ObamaCare’s impact on health costs.
The White House announces regulations for implementing ObamaCare’s federal mandate that employer-sponsored or individually purchased policies must offer coverage to subscribers’ children if these “youths” are under the age of 26 — with the increased costs being borne by all families with employer-sponsored insurance.
The Milliman consulting and actuarial firm discusses how an ineffective individual mandate — one that leads many people to defy the requirement that they buy insurance — combined with a mandate that insurers cover all comers without charging any additional premiums for those with preexisting conditions, would likely raise health insurance premiums dramatically.
In perhaps the most authoritative study to date on ObamaCare’s likely impact on insurance premiums, the Oliver Wyman consulting firm spent eight months developing a model to gauge the legislation’s effects, drawing on a database of actual insurance information for nearly 6 million people. The firm’s analysis of the Senate bill (which, in connection with the Reconciliation Act, became law) concludes that its weak individual mandate wouldn’t coax high participation among younger and healthier people; that its other mandates (requiring more expensive coverage and not allowing insurers to charge applicants based on the likely costs of their care) would encourage high participation among older and less-healthy people; that adverse selection would result; and that premiums would therefore rise dramatically. Within five years, the average family’s insurance premiums would be $3,341 higher with ObamaCare than without it, the average individual’s premiums would be $1,576 higher, and overall insurance costs would be 54 percent higher — above and beyond the impact of medical inflation.
WellPoint estimates that, under ObamaCare, insurance premiums for younger, healthier people would more than double in the individual markets in California, Colorado, Connecticut, Georgia, Indiana, Kentucky, Maine, Missouri, Ohio, Virginia, and Wisconsin.
ObamaCare would impose higher implicit marginal tax-rates on lower- and middle-class workers than on millionaires, thereby penalizing work and providing a barrier to upward mobility. Under the Senate bill (which, along with the Reconciliation Act, became law) those making $14,560, who make another $560, would be $200 worse off than if they hadn’t made that extra money at all; those making $12,000 would pay implicit marginal tax-rates of 66 percent on the next $5,000 earned; and people who make between $30,000 and $100,000 would pay implicit marginal tax rates of over 50 percent. Disincentives for work would be coupled with rewards for dropping insurance, as those who drop insurance, picking it up again only when sick or injured, could save as much as $8,000 a year.
Through a variety of restrictions, requirements, prohibitions, and taxes, ObamaCare would — as if by design — seriously hinder, if not altogether kill, HSA plans — despite the promise they have shown as a tool for lowering health-care costs