2013 ObamaCare Sticker Shock: Premiums May Increase by up to 100 Percent

posted by Nima

January 15, 2013 · Posted in Health 

In Fixing US Health Care Once And For All – 5 Crucial Steps I wrote:

… without addressing the 5 steps I outlined above, all other efforts will be completely and absolutely futile. Without addressing the root of high health care costs, it does not matter whether we let government alone take care of health insurance, or whether we completely liberalize the health insurance market. Nothing would change substantially. We would still be paying high premiums that go into a pool that pays for overly expensive health care products and services. We would still be faced with an inherent shortage of health care goods and services.

Also in The Truth About Obamacare, Mandates, and Health Care in the US I wrote:

… under the Affordable Care Act health care will become less and less affordable to Americans. And it has. Premiums have gone up two-,three-fold, maybe even more for some. The inability to charge more for pre-existing conditions simply results in higher charges for everybody, regardless of condition, or in bankrupting insurers (a welcome excuse for the all out nationalization of health insurers at some point?). Meanwhile the root causes of rising health costs have not been addressed at all.

Now it’s time brace yourselves for ObamaCare’s Health-Insurance Sticker Shock:

Health-insurance premiums have been rising—and consumers will experience another series of price shocks later this year when some see their premiums skyrocket thanks to the Affordable Care Act, aka ObamaCare.

The reason: The congressional Democrats who crafted the legislation ignored virtually every actuarial principle governing rational insurance pricing. Premiums will soon reflect that disregard—indeed, premiums are already reflecting it.

Central to ObamaCare are requirements that health insurers (1) accept everyone who applies (guaranteed issue), (2) cannot charge more based on serious medical conditions (modified community rating), and (3) include numerous coverage mandates that force insurance to pay for many often uncovered medical conditions.

Guaranteed issue incentivizes people to forgo buying a policy until they get sick and need coverage (and then drop the policy after they get well). While ObamaCare imposes a financial penalty—or is it a tax?—to discourage people from gaming the system, it is too low to be a real disincentive. The result will be insurance pools that are smaller and sicker, and therefore more expensive.

(…)

Health insurers have been understandably reluctant to discuss the coming price hikes that are driven by the Affordable Care Act. Mark Bertolini, CEO of Aetna, the country’s third-largest health insurer, broke the silence on Dec. 12. “We’re going to see some markets go up by as much as 100%,” he told the company’s annual investor conference in New York City.

To all those who cheered for ObamaCare: You reap what you sow.

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