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Obamacare: Unaffordable for Many; Broken Promises Are Numerous

Posted by Larry Doyle on May 14, 2013 8:39 AM |

A month ago Senator Max Baucus, a Democrat from Montana, projected that he envisioned the implementation of the President’s new health care program, aka Obamacare, as being “a train wreck.”

Well, in reviewing a report released yesterday by the US House of Representatives Committee on Energy and Commerce, we gain a greater appreciation for just how expensive this train wreck might be.

I hope readers are not already feeling ill at ease this morning because after reading this report I can assure you that you will get sick. Let’s navigate and look more deeply at The Looming Premium Rate Shock: >>>>>>>

Affordability. It was a central premise – and promise – of the Patient Protection and Affordable Care Act (PPACA) when the law was debated in Congress throughout 2009 and signed into law on March 23, 2010. In his remarks that day, President Barack Obama stated: “This legislation will also lower costs for families and businesses . . . .” Over three years later, the White House continues to state that the PPACA will lower costs.

Then how do the wizards working at 1600 Pennsylvania Avenue explain this.

On March 14, 2013 the committee sent letters to 17 of the nation’s largest health insurance companies requesting analyses of the effect of PPACA’s (i.e. Obamacare) policies, mandates, taxes, and fees on premiums.

The materials submitted by the health insurance companies show that the PPACA will increase premiums significantly for most Americans. One company stated: “…consumers in about 90% of all states would likely face significant premium increases.” Another insurer wrote that they “expect significant increases in premiums for a large percentage of our membership depending on their current health plan product and their specific circumstances.”

How large might the increases be for those purchasing individual coverage?  (caution: get your barf bag ready!!)

The total average change due to the PPACA for new business in the individual market will be a 96 percent increase in premiums. Existing customers can expect an average increase of 73 percent.

Note that these are only the average expected changes because of the PPACA. As is shown above, new business in the individual market could see a premium increase of 413 percent when new requirements on age rating and required benefits are taken into account.

In dollars, this is a large hit to every American’s pocketbook. The average yearly cost for a new customer in the individual market grows from $1,896 to $3,708 — a $1,812 cost increase.

Another insurer provided materials showing that the average increase would be much higher for a young, healthy male. As the chart suggests, the PPACA could lead to a 180 percent premium increase.

What about for small employers, those being companies with fewer than 50 employees?

 . . .  purchasers of small group plans can expect premium increases of up to 50 percent. The insurer that produced this chart estimated that a plurality, 35 percent of  the small group market, can expect premium increases over 30 percent. An additional percent of small group purchasers can expect increases ranging from 20 percent to 30 percent.

And for large employers?

Most of the insurers contacted by the committee had not conducted an analysis on the PPACA’s effects on the large group market. One insurer that did, however, estimated a premium increase for the large group market at 20 percent to 25 percent. Another insurer provided the following chart showing estimated premium increases in the large group market ranging from 15 percent to 20 percent.

As if these increases were not enough to make you sick, the committee also informs us that new taxes and fees,

. . . could increase premiums from 2.3 percent to 2.5 percent in 2014 in the individual, small, and large group markets. This tax could increase premiums an additional 3 percent to 4 percent in future years. Other insurers, by grouping the fees and taxes together, found premium increases ranging from 4 percent to 8 percent.

What does the committee conclude?

The internal documents provided by the insurance industry confirm many of the concerns voiced over PPACA: despite promises that the law will lower costs, the PPACA will in fact cause the premiums of many Americans to spike substantially.

The broken promises are numerous, and the data reveals that many Americans, from recent college graduates to older adults, will not be able to afford the law’s higher costs.

One of the nation’s leading insurance companies that insures millions of Americans predicts premiums will nearly double for individuals getting a new plan, those keeping their insurance will see an average increase of 73 percent, and some individuals could see increases of as much as 413 percent.

These figures forecast looming financial hardships when the law takes effect on January 1, 2014.

Why is it that our economy cannot seem to gain any momentum? A variety of reasons but the grinding of the brakes related to Obamacare should not be underestimated.

Navigate accordingly.

Larry Doyle

Isn’t  it time or overtime to subscribe to all my work via e-mail, an RSS feed, on Twitter or Facebook.

I have no business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.

  • Always Learning

    Change the name of this dreadful law to the Unaffordable Care Act . . . and then repeal it!

