact that part of the cost was stripped out and moved elsewhere (the “doc fix”) to make the cost look lower.

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