Many Americans Face Unpleasant Surprises as Obamacare Debuts

Higher premiums, dropped coverage and other fun surprises

In recent weeks, there have been increasing expressions of concern from surprising quarters about the implementation of ObamaCare. Montana Sen. Max Baucus, a Democrat, called it a "train wreck." A Democratic colleague, West Virginia's Sen. Jay Rockefeller, described the massive Affordable Care Act as "beyond comprehension." Henry Chao, the government's chief technical officer in charge of putting in place the insurance exchanges mandated by the law, was quoted in the Congressional Quarterly as saying "I'm pretty nervous . . . Let's just make sure it's not a third-world experience."

These individuals are worried for good reason. The unpopular health-care law's rollout is going to be rough. It will also administer several price (and other) shocks to tens of millions of Americans.

Start with people who have individual and small-group health insurance. These policies are most affected by ObamaCare's community-rating regulations, which require insurers to accept everyone but limit or ban them from varying premiums based on age or health. The law also mandates "essential" benefits that are far more generous than those currently offered.

According to consultants from Oliver Wyman (who wrote on the issue in the January issue of Contingencies, the magazine of the American Academy of Actuaries), around six million of the 19 million people with individual health policies are going to have to pay more—and this even after accounting for the government subsidies offered under the law. For example, single adults age 21-29 earning 300% to 400% of the federal poverty level will be hit with an increase of 46% even after premium assistance from tax credits.