Obamacare

A Year And a Half After ObamaCare, Employee Health Insurance Premiums Spike

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In 2008, the Kaiser Foundation's annual survey of employee health benefits reported that employer-sponsored insurance premiums for families were up by five percent. Family premiums for employer-sponsored insurance rose by five percent again in 2009, and by about three percent in 2010. In Kaiser's 2011 survey, the first report a full year after the passage of ObamaCare, family premiums are up by nine percent.

What accounts for this dramatic spike? At Forbes, Avik Roy suggests some reasons:

First, the blizzard of new mandates and regulations on private insurers has, and will continue, to drive premiums up. If you force every restaurant to serve fancy organic vegetables, restaurants will have to charge higher prices for the food on their menus. Same goes for insurance.

Second, Obamacare contains significant tax increases that will get passed down to consumers in the form of increased premiums. 

…Third, insurers know that Obamacare's insurance price control regulations areset to go into effect for 2012, and are doubtlessly trying to get in as big a price increase as they can before the process of premium increases becomes completely politicized.

So the time-delayed regulations intended to bring health insurance premiums down may have encouraged insurers to hike premiums in the short term in order to start from a higher baseline once the rules kick in. 

Perhaps that's just a temporary effect. Will the law's roundabout system of price controls succeed in keeping the cost of health insurance down once they actually go into effect? In the long term, I wouldn't count on it, at least not unless broader economic factors change considerably. Mandatory medical loss ratios, which require insurers to spend a certain percentage of their premium revenue on federally defined clinical services, end up giving insurers an incentive to increase premiums. And when Massachusetts attempted to enforce health insurance rate reviews that are in many ways more powerful than those in the law, the result was that the state's biggest health insurers ended up operating at a loss—which obviously isn't a sustainable situation. 

The Kaiser report looked at employer-sponsored benefits. But reports from several states, as well as the Congressional Budget Office, project that once ObamaCare is fully operational, the biggest premium increases will be in the individual insurance market. 

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  1. You still don’t get it Suderman. This is exactly what was intended all along.

    1. They’ll demand single payer before we’re done with em!

  2. 9% is good. Without Obamacare, premiums would have gone up like eleventy thousand percent. And you can’t prove otherwise.

    1. Prove that the premiums would have so increased. If you can, I’ll buy you lunch at the Lincoln Diner in Gettysburg next time I’m there.

      1. Mike, do you hear that whooshing sound ?

        1. All the time.

  3. Obviously, the only way to fix this insurer-created mess is single payer.

    1. The system works!

  4. Not a bug…its a feature…

  5. Will the law’s roundabout system of price controls succeed in keeping the cost of health insurance down once they actually go into effect? In the long term, I wouldn’t count on it,

    It depends, I suppose, on whether the price controls are implemented in a way that allows insurance companies to survive.

    Put a hard cap on premiums, plus lots and lots of regs on mandatory benefits, open networks/ “patient choice”, etc., and you’ve got a recipe for insurer insolvency.

    1. Right. That’s the Massachusetts situation. You can contain costs for a little while simply by forcing (or pushing) insurers to charge less. But if insurers end up consistently operating at a loss, then that won’t last for very long. The end result is that insurance either becomes the providence of the government, a utility of sorts, or that insurers end up with more authority to set rates and design plans.

      1. Think of the precedents: AMTRAK, The Postal Service, public schools, national infrastructure…

        1. ….the “defense” department……..

          1. More of a hybrid: the private corporation totally reliant on corrupt government deals.

          2. It’s funny how the Department of War was focused primarily on defense, while the Department of Defense is focused primarily on war.

            And I don’t mean “LOLZ” funny. I mean “make-it-a-double” funny.

            1. The title “Department of War” was more honest. Not very PC though.

    2. I generally don’t believe in conspiracies. I firmly believe Hanlon’s razor “Never attribute to malice that which is adequately explained by stupidity”. But in the case of Obamacare the consequences have always been so obvious that they CAN’T be unintended. Single payer is an obvious solution when it is “proven” that health insurance doesn’t work.

