The Coming Increases in Health Insurance Prices

This post from Bob Laszewski on why 30% or 40% increases in the price of private healthcare insurance are well within the realm of possibility is worth reading:

On average, expect a 30% to 40% increase in the baseline cost of individual health insurance to account for the new premium taxes, reinsurance costs, benefit mandate increases, and underwriting reforms. Those increases can come in the form of outright price increases or bigger deductibles and co-pays.

In states with the least mandates or for health insurance companies with the tightest underwriting now, the increase could be a lot more.

But when you add the impact of the requirement that older consumers can be charged no more than three times as much as the youngest consumers (the usual standard is now a five times difference), premiums increase dramatically for the youngest.

There ain’t no such thing as a free lunch.

He concludes: “I told them not to call this the ‘Affordable Care Act.'”

Considering that our healthcare costs are already dramatically higher than any other OECD country’s dramatically higher costs would not only be a crime but an outrage. As I’ve been saying for some time, we need healthcare reform.

52 comments… add one
  • jan Link

    Steve, where are you?

    I would be interested in hearing your take on this.

  • Well, as Dave points out its the prices, stupid.

    Here in the U.S. we get pretty good health care, but we spend an awful lot for it. To be clear, we get health outcomes similar to that of other OECD countries similar to us (there are differences in the gross statistics, but gross statistics over look things like differences in the murder rate, car accidents, etc. and their effect on things like life expectancy).

    So, if the problem is we pay alot for similar quality care and prices are going to go up, and demand is fairly inelastic for many health care expenditures, then it stands to reason the real health care problem (it isn’t coverage) is going to only get worse. That is, costs are going to go up even more, with little to no increase in quality.

    The part Dave has quoted strikes me as reasonable. Basically health care premiums have to cover the costs. If we limit the spread between the elderly and young, then the lower prices will have to rise. There is no doubt about that. Since the younger people are also workers it will make employing them that much more expensive as well.

    Come October 1, consumers will find that they will be faced with very comprehensive health plans but those plans––including the lower cost “Bronze” and “Silver” plans––will have very high deductibles. Middle class families (300% to 400% of poverty), who aren’t fortunate enough to be in employer-sponsored plans and will be eligible for only partial federal premium subsidies, will still have to pay many thousands of dollars in premiums. They will also be confronted with a choice––pay the big premiums for a plan that will cover only 60% or 70% of their health care costs, with a big upfront deductible, or pay a fine equal to 1% of their income for each adult in the family.

    Depending on how it works, this could cause some people to not get insurance or only get it at the last minute. It would depend on the premium for these Bronze/Silver plans and limitations on when you can sign up. If I can sign up when I get really sick, it might make sense to pay the fine and then when one gets really sick, sign up.

  • But, but, but I’m not sick. I might have NPS, but that’s never been a big problem.

    I smoke, which is a problem, and I pay for it. I pay $155 a month for a catastrophic policy, $2500 deductible, one wellness exam a year, 80% coverage otherwise.

    That sounds right up your alley SteveV.

  • I have incentives to stay healthy. Or even reduce bad habits.

  • I’m 55.

  • I’ll fax the policy if you’d like. Looks like Obama has been talking to Jindal. Little sons a bitches.

  • Look kiddos, When I was out one night at 21 my companion and I were hit by a drunk turning through a mid left lane on a red light. I hit the windshield. I had Blue Cross.

  • For a good while there I could have liquidated assets. Not anymore.

  • Yeppers. I was in the 5%.

  • Oddly enough, when you split that it goes down to something like 35%.

  • What’s shocking? We’re talking policy.

    Looks good in LA for my purposes.

  • My husband did not give me money. He gave me a roof over my head, cars to drive, and stocked freezers. He loved me.

  • C’mon. What about the policy?

  • You can get hit by a bus or an erratic truck driver. Waiting until you get sick is a fool’s game.

