Friday, May 18, 2012

Health Insurance Rates Drop 60%

Health care reform will result in lower health insurance rates, up to 60% lower than current rates. Yes, health care reform seems to be working . . . for those who live in Maine.  

Falling health insurance rates due to health care reform is the lead in of a post at The Maine Wire.
PL 90, the free market based health reform law, was passed last March by a Republican majority in Maine’s legislature. Governor Paul LePage signed the bill in a ceremony at the statehouse amid cries from Democrats that it wasn’t right for Maine.
Well that's a twist.

Republican health care reform but Democrat's protest the move.
The law has resulted in a drop in rates for small group plans but individual rates are expected to drop as much as 60% . . . for some age groups . . .

Maine has two provisions on the books that make health insurance premiums unaffordable for most folks. Community rating and guaranteed issue, two things that are cornerstones of Obamacare, drive premium rates through the roof.

Community rating means essentially everyone pays the same rate, regardless of age or gender. Guaranteed issue means anyone can buy coverage, regardless of their health or existing medical conditions.

In the parlance of Obamacrap, "Insurance companies can no longer discriminate against you because you have a pre-existing condition".

The flip side of that argument is, "Insurance companies will be allowed to charge significantly higher premiums to those who are healthy to pay for the claims of those who have expensive medical conditions".

That is analogous to auto insurance carriers charging drivers with perfect records the same rate as one who has had multiple DUI's and speeding violations. Or banks imposing much higher interest rates to the most creditworthy so they can also extend credit to those with severely damaged credit.
PL 90, the health reform law that Republicans guided through the legislature despite passionate opposition from Democrats, expanded the “rate bands” to allow a wider variation in cost between different aged applicants. In the past, insurance companies had to treat a 21-year-old and 55-year-old as basically the same. The new law allows for distinction in age groups. 
Once the new rates are approved, a 21 year old will pay $215 per month for a plan with a $2,000 deductible. Before health care reform, that person would pay $448 per month.

The rates are still high, mostly because the guaranteed issue provisions remain in play, but are much more affordable. A healthy 21 year old in Atlanta, Georgia could buy a comparable plan from Cigna for $98 per month.

So the Obamacrap-like guaranteed issue provisions mean healthy people will still pay double the normal premium so everyone can have health insurance.

Seems fair, right?
“Getting more young people into the market is a major plus for all Mainers and was a primary goal of the law,” Allumbaugh notes. “As this happens, the claims experience tends to improve and it can lower the rates even further for all age groups,” Allumbaugh said.“This is precisely the impact the health reform law aimed for, lowering rates generally, but in a way that helps our insurance markets reverse the death spiral and begin to grow.”
Death spiral. Now that's a word you don't hear every day.

Hyper-regulation by the Maine Department of Insurance has resulted in most health insurance carriers leaving the state. Anthem Blue Cross controls most of the health insurance market in Maine. Less competition, higher rates.

The same thing we will have in 2014 when Obamacrap is in play.

How is this health care reform idea working for you?

About as well as hope and change.
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