Increased Premiums by PPACA

[Ann H]

AHIP has a great graphic that shows the problem of 3:1 age bands instead of the usual 5:1.

http://www.ahipcoverage.com/wp-content/uploads/2012/12/AgeRatingInfographic.jpg

Actuaries completed a study about those age band compressions and its affects on premium, and following are some great quotes:

Our analysis shows that under the ACA, premiums for people aged 21 to 29 with single coverage who are not eligible for premium assistance would increase by 42 percent over premiums absent the ACA. People aged 30 to 39 with single coverage who are not eligible for premium assistance would see an average increase in premiums of 31 percent. Those with single coverage aged 60 to 64 who are not eligible for premium assistance would see about a 1 percent average increase in premiums. (page 31)​

Next they considered the subsidies, and yet costs were greater:

Our core finding is that young, single adults aged 21 to 29 and with incomes beginning at about 225 percent of the FPL, or roughly $25,000, can expect to see higher premiums than would be the case absent the ACA, even after accounting for the presence of the premium assistance. Similarly, single adults up to age 44 with incomes beginning above approximately 300 percent of FPL can expect to see higher premiums, even after accounting for premium assistance. This is because in today’s market, younger enrollees can buy coverage that more closely reflects their expected actuarial costs based on their age, and this coverage is pooled with other similar risk classes in accordance with standard actuarial principles. In addition, the ACA requires that all nongroup coverage meet essential health benefit requirements, both with respect to the type of services covered and with respect to the actuarial value of the coverage.

Consider, for example, a 25-year-old person with income at 300 percent of FPL, or $33,510. This person currently could purchase coverage for about $2,400 per year, or 7.2 percent of his or her income. Age band compression and the other changes to the ACA would result in premiums (before premium assistance) increasing by 42 percent to $3,408. As shown in Chart 2, this person at 300 percent FPL will be required to pay 9.5 percent of his or her income, or $3,183, toward the cost of coverage. The cost of his or her actual premium would increase by $783, even with the $225 in premium assistance. (The impact of cost-sharing reduction assistance at these income levels is not relevant because the assistance completely phases out at household incomes above 250 percent of FPL.)​

(page 32)​

And finally, they talk about Guarantee Issue and its impact on rates:

Analysis of representative carrier data suggests that eliminating health status as a rating factor itself may increase premiums by roughly 17 percent to 20 percent for those who have preferred rates because of lower-than-average health risks. Young adults often qualify for these preferred rates. These increases would be in addition to any premium rate change due to age compression, required increases to benefits, or other factors discussed above. (page 33)​

http://www.contingenciesonline.com/contingenciesonline/20130102#pg33

 

[somarco]

I don't care what they say, adding in GI, even with a "mandate", is still worth more than 17 - 20%.

 

[Ann H]

But, but, but, but... the insurance companies gain volume!! It will lower rates 3000%.

 

[somarco]

insurance companies gain volume!! It will lower rates 3000%.

What flavor of Kool-Aid do you like with your gruel?

 

[Dave020]

Interesting article in Forbes today

California is hardly alone. Around the country, insurers are fixing to raise rates by double digits. They’re privately briefing politicians in Washington on what’s in store. Those briefings are leaving a lot of folks up and down Pennsylvania Avenue jumpy.

There’s buzz in Washington that to ease the price hikes, the Obama team may slow down some of the most expensive regulations. This might include the law’s mandatory community rating. One approach they’re said to be considering is allowing some of the historically based underwriting to stay in place for a time.

This is the next iteration of healthcare reform. Call it Obamacare 2.0. Doctors will become the next bogyman in Washington. The target is already being fixed to their hide. As for the rest of us, our health insurance will become increasingly illusory.

Health Insurance Brokers Prepare Clients For Obamacare Sticker Shock - Forbes

 

[AllenChicago]

Thank-you THANK-YOU for that Forbes article, Dave020. It was a pleasure to read and it's been bookmarked. Thankfully, it looks like Washington is finally figuring out that the cost of medical care is underlying problem. They could have asked us this a few years ago and avoided the huge healthcare debacle that's about to be unleashed on our country. However, the medical-related lobbyists have more congressional influence than any other.
-ac

 

[SportsNut]

"Those briefings are leaving a lot of folks up and down Pennsylvania Avenue jumpy"

They must lay in their own excrement...

 

[Ann H]

Below is an article from the Wall Street Journal dated 1/14/2013 about the very premium increases we have been discussing:


ObamaCare's Health-Insurance Sticker Shock
Thanks to mandates that take effect in 2014, premiums in individual markets will shoot up. Some may double.

Health-insurance premiums have been rising—and consumers will experience another series of price shocks later this year when some see their premiums skyrocket thanks to the Affordable Care Act, aka ObamaCare.

