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Charlie Sykes: Sykes Writes

Brace Yourself For Health Insurance Sticker Shock

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How high will Obamacare drive health insurance premiums? 10%? 20%? How about rates rising by 100%  next year? "Unexpectedly," of course.

 John Torinus says that smart folks in the industry "expect premiums to rise as much as 50% after January 1, 2014. They sounded histrionic, but then the top two executives of Aetna said publicly that some rates could double."

CEO Mark Bertolini said that in some markets premium increases could “go as high as 100%. And we’ve done all that math.” Average markets will show rises of 20% to 50%, he predicted.

Executive Vice President Frank McCauley had said earlier that the dramatic rate hikes would prevent many small businesses from using the new public exchanges.

The average cost of a family health plan in the country is more than $16,000 per year. Imagine, then, the reaction to a health care policy that costs more than $30,000. It will be run, not walk away from that kind of expensive coverage.

The drivers for the new round of hyperinflation are obvious to anyone who has examined the new law:

• “Guaranteed issue” will bring sick people into the pools, adding expense.

• The mandate on “essential health benefits” will add coverage of previously uncovered items. All providers in the country are lobbying to add more of their products and services to the coverage list.

• “Community rating” will force young people to pick up more of the tab for older people.

• Requirements for “minimum actuarial value” will cause insurers to enrich plans from where they are now.

• The requirements for an acceptable “medical loss ratio” will incentivize insurers to raise prices on care so they can meet the 20% or 25% allowed for overheads and profits.

* Effective Jan. 1 is a new tax on medical devices of 2.3%, which will be passed on by device makes and providers to consumers and will show up as premium increases.

• The public exchanges will be paid for by a tax on policies, which will raise the price tag for co

Inevitably this will lead to the usual political kabuki dance of fingerpointing. Torinus notes:

 

 Democrats will attack the “greedy” insurance companies. They will duck the obvious truth that prices are largely a function of costs, not profit taking.

Expect also a call for higher subsidies to make the new policies affordable to consumers.
Expect in the long run a renewed call for a government-run single-payer system, because only the government has enough money to pay for the bloated price tag.

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