Wednesday, October 28, 2009

Higher Costs: Guaranteed

As Bob has noted extensively (here and here, for example), "reform" efforts like ObamaCare will lead to significant premium increases for pretty much every insured. Other folks have also shown this to be true; CongressCritters worried about the impact of such efforts on their constituents turned to one of the eeeeevil insurance companies for actual, you know, data. WellPoint (Blue Cross/Shield) obliged, "mining" their substantial databases for information on how (what we know about) ObamaCare would affect actual insureds in 14 states.

The information gleaned took into account a number of factors which previous studies have not, including demographic and market variables; this is important because other studies basically studied national trends, which don't give as precise a picture. It's also critical to understand that these are based on actual insured populations, not a hypothetical one.

"In all of the 14 states ... ObamaCare would drive up premiums for the small businesses and individuals ... Young and healthy consumers will see the largest increases."

Those increases, by the way, amount to double and even triple the cost of current rates. One example they gave struck close to home: that of a young (well, relatively: age 25) male living in Columbus, Ohio (just a scant 75 minutes away from IB Central). This young man's current monthly premium is $52 [ed: based on the county, age and sex, and guessing at underwriting, I presume this would be a high deductible, HSA type plan]; under the underwriting and pricing provisions of both the Senate and House bills (i.e. guaranteed issue and community rating), this gentleman's premium would jump to $134. Adjust the benefits (because ObamaCare requires lower out-of-pockets and more first-dollar coverages), and the bill tops out at a whopping $157, almost triple the current rate.

Families will see tremendous cost increases, as well: in the example cited by the WSJ, a typical family of four would see their premiums double. What a great idea in a floundering economy.

Of course, naysayers will claim that this is simply another industry shot at "reform;" after all, their excessive profits are at stake. This ignores the fact that companies like WellPoint would actually benefit from these increases: higher premiums mean higher profits, and richer plans means higher renewals. But why let logic and common sense enter the picture now?

Something else that no one seems to be discussing is that none of the plans currently under consideration substantively address the primary reason that insurance costs continue to increase: higher medical costs. In fact, richer plans (with lower deductibles and more "freebies") will guarantee greater costs, since the demand on providers will increase dramatically.

As Bob says: Smaller cars, bigger health insurance, Poppa Washington.
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