  6. If those evil insurance companies would just do as they’re told, instead of wasting a bunch of money suing the government, everything would work perfectly.

    1. …and they are trying to operate profitably. Profit = teh evul.

    2. Thank you, P Brooks. I will add that we will not stand idly by as those evil insurance companies waste a bunch of money.

      1. Plus I’m a call my girl frein Janet….and she gonna f you up on that you cain’t get a off a!

        Foo!

  7. Before you jump to conclusions (too late!), it is not the ACA that has caused the increase in premiums. It’s private insurance anticipating economic recovery and charging more.

    1. Whaaaaaaaaaaaaaaat?

    2. Wait, I thought we were going into a double dip recession… Can’t big business make up its mind?

    3. Fake Tony or Real Tony?

      1. It hardly matters. The knocks off are of approximately the same quality as the original.

        1. That’s what my chinese frineds tell me.

    4. Really? Citation?

      1. Link

        “Although the survey did not study contributing factors, Altman echoed other analysts in suggesting that insurance companies had planned their premiums in expectation of more people going to the doctor or buying medications as the economy improved ? which did not happen.”

        1. “Although the survey did not study contributing factors, Altman blew smoke out his ass”

          FIFY, shithead.

        2. From the article:

          Franck at Altru Health pegged much of the premium costs’ increase at his company to adding children of his employees onto their plans.

          That part of the healthcare reform was not meant to cut costs, and many cost-cutting provisions have yet to kick in, said Kaiser president and chief executive Drew Altman.

          “There are a variety of factors that could have been responsible for (premium increases), but the major reason is not the healthcare reform,” he said.

          Healthcare reform made it mandatory to cover children longer which raised premiums but that has nothing to do with healthcare reform.

        3. Although the survey did not study contributing factors, Altman echoed other analysts in suggesting that insurance companies had planned their premiums in expectation of more people going to the doctor or buying medications as the economy improved ? which did not happen.

          And here all the time I thought your reasoning skills were weak! I’m shocked to find that there are those who are equally deficient.

        4. Although the survey did not study contributing factors, Altman echoed other analysts in suggesting speculated without any apparent basis that insurance companies had planned their premiums in expectation of more people going to the doctor or buying medications as the economy improved ? which did not happen.”

          1. That’s the same line I heard in NPR in the car the other day when they did a story on the health care premium subject.

            They were spinning like a top to keep from attributing it to the effects of Obamacare.

    5. They are anticipating the election of the Paul/Johnson ticket in 11/12 and explosive growth of the American economy?

      1. Strike two….and on a single swing! Nice!

    6. An argument is a connected series of statements intended to establish a proposition. An argument isn’t just contradiction. Argument is an intellectual process. Contradiction is just the automatic gainsaying of anything the other person says.

      1. Socrates, the first troll.

        1. Winner, real Tony or not!

          1. He’s wrong and three and a half years late.

  8. Democrats don’t want to fix the insurance system, they want to break it badly enough that society has no choice but to crawl to them and admit that we need single payer.

    1. They love to intervene heavily then scream “Market failure!” after their intervention screws up the market.

      1. Damn. They’re finally on to me.

      2. Democrats aren’t the only ones playing that game. It’s pretty much all politicians, everywhere (except the ones who have been deemed “crazy”).

        1. Well, they’re more likely to be the ones playing that game with health insurance and health care.

          If we look one step further beyond single payer, we can say that once people look to the government for their very health, the Progressive dream of complete control over everyone’s life will be that much closer to reality.

  9. 5% increase? Could somebody please get me that? My plan went up 30% last year and I was notified a month after renewal that next years will be 22%. And that is for small corp. high deductible plan.

  10. This report says rates increased 9.6%, due primarily to a shift in the age of people buying their own insurance, which increased.
    http://news.ehealthinsurance.c…..18305.aspx

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