WSJ: Health Premiums Could Double Under Obamacare

Health insurance costs will rise as much as 100 percent under Obamacare, Merrill Matthews, resident scholar at the Institute for Policy Innovation, and Mark Litow, a retired actuary, write in The Wall Street Journal. 

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

Obamacare requires that health insurers accept everyone who applies, that they can’t charge more based on serious medical conditions, and that they pay for some uncovered medical conditions. 

The guaranteed acceptance drives people to wait on buying insurance until they get sick. Obamacare includes a financial penalty to keep people from doing that. But, “it is too low to be a real disincentive,” Matthews and Litow say. “The result will be insurance pools that are smaller and sicker, and therefore more expensive.”

They feel confident making that projection because eight states enacted similar requirements in the mid-1990s and “wrecked their individual health insurance markets,” the pair states. “Premiums increased so much that Kentucky largely repealed its law in 2000.”

States that will likely experience the biggest insurance price increases under Obamacare are Arizona, Arkansas, Georgia, Idaho, Iowa, Kentucky, Missouri, Ohio, Oklahoma, Tennessee, Utah, Wyoming, and Virginia — between 65 percent and 100 percent, Matthews and Litow write. 

The editorial argues that President Barack Obama was right when he said during fiscal-cliff negotiations that “we have a healthcare [spending] problem,” and that problem is of his own making.

Just before the healthcare reform bill was passed in 2010, Obama said, "Everybody who's looked at it says that every single good idea to bend the cost curve and start actually reducing health-care costs are in this bill."

That leads Journal editors to wonder: “why is Mr. Obama invoking a special healthcare spending problem now?”

The answer: “The rational way of reading his fiscal-cliff refrain is as a concession that his cost-control promises are being repudiated by reality. Entitlement spending is headed up, as are overall U.S. healthcare costs.”

Health entitlements — Medicare, Medicaid, the children's state insurance program, and soon Obamacare subsidies — will explode to account for 10.4 percent of GDP over the next 25 years from 5.4 percent today, despite Obamacare, according to the Congressional Budget Office.

But Obama “seems to believe his own advertising,” The Journal editorial states. “The White House position is that the government health gnomes now have the tools they need to solve the problem . . . Nothing in practice supports this delusion.”

The Health and Human Services Department estimates that health costs will surge 7.8 percent in 2014, when Obamacare is due to be fully implemented, and 6.2 percent a year on average for the decade thereafter. 


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