ObamaCare-Friendly States Prepare For Health Insurance "Rate Shock"
The L.A. Times warns that even in states where politicians have enthusiastically embraced President Obama's health care law, many officials — especially the young — are bracing for unexpectedly high health insurance premiums when the law's major coverage provisions kick in next year:
Exactly how high the premiums may go won't be known until later this year. But already, officials in states that support the law have sounded warnings that some people — mostly those who are young and do not receive coverage through their work — may see considerably higher prices than expected.
That is because of new requirements in the law aimed at making insurance more comprehensive and more affordable for older, sicker consumers.
Insurance regulators in California, which has enthusiastically embraced the law, cautioned the Obama administration in a recent letter about "rate and market disruption."
Oregon's insurance commissioner, another supporter of the law, said new regulations could push up premiums for young customers by as much as 30% next year. He urged administration officials to slow enactment of the new rules.
A leading advocate for consumers in their 20s, Young Invincibles, sounded a similar caution, suggesting in a letter to administration officials that additional steps may be needed to protect young people from rising premiums. Young Invincibles mobilized in 2010 to help pass the healthcare law.
It is interesting to see state officials continue to support the law despite clearly acknowledging that it will raise some premiums and disrupt insurance markets. This suggests that Democrats, who sold the law on promises that it would lower health costs (or at least hold them in check) and allow individuals to keep plans and providers they already liked, are not actually all that concerned about those effects.
Still, it's not surprising considering how the law was designed. Higher premiums for many are baked into the law for a variety of reasons, including community rating rules that effectively force the young and healthy to subsidize the old and sick, coverage mandates that add to the cost of individual market policies, accounting requirements that incentivize insurers to charge higher up front premiums, a multibillion dollar new annual tax on health insurance that the Congressional Budget Office warned would be mostly be passed on to consumers.
The law's supporters sometimes try to shrug off the hikes by noting that consumers will be paying more, but also getting more in return thanks to the coverage mandates and other regulations. No doubt some consumers will appreciate having more robust coverage. But others almost certainly won't. ObamaCare offers the latter group very little. It institutionalizes a preference for more expansive, more expensive coverage. And many of those who don't share that preference are going to have pay for it anyway.