If You Think Health Insurance Is Expensive Now, Just Wait!


Health Insurance premiums have been rising rapidly since Obamacare was passed, but we really haven’t seen anything yet. It’s going to get worse, especially for individuals. During the debate before the law was rammed through many people said we needed it to stop subsidizing those who don’t buy health insurance. Well, how did that work out? Now we’re not only subsidizing those people, but giving them incentives not to purchase health insurance until they get sick.

Central to ObamaCare are requirements that health insurers (1) accept everyone who applies (guaranteed issue), (2) cannot charge more based on serious medical conditions (modified community rating), and (3) include numerous coverage mandates that force insurance to pay for many often uncovered medical conditions.

Guaranteed issue incentivizes people to forgo buying a policy until they get sick and need coverage (and then drop the policy after they get well). While ObamaCare imposes a financial penalty—or is it a tax?—to discourage people from gaming the system, it is too low to be a real disincentive. The result will be insurance pools that are smaller and sicker, and therefore more expensive.

How do we know these requirements will have such a negative impact on premiums? Eight states—New Jersey, New York, Maine, New Hampshire, Washington, Kentucky, Vermont and Massachusetts—enacted guaranteed issue and community rating in the mid-1990s and wrecked their individual (i.e., non-group) health-insurance markets. Premiums increased so much that Kentucky largely repealed its law in 2000 and some of the other states eventually modified their community-rating provisions.

States won’t experience equal increases in their premiums under ObamaCare. Ironically, citizens in states that have acted responsibly over the years by adhering to standard actuarial principles and limiting the (often politically motivated) mandates will see the biggest increases, because their premiums have typically been the lowest.

Read the whole thing, some premiums are expected to rise by 50% and others could see 100% increases. While individuals and small businesses will see the biggest spikes, premiums for everybody will go up eventually. The government will try to force insurers to keep rate increases low, which will only lead to the insurers going bankrupt and pushing us all into a single payer nightmare.