  • Far as as I can tell, that’s Whole Food’s deal. The company sets up the policy and pays the deductible. Not such a bad thing for the vast majority.

  • That leaves another, say, $400 a month on the table to drive prices.

  • Where y’all?

  • C’mon. Let’s have some discussion.

  • C’mon. Do you want to see the policy?

  • How y’all get so staggered?

  • Mr.Dave, have you gone to the opera, or what? It’s Naoleonic Code.

  • The lawyer was trained by Jesuits.

  • You’re not going to come up with the devil is in the details.

  • So, what about a $155 catastrophic policy for a 55-year-old who smokes? Y’all gone bluestocking?

    I’m not looking for handouts.

  • C’mon, it’s what you say you want.

  • jan, you’re tough enough to weather these boys.

  • What’s with you people?

  • Its what you say you want.

  • You don’t think I got that money through a lawsuit do you?

    Indeed, not! I got it through a $150 black tuxedo-jacket pencil-skirt for $150 at J. Harris in downtown Dallas in 1984. On sale.

    What do you take me for?

  • I can still wear it.

  • Come down and see me sometime, Big Boy…

  • steve Link

    I was working late to see if I could personally make costs go up 30%-40%. Really, I dont know what to do with outlier claims like that of Laszewski. Kind of like going to one of those “up to 70% off” sales. I have no idea where he gets his numbers. CBO predicted a smaller increase. If we look at Massachusetts, we dont see those kinds of increases. Yes, both of those have some problems, but his estimates are far out compared with these two.

    What I think really will increase a lot are premiums for those currently on the mini-med type plans. Ones where employees pay $1000 and get $2000 worth of medical care. They will get to have real insurance. That will cost more. Free riders will go from zero in premiums to paying something. Young people will still have the option of buying catastrophic or high deductible plans. Small companies are exempt if they want. However, about 70% of those do provide insurance for their employees. I still think that is likely to be lower since they wont have to pay for underwriting or agent commissions. Large corporations mostly self- insure. I dont see them changing much.

    The only group I see maybe taking a hit is the mid-level company.


  • My sis works for a firm that headhunts computer talent. She pays $127 for a comprehensive policy. She’ll take a hit.

  • My snotwad stepsons will finally learn that capital is precious. That Daddy don’t pay premiums.

    The younger actually approached me one time about buying a family policy. He was 37. Maybe 36.

  • Live free or die jerk-offs.

  • The woman has savage blood. I really do need to look at that DNA profile.

  • Cat On a Hot Tin Roof and all that.

  • Liz and I were like this.

  • Isn’t it fun to have a baby Joan Rivers at your side, our good host?

  • Don’t have one iota of plastic surgery, except for that eyebrow.

  • Which I kind of like.

  • “Y’all kidding?”

  • Lyman used to tickle me mercilessly, like my big brothers. Time to pass it on.

  • Damn, I missed the memorial service.

  • I should have been there, you know.

  • But you’re a lot more fun, old friend.

  • He wasn’t the lugubrious sort.

  • My God, I’ve flatly gone out of my mind, haven’t I? Not the worst thing to do in the circumstances.

    I do trust you.

  • My bank numbers are xxx-xxxxx-xxxxx-xxxx and
    xxxxxxxx-xxxx, and xxxxxxxxx-xxxx.

    Please make sure I’m taken care of properly.

  • Good night sweet prince, and thy good lady…and the dogs. Lord speed thee to to thy rest.

  • Since I’m always off-topic, I’d like to note that I just signed up (over the Internet) with Virgin Mobile for cell phone service.

    Their customer service was top notch, with a “magic” chat box that just appeared as I was perusing the site. 300 anytime min, no contract, $35/month.

  • I think there are lot Companies which provide the benefits to the Seniors as well as the Women more then anyone as they think these are the only ones who needs the Medicaid at most, but i guess Medicaid is not something which is fixed to someone. Infact everyone may need Medicaid at some point of time ….

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