The reason: The congressional Democrats who crafted the legislation ignored virtually every actuarial principle governing rational insurance pricing. Premiums will soon reflect that disregard—indeed, premiums are already reflecting it.

Central to ObamaCare are requirements that health insurers (1) accept everyone who applies (guaranteed issue), (2) cannot charge more based on serious medical conditions (modified community rating), and (3) include numerous coverage mandates that force insurance to pay for many often uncovered medical conditions.

Guaranteed issue incentivizes people to forgo buying a policy until they get sick and need coverage (and then drop the policy after they get well). While ObamaCare imposes a financial penalty—or is it a tax?—to discourage people from gaming the system, it is too low to be a real disincentive. The result will be insurance pools that are smaller and sicker, and therefore more expensive.

How do we know these requirements will have such a negative impact on premiums? Eight states—New Jersey, New York, Maine, New Hampshire, Washington, Kentucky, Vermont and Massachusetts—enacted guaranteed issue and community rating in the mid-1990s and wrecked their individual (i.e., non-group) health-insurance markets. Premiums increased so much that Kentucky largely repealed its law in 2000 and some of the other states eventually modified their community-rating provisions.

States won't experience equal increases in their premiums under ObamaCare. Ironically, citizens in states that have acted responsibly over the years by adhering to standard actuarial principles and limiting the (often politically motivated) mandates will see the biggest increases, because their premiums have typically been the lowest.

Many actuaries, such as those in the international consulting firm Oliver Wyman, are now predicting an average increase of roughly 50% in premiums for some in the individual market for the same coverage. But that is an average. Large employer groups will be less affected, at least initially, because the law grandfathers in employers that self-insure. Small employers will likely see a significant increase, though not as large as the individual market, which will be the hardest hit.

We compared the average premiums in states that already have ObamaCare-like provisions in their laws and found that consumers in New Jersey, New York and Vermont already pay well over twice what citizens in many other states pay. Consumers in Maine and Massachusetts aren't far behind. Those states will likely see a small increase.

By contrast, Arizona, Arkansas, Georgia, Idaho, Iowa, Kentucky, Missouri, Ohio, Oklahoma, Tennessee, Utah, Wyoming and Virginia will likely see the largest increases—somewhere between 65% and 100%. Another 18 states, including Texas and Michigan, could see their rates rise between 35% and 65%.

While ObamaCare won't take full effect until 2014, health-insurance premiums in the individual market are already rising, and not just because of routine increases in medical costs. Insurers are adjusting premiums now in anticipation of the guaranteed-issue and community-rating mandates starting next year. There are newly imposed mandates, such as the coverage for children up to age 26, and what qualifies as coverage is much more comprehensive and expensive. Consolidation in the hospital system has been accelerated by ObamaCare and its push for Accountable Care Organizations. This means insurers must negotiate in a less competitive hospital market.

Although President Obama repeatedly claimed that health-insurance premiums for a family would be $2,500 lower by the end of his first term, they are actually about $3,000 higher—a spread of about $5,500 per family.

Health insurers have been understandably reluctant to discuss the coming price hikes that are driven by the Affordable Care Act. Mark Bertolini, CEO of Aetna, the country's third-largest health insurer, broke the silence on Dec. 12. "We're going to see some markets go up by as much as 100%," he told the company's annual investor conference in New York City.

Insurers know that the Obama administration will denounce the premium increases as the result of greedy health insurers, greedy doctors, greedy somebody. The Department of Health and Human Services will likely begin to threaten, arm-twist or investigate health insurers in an effort to force them into keeping their premiums more in line with Democratic promises—just as HHS bureaucrats have already started doing when insurers want premium increases larger than 10%.

And that may work for a while. It certainly has in Massachusetts, where politicians, including then-Gov. Mitt Romney, made all the same cost-lowering promises about the state's 2006 prequel to ObamaCare that have yet to come true.

But unlike the federal government, health insurers can't run perpetual deficits. Something will have to give, which will likely open the door to making health insurance a public utility completely regulated by the government, or the left's real goal: a single-payer system.

Matthews and Litow: ObamaCare's Health-Insurance Sticker Shock - WSJ.com

 

[CHUMPS FROM OXFORD]

"Ironically, citizens in states that have acted responsibly over the years by adhering to standard actuarial principles and limiting the (often politically motivated) mandates will see the biggest increases, because their premiums have typically been the lowest."

And that is definitely Ohio. Folks here threaten to riot if increases are in double digits. With 50% increases...who knows?

​

 

[leo3010]

Aetna ceo announced that lots of premiums will double throughout 2013 and 2014 due to Obama care
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This bill will definately be a burden ti small bussinesses
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This bill will definately be a burden to small businesses