Impact of the Patient Protection and Affordable Care Act on Costs in the Individual and Small-Employer Health Insurance Markets

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.