The blogosphere is alive with the sound of Obamacare sticker shock. The stories abound. There are winners and losers with Obamacare, as was always promised. Some people have to pay more, so that others may pay less. Some people have to pay more so that things they may not even want will be covered (e.g., mental health and maternity services). Plenty of people who didn’t bother to check into their health-insurance future before now are getting that letter from the insurance company, informing them that their insurance package of choice will no longer be offered after 31 December (it doesn’t comply with the Obamacare standards for coverage), or that their premiums will go up by 40%, 74%, or 107%. Or more.
This poignant reader comment from the California Report website is typical:
Well, dear, you’d get it if you had listened to the numerous commentators who warned weeks, months, or even years ago that the provisions of the 2010 Affordable Care Act would force premiums to go up. Those warnings weren’t a “mythical” scare-narrative concocted by The Evil Right. They were based on realistic analyses of what it will take to pay for the mandates in the ACA legislation.
A study by the Manhattan Institute, released in September 2013, predicted that premiums would rise significantly for younger, healthier customers under Obamacare.
A study sponsored by Center Forward, released in May 2013, predicted that individual-market premiums in six states (Arizona, Florida, Illinois, New Jersey, Ohio, and Wisconsin) would rise by an average of 40% under Obamacare.
Kathleen Sibelius warned in March 2013 that some premiums would have to go up:
… while the changes are expected to lower costs for women, older beneficiaries and the sick, men and younger, healthier people will likely see higher rates as insurers try to hedge against continued risks.
“Women are going to see some lower costs, some men are going to see some higher costs. It’s sort of a one to one shift … some of the older customers may see a slight decline, and some of the younger ones are going to see a slight increase.”
Insurance premiums could rise for some with individual plans, she said, as Obama’s Patient Protection and Affordable Care Act enhances the level of coverage and either eliminates or reduces the rate of price discrimination against people who are older, female or have preexisting medical conditions.
From the same Reason.com article:
Sebelius says that the hikes involved will be “slight,” but insurance industry representatives have suggested otherwise. And as Reuters notes, a study released this week by the Society of Actuaries projects that on average, individual premiums will rise by 32 percent across the country over the next three years.
In December 2012, Aetna CEO Mark Bertolini predicted that premiums would rise by as much as 100% under Obamacare.*
In 2010, MIT economist Jonathan Gruber, a principal architect of the ACA, was contracted by three states (Colorado, Minnesota, and Wisconsin) to predict the impact of the ACA on their health-insurance markets. As noted by the Daily Caller in February 2012, Gruber’s reports predicted a typical premium increase of between 31% and 34% for young, healthy customers covered in the individual insurance market. (H/t: FrontPage)
Daily Caller has Gruber’s assessment for Wisconsin (dated 2012) available online, and it includes the following predictions (emphasis added):
— 59% of individual-market customers will see a premium increase, after tax credits
— The average premium increase will be 31% over the first three years of ACA implementation, after tax credits
— By 2016, the current Wisconsin individual (non-group) market for health insurance will decline from 180,000 customers to 30,000 (basically, due to its unaffordability, for both insurers and customers, under the new rules of the ACA)
— 136,000 of that difference will migrate to the Obamacare exchange – which is where the customers will see the premium increases
— Individuals ages 19-29 will see an increase of 34% in premium costs on the Obamacare exchange individual market
— Individuals ages 55-64 will see a 1% decrease in premium costs on the Obamacare exchange individual market
— Families of two or more will unvaryingly see an increase in premium costs on the Obamacare exchange market, ranging from an increase of 12% for two insured to an increase of 28% for four or more insured
— Wisconsin employers will drop employer-provided insurance for 100,000 workers
One could go on, but you get the point. The information has been out there. It’s been coming from sources not affiliated with the political right. ThinkProgress and Media Matters may have pooh-poohed the predictions, depicting them as arising from right-wing hysteria, but in fact, left-wing proponents of Obamacare, including architects of the program, along with self-identified political “moderates,” have been saying all along that premiums will have to go up – and have to go up a lot, for some people.
You may feel that you, personally, aren’t rich enough to be targeted for higher premiums. You’re just a healthy, non-elderly guy or gal who earns a bit too much to get a subsidy. In that case, your only hope of prior warning – warning geared to alerting you that you’d fall into the disadvantaged group – probably was the right-wing commentariat.
The relatively accurate predictions from Obamacare proponents about rising premiums have focused on averages, as Media Matters’ “15 myths” article did on 1 October (same as link above). That focus is misleading, if you’re a healthy, self-reliant full-time earner. The impact of Obamacare on premiums is disparate: higher and disadvantageous on you, lower or advantageous on others.
You’ll have to decide how you feel about that: about realizing that you, non-wealthy and ordinary as you may be, are the money sump from which Obamacare proposes to pump. As you ponder the matter, consider that other people – people you may have thought were stupid or hysterical – already understood that. Yeah, plenty of them are out here saying they told you so. It sounds like gloating to you, because a lot of it is, and it’s annoying.
But they were right. They’ll keep being right: because they understand market economics; because they familiarized themselves with the available information about the ACA; because they know history and its lessons about human nature and collectivist ideas. You can listen to them, and understand beforehand where things are headed, or you can keep thinking they’re stupid and hysterical, and keep being unpleasantly surprised. Remember that.
* Note the points entered at the end of the MoneyNews report on Bertolini:
The CBO estimated that the law will prompt individual premiums to increase 10 to 13 percent. After including subsidies, individual premiums will decline about 60 percent.
What the report doesn’t make clear is that the CBO numbers (from a 2009 analysis) are obtained by averaging the impacts across customer groups. Some customers – younger and healthier ones – see much higher premium increases than 10-13%. The “decline of 60 percent,” with subsidies (or tax credits), is actually a decline of 56-59%, which applies only to a select segment of the insurance enrollees with incomes between 133% and 399% of the federal poverty level. That segment is estimated to encompass about 18 million of the exchange customers, and their premium decline will vary widely from nearly 100% to 1-2%. Almost no one will see a decline of, literally, 56-59%.
Additional observations made by Ed Morrissey on the 2009 CBO analysis are here.
