Obamacare to Drive Up Individual Insurance Rates by 88 Percent in Ohio


credit: Foter.com / CC BY-SA

Ohio's Department of Insurance has seen the result of Obamacare, and it is higher average rates for people buying individual health insurance.

The cost of health plans sold on the individual market will rise by an average of 88 percent, according to an analysis by the state's insurance regulators based on 214 proposed plans from 14 difference insurance companies. Now, that's an average increase across the individual insurance market, so the release also notes that "those costs do not specifically track with the premiums insurers charge individual customers. However, state regulators also say that "it is expected that these increases in costs will also translate to significant premium increases for many Ohioans."

The response to this from Obamacare's supporters is, by now, familiar: Yes, costs will go up in some cases, but health plans will offer more expansive coverage thanks to Obamacare's essential health benefits regulations; individual exposure to high health bills will limited and insurers will be more strictly regulated—required to sell you a policy at a regulated rate even if you have a preexisting condition.

It's worth breaking that down a little bit. Over at Forbes, Avik Roy takes a look at how the law's various coverage requirements increase the cost of coverage in the state:

What are the drivers of the increase? According to [a report by consulting firm] Milliman, the two biggest drivers are (1) risk pool composition changes, such as forcing the young to subsidize the old, and the healthy to subsidize the sick; and (2) Obamacare's required expansion of insurance benefits, particularly its mandated reductions in deductibles and co-pays.

This is a significant concept to understand. Some people have the impression that the main reason that rates are going up under Obamacare is because of the law's requirement that insurers cover people with pre-existing conditions. But that accounts for only a fraction—around a quarter—of the rate hike. The rest comes from all the other things that Obamacare does, such as forcing people to buy richer insurance benefits; to buy products with all sorts of add-ons they might not need; to pay Obamacare's premium tax; and to pay a lot more, if they're young, to subsidize older individuals.

Premium subsidies will reduce the impact on individual pocketbooks somewhat. But even factoring those in, it's not clear that young, single adults buying coverage under the law are ready for the costs it will impose on them. And, of course, those subsidies aren't free either. If costs rise, but subsidies hide some or all of the hike, that just means that taxpayers are making up the difference.