Affordable Care Act to Result in Less Affordable Care


That didn't take long:

Aetna Inc., some BlueCross BlueShield plans and other smaller carriers have asked for premium increases of between 1% and 9% to pay for extra benefits required under the [new health care] law, according to filings with state regulators.

These and other insurers say Congress's landmark refashioning of U.S. health coverage, which passed in March after a brutal fight, is causing them to pass on more costs to consumers than Democrats predicted.

…Many carriers also are seeking additional rate increases that they say they need to cover rising medical costs. As a result, some consumers could face total premium increases of more than 20 percent.

The insurance industry's top lobbyist, who was basically supportive of the new health care law while it was being drawn up, explains the price hikes pretty succinctly, telling the Journal, "Anytime you add a benefit, there are increased costs." In the past, as state governments have piled on mandates, we've seen evidence that those added requirements can increase the cost of insurance premiums by as much as 30 percent. Mandatory benefits may or may not provide extra value to consumers. But they definitely impose additional costs.

What about those who are happy with the insurance they have? Welll, those who have chosen to keep their old plans may be able to escape the hikes for now:

While the increases apply mostly to the new policies insurers write after Oct. 1, consumers could be subject to the higher rates if they modify their existing plans and cause them to lose grandfathered status.

The problem, though, is that the grandfathering rules are strict enough that virtually any change to a plan triggers a loss of grandfathered status. That means that eventually, nearly every grandfathered plan will lose its grandfathered status. As a draft administration document looking at the grandfathering rules noted earlier this summer "after some period of time, most plans will relinquish their grandfathered status." [bold added] Indeed, that's arguably the whole point—to push health plans away from grandfathered status so that they can be regulated under the PPACA's new insurance rules.

The health care law was sold largely on the dual argument that's spelled out in its name: the Patient Protection and Affordable Care Act. First, it would make health insurance more robust; that's the "patient protection" part. Second, it would make health insurance less expensive; that's the "affordable care" part. But it's tough to achieve both at the same time, especially through top-down regulation. As we're seeing, the end result of insurance that's subject to more mandates is insurance that's more expensive.