American Elephants

Are You Ready for ObamaCare Sticker Shock? by The Elephant's Child


The nice folks who created ObamaCare in some back room in Congress ignored virtually every actuarial principle that governs rational insurance pricing. Consumers will experience another series of price shocks later this year when some see their premiums skyrocket thanks to ObamaCare. Premiums are already reflecting some of their neglect.

One of the central provisions of ObamaCare is the 1). requirement that health insurers accept everyone who applies (guaranteed issue). And 2). cannot charge more based on serious medical conditions and 3). coverage mandates that force insurers to pay for many uncovered medical conditions.

Guaranteed issue gives folks the incentive to forgo buying a policy until they get sick and need coverage, and drop the coverage when they get well. ObamaCare imposes a penalty (a tax?) but it isn’t enough to keep people from gaming the system.

Some actuaries are predicting 50% increases in premiums. Large employer groups will be less affected because the law grandfathers in employers that self-insure.

President Obama repeatedly claimed that health-insurance premiums would be $2,500 lower by the end of his first term, they are actually about $3,000 higher. He also claimed during the fiscal-cliff negotiations, a claim that he kept repeating, that “We don’t have a spending problem.  We have a health-care problem.”

Back in 2009, he was claiming that health-care reform “is no longer just a moral imperative, it’s a fiscal imperative,” and ” one of the best ways—in fact maybe the only way— to reduce those long-term costs.” In March, 2009, in a White House speech kicking off the Affordable Care Act in May of that year, he took notice of “one clear, indisputable fact”, which was that “the explosion in health-care costs has put our federal budget on a disastrous path.” He added that controlling those costs “is essential to reducing budget deficits.

A year later just before the Democrats voted to pass what he called “one of the biggest deficit reduction measures in history.” Obama said “Everybody who’s looked at it says that every single good idea to bend the cost curve and start actually reducing health-care costs are in this bill.” He promised that the conversion to electronic health records would produce $81 billion in savings, and make for greater efficiency. Nope. Didn’t happen. There is increasing concern that the switch has actually added to costs.

One dirty little secret was that the health care industry was already controlling costs before the Democrat push for ObamaCare took off. The new diagnostic machinery was hugely expensive, but improved outcomes. New drugs, made affordable for the elderly, prevented more serious disease. Health savings accounts combined high-deductible insurance policies with a tax-free health spending account that rolls over at the end of the year. Democrats killed the incentives in the drug plan, making it cost more, and  ObamaCare declared war on that cost control effort by capping deductibles at $2,000 and making it harder to offer the savings accounts. ObamaCare’s ever-increasing list of benefit mandates will drive up costs.

Doctors take an oath to “first do no harm.” Obama adviser Ezekiel Emanuel has declared that doctors pay way too much attention to their oath.


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