Kessler notes, “[T]he law . . . mandates a number of significant changes that many experts believe will put upward pressure on premiums. There are potentially important policy reasons for each of these changes. But remember, you usually don’t get something for nothing.”
He points out, “Currently insurance companies offer lower premiums to younger Americans, since they generally have lower health costs. But starting in 2014, the law implements an age band so that the amount an older individual pays will be no more than three times what a younger individual pays. So if a state currently allows an age band of 5:1, older Americans might see a premium decrease — but younger Americans would see a premium spike. A similar dynamic exists with the law’s requirement that insurers selling policies through the health exchanges will no longer be able to charge different premiums based on a person’s health status when coverage is first purchased. This is known as a community rating. So healthier individuals generally will see higher premiums. The popular provision that requires insurers to accept everyone regardless of their health status (i.e., pre-existing conditions) also will transfer costs to healthier individuals. Insurers must offer an “essential health benefits” package, providing coverage in 10 categories. . . . [T]he benefits are more extensive than what most individuals and small businesses already purchase. So that will also boost premiums, especially if you currently have a less extensive plan. A report in the June edition of Health Affairs found that “more than half of Americans who had individual insurance in 2010 were enrolled in plans that would not qualify as providing essential coverage under the rules of the exchanges in 2014. The law also contains various taxes and fees, including a health insurance tax. Those costs presumably would be passed on to consumers, resulting in higher premiums.”
Further, Kessler writes, “There have been several national and state studies, conducted by credible analysts, that have attempted to calculate the impact of these changes on premiums. . . . [T]he bad news is that, on average, premiums almost certainly will go up — with some people really getting hit with increases. ‘Based on the analysis of the individual market, there is a concern for rate shock to a material portion of the population,’ a report for Rhode Island said. ‘The individuals who currently are qualified for preferred rates will be seeing large increases in their healthcare premiums if they do not qualify for premium subsidies.’”
He concludes, “The president asserted that because of the law, small business and individual premiums ‘will go down.’ . . . The law’s provisions, especially the requirement for essential benefits, will almost certainly increase premiums, though tax subsidies will help mitigate the impact for a little over half of the people in the exchanges. But a lot of other people — such as a young male who currently has a plan that does not include all of the required benefits — are likely going to have sticker shock when they see what happens to their premiums starting in 2014. As we said, you don’t get something for nothing. . . . Three Pinocchios.”
Recalling past comments on this issue:
This is not how Obama and Democrats in Congress sold their health care law. As the Senate was debating the bill, Sen. Dick Durbin (D-IL), declared, “Bringing down costs of health insurance and making it more affordable is job one for this health care reform.” And President Obama said six months after he signed the law, “All this is going to lower premiums. It's going to make healthcare more affordable.” He boasted last year, “This law will lower premiums.”
Senate Republican Leader Mitch McConnell said on the day of the Supreme Court’s decision on the law, “Two and a half years ago, President Obama teamed up with Democrats in Congress to pass a health care bill they knew most Americans didn’t really want. Americans had been very clear about what they thought of this bill. So Democrats settled on a deeply dishonest sales pitch aimed at convincing them otherwise.
“And nearly every day since then, the promises that formed the heart of that sales pitch have been exposed for the false promises they were. Americans were promised lower health care costs. They’re going up. Americans were promised lower premiums. They’re going up. Seniors were promised Medicare would be protected. It was raided to pay for a new entitlement instead. We were promised it would create jobs. CBO predicts it will lead to 800,000 fewer jobs. People were promised they could keep the plans they liked; millions have now learned they can’t. For two years, the list of broken promises has grown longer and longer. . . . With every passing day we learn something new about this terrible law. Not only does it make the problems in our health care system worse, but it leads to a tax on middle class families who are either unable or unwilling to purchase health insurance. So, it’s time for Democrats to stop trying to defend the indefensible and join Republicans in wiping this colossal legislative mistake clear off the books.”
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