  • Carl Collicott

    TITLE I—QUALITY, AFFORDABLE HEALTH CARE FOR ALL AMERICANS
    Subtitle A—Immediate Improvements in Health Care Coverage for All Americans

    *Sec. 1001. Amendments to the Public Health Service Act.

    Sec. 1555. Freedom not to participate in Federal health insurance programs.

    SEC. 1555 @42 U.S.C. 18115. FREEDOM NOT TO PARTICIPATE IN FEDERAL
    HEALTH INSURANCE PROGRAMS.
    No individual, company, business, nonprofit entity, or health
    insurance issuer offering group or individual health insurance coverage
    shall be required to participate in any Federal health insurance
    program created under this Act (or any amendments made
    by this Act), or in any Federal health insurance program expanded
    by this Act (or any such amendments), and there shall be no
    penalty or fine imposed upon any such issuer for choosing not
    to participate in such programs.
    ______________________________________________________
    Public Health Service Act (th real law)

    July 1, 1944 [H.R. 4
    624] | [Public Law 410] 58 Stat. 682
    TITLE I—SHORT TITLE AND DEFINITIONS
    SHORT TITLE
    SEC. 1.
    Titles I to V, inclusive, of the Act may be cited as the “Public Health Service Act”.
    SEC. 605. (a) Section 7 of the Act of September 7, 1916, entitled “An Act to provide compensation for employees of the United States suffering injuries while in the performance of their duties, and for other purposes”,

  • Jim

    It’s just all so unreal. This jack@$$ is making Carter look like George Washington

  • ed pefferman

    Larry,
    YOUR HYPOCRISY IS LIMITLESS

    On the one hand, you rail against Pol’s that are bought
    and paid for by Wall Street.
    On the other hand, when it suits your purpose, you use
    them to legitimize your arguement and hatred for Obama
    Care.
    Max Baucus has been bought and paid for by the Health
    Industry. Between 2003 and 2008 he received 3.9 million
    from the Health sector (Center for Responsive Politians)
    This much to a “Montana Senator” (91% of his reelection
    funds came from outside Montana). There is a revolving
    door between Max’s staff and Health Care lobbist on
    K Street.
    These “Prairie Dog Senators” can be bought and paid for
    relatively easily and cheaply (how many news outlets can
    there be in Montana?)
    Larry, you never cease to amaze me, and you say,
    “Everything is Political”……how sad.

    Ed

  • LD

    Ed,

    What do you make of the expected increased health care premiums?

    In regard to the quote “Everything is political” I would recommend you go back to that post. That quote was shared with me by an individual who covered the WH and he is referring to a former WH official.

    I hope that clarifies things for you.

  • SBD

    Not to presume, but I will answer LD’s question to Ed: While increased premiums are very likely, they can not be predicted this far out.

    Moving along,- everything is indeed political. Faced with an enormous paradigm shift that would directly affect virtually every American (not to mention the flailing economy), our great statesmen simply relied upon industry-provided talking points. Worse yet, many democrats voted for the PPACA simply because, should the cursed Act not pass, even more seats would have been lost to the republicans.

    The ACA was mostly designed by the large insurers that are now providing the above, unreliable premium projections. These insurers were delighted with the prospect of new business (mandated) flooding through their doors.

    I can not imagine what assumptions were fed into the above-referenced projections. It is difficult enough to project claims beyond 3 – 6 months for an existing program / population. But in many ways the ACA is bringing us into entirely unexplored territory. Maybe we should take a random poll at a shopping mall to determine what our premiums are going to be!

    An analogy can be drawn from the hubris that underwriters felt when convincing themselves that long-term care policy claims could be reasonably predicted; despite a dearth of claims experience to rely upon. Now, insurers are withdrawing from the LTC market in droves and / or begging state insurance commissioners / superintendents to allow them to drastically raise premiums (as a way of forcing consumers out of policies, or offering the choice of a more affordable, yet inadequate benefit scheme).

    And can you imagine the idiocy of having initially including a long-term care component in the ACA which, aside from providing unrealistically low benefits, had to be excised altogether!

  • ed pefferman

    Larry,
    Thanks for clarifing that for me.
    SBD,
    Dido.
    Larry,
    Can I send you my Econ 101 book? It has a chapter on
    Supply and Demand. The Health Care costs will continue
    to go up, as long as we demand to live to 150 years old.

    Ed






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