Wednesday, July 21, 2010

ObamaCare© rate hikes: Some traction, finally?

Is the third time finally the charm? As we've previously noted (here and here), a lot of the squawking about ObamaCare© being the primary cause of rate increases seem, at best, unfounded. But a more credible claim has emerged, as The Grand Canyon State advises its own employees:

"State and university employees with families can expect to see their monthly health-insurance costs rise as much as 37 percent next year ... The Department of Administration cited federal health reform as the reason the state's health plans will carry "greater expenses and higher premiums for members..."

There are a number of interesting trends here:

First, the rate of increase is greater for those insuring children. This makes sense, since the rule that now mandates covering "kiddies" through age 26 "will ultimately increase the claims paid under the plan, and that added claims expense will eventually be passed on to the planholder."

The second is one that I think has been flying under the radar: "the federal legislation's ban on lifetime limits." This one's not as "sexy" as the kiddie-coverage or guaranteed issue provisions. But it's important because carriers can no longer accurately assess (or price for) the risk. Bob likens health insurance to a line of credit; that is, one walks into (for example) a hospital with a card that essentially says "do what you need to do, until I've hit my limit." That limit has grown rather high of late: most carriers offer $5 or even $7 million lifetime maximums. But of course, those caps are going away, so the equation now becomes "money is (literally) no object." How does a carrier put a price on that?

The state's employees are also the canaries in the coal mine: "Because the state is one of Arizona's largest providers of health insurance, its estimates could provide an early glimpse of how large employers will pass along health-reform costs to their employees." That's true, up to a point, but I think the long term effect is a lot simpler: kiss your group coverage good-bye.
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