March 19 2014
Report: Healthcare Premiums on the Rise
Patrice J. Lee
The Administration likes to tell the tale that ObamaCare has slowed the rise in healthcare costs, but a new report tracking actual premiums challenges that cost-reduction myth.
According to the private health exchange eHealthInsurance, premiums have risen more after ObamaCare than the average premium increase over the eight years before ObamaCare became law.
Since February 2013, health insurance premiums in the individual market have risen by 39 percent, and (without a subsidy) the average individual premium is now $274 a month. Between 2005 and 2013, average premiums for individual plans increased 37 percent. The cost differences are more dramatic for families. Since February 2013, the average family premiums increased 56 percent (now $663 per family). In the eight years prior they rose 31 percent.
The Daily Caller explains why:
Premiums are being hiked across the board for several reasons, but the biggest contributor is the Obama administration’s highly touted “essential health benefits,” services that insurers on and off exchanges must provide.
Some benefits, such as emergency and laboratory services, are uncontroversial. But others, like maternity, newborn and pediatric services, are causing headaches for huge swaths of the population that don’t need them. Anyone past childbearing age, single men, the infertile, even nuns — their premiums are rising as well, because their plans must, by law, provide more services.
But premiums aren’t the only key to health care costs — deductibles and out-of-pocket costs like co-pays are also rising. When it comes to employer health plans alone, four out of five U.S. companies have increased deductibles or are considering doing so.
Earlier this year, the Administration jumped on a report that national spending on healthcare grew less in 2012, continuing a decline in growth rates. As we explained, that was because of a slowed economy rather than ObamaCare. The President’s policies and priorities have done little to stimulate growth, so in that way he has contributed to the slowdown in the healthcare costs.
In the same piece we agreed with healthcare experts that healthcare costs would actually rise as the economy improves and people feel more secure in their jobs to resume their healthcare usage patterns. And add to that new regulatory burdens from ObamaCare. It hasn’t taken any time for these predictions to bear out with the average costs of premiums for individuals and families rising significantly.
Even the Administration knows trouble is ahead. HHS Secretary Kathleen Sebelius has already said that premiums will rise, but they just don’t know how much.
That’s where the demographic mix of patients (i.e., young, healthy Americans versus older, sicker Americans) comes into play. As we know the current ObamaCare signup pool has only a quarter of young people, which doesn’t bode well for this healthcare insurance system. Insurers will adjust their costs to account for what they assumed would have been a more balanced pool where young people would be paying more of the costs.
The Administration still lags in signing up Americans for what is essentially a bad deal for them. Reports of rising costs do nothing to help the cause.