The Purpose of This Bl;og

By and large, liberals are very decent, kind, and compassionate people who genuinely want what is best. This should be kept in mind as we explore the Law of Unintended Negative Consequences near invariably resulting from Leftist big-hearted solutions to societal problems.

Tuesday, November 5, 2013

Obamacare - Lower Premiums?

During the 2008 presidential election, Barack Obama set forth a firm and exacting commitment to lower health insurance premiums. He said: "I will sign a universal health care bill into law by the end of my first term as president that will cover every American and cut the cost of a typical family's premium by up to $2,500 a year." (See HERE)

He also said that, "My plan begins by covering every American. If you already have health insurance, the only thing that will change for you under this plan is the amount of money you will spend on premiums. That will be less than what you are spending now." (See HERE)

Who wouldn't want this?

However, after being elected, did President Obama deliver on his adamant commitment to decrease "a typical family's premium by up to $2,500 a year"? Does Obamacare live up to its billing as the "Affordable Care Act"?

In 2009, President Obama said: “We agree on reforms that will finally reduce the costs of health care. Families will save on their premiums…” ( See HERE)

Yet, in 2013, even the President's own Obamacare web site admits that on average premiums will increase rather than decrease because of the law (see HERE), though several noteworthy spins have recently been put into play by the Obama administration and their friend in the media.

For example, attempts have been made to minimize the increases by suggesting that they will be "the lowest in decades." (See HERE and HERE and HERE)

And, the HHS report claimed, “Premiums nationwide will also be around 16 percent lower than originally expected.” However, Avik Roy, of Forbes Magazine, says: "But that’s a ruse. HHS compared what the Congressional Budget Office projected rates might look like—in 2016—to its own findings. Neither of those numbers tells you the stat that really matters: how much rates will go up next year, under Obamacare, relative to this year, prior to the law taking effect." (See HERE)

Liberals have also been quick to point out that premiums will be lower for many people because of government subsidies (see HERE). Yet, as Avik Roy also notes, "the overall results make clear that most people will not receive enough in subsidies to counteract the degree to which Obamacare drives premiums upward." (See HERE)

Besides, as pointed out in a WSJ article (March 2010): "Insurance subsidies are transfer payments in which government takes money out of the private economy and gives it to someone else. Subsidies thus put an even larger share of health-care spending in government hands. When you subsidize something, you get more of it, which means higher demand for insurance and health-care services. Combine this with new mandates that have raised costs in every state where they have been tried, and you will get higher premiums. In Massachusetts—where Mitt Romney imposed the beta version of ObamaCare in 2006 in the name of controlling costs—insurance carriers asked regulators this week to approve premium increases ranging from 8% to 32% for small businesses and individuals. That isn't far from the top 39% increase by Anthem Blue Cross in California that Mr. Obama claims his plan would prevent."

Nevertheless, insurance premiums aren't dropping by $2,500.00 for the typical family. They are increasing. (See HERE and HERE and HERE and HERE and HERE and HERE and HERE)

[Update 3/17/2014: According to United Liberty, Obamacare premium increases eclipse previous eight years combined. (See HERE)]

[Update 8/18/2015:  Analysis of 2016 Premium Changes and Insurer Participation in the Affordable Care Act’s Health Insurance Marketplaces - premium cost will continue to increase in 2016 (on average 4.45 higher]

The Obama administration has become so concerned about the truth of premium hikes getting out absent the spin, that the HHS decided to issue a censoring order: "Shortly after its enactment, Obamacare began increasing health insurance premiums. To prevent a(n even greater) backlash, Obama’s HHS Secretary Kathleen Sebelius started waiving select mandates for select companies and unions. Congress gave her no authority to issue such waivers. When health insurers began to inform customers how much Obamacare was increasing their premiums, Sebelius threatened to use her powers under the law to bankrupt any insurer that conveyed an unapproved message about the law. All insurers quickly complied."  (See HERE)

This is ironic given that the Obama plan requires "full transparency about quality and costs." (See HERE as quoted HERE

To make matters worse, not only are premiums increasing, but in many cases so are deductibles, co-pays, and other out-of-pocket expenses. For example, "After receiving a letter from her insurer that her plan was being discontinued, Deborah Persico, a 58-year-old lawyer in the District, found a comparable plan on the city’s new health insurance exchange. But her monthly premium, now $297, would be $165 higher, and her maximum out-of-pocket costs would double. That means she could end up paying at least $5,000 more a year than she does now." (See HERE)

With this having been said, let's see the extent to which premiums and out-of-pocket expenses have or will increase by looking at the employer and individual health insurance markets separately, then government health insurance, and then the entire market as a whole.

Employment Health Insurance:

Surprisingly, a number of liberal media outlets have begun delivering the bad news about premium hikes in employee health benefits. The NCSI reported in Nov., 2013: "Annual premiums for employer-sponsored family health coverage reached $16,351 this year, up 4 percent from last year, with workers on average paying $4,565 toward the cost of their coverage, according to the Kaiser Family Foundation/Health Research & Educational Trust (HRET). During the same period, workers' wages and general inflation were up 1.8 percent and 1.1 percent respectively."

CNBC reported in Oct. 2013:  "Health insurance premiums at large employers rose an average 3.3 percent this year....It also found that though premium inflation had slowed significantly, the average cost to employees for out-of-pocket expenses spiked by nearly 13 percent, continuing a trend that has seen employees' share of total health-care costs jump 150 percent since 2004."

Regarding projected increases, CNBC noted in Oct. 2013: "Employees' costs are expected to rise 5 to 7 percent next year, according to early estimates. Those annual increases have been a fixture for years. But in some 2014 open enrollment documents reviewed by CNBC, companies are specifically citing the law as a factor in next year's pricing. '(F)ederally mandated health care changes will require Comcast-NBCUniversal to pay new fees and implement plan design changes that will contribute to the increased cost of our plans,' says the open enrollment guide for's parent company, where employee health care premiums are rising by double digits, and deductibles in some cases are doubling. The guide also cites rising health care delivery costs not directly related to the new law."

See also HERE and HERE

Individual Health Insurance:

As early as 2010, the WSJ reported: "In recent weeks, insurance companies have started mailing consumers letters informing them of double-digit rate increases starting this month, partially attributing them to the mandates that begin Thursday. That is sowing confusion among consumers, and muddying the Democrats’ contention that the law will rein in sharply rising premiums."(See also HERE)

Heritage Foundation (Oct 2013): Obamacare will leave many people paying more for their health insurance. The website is learning to crawl, with additional data trickling in. However, based on information already released by HHS, states, and insurance plans, the claims of savings on premiums for the average participant is a fantasy. (Click on the link to see the state-by-state breakout.)

Forbes (Sept 2013): "Obamacare will increase avg. individual market insurance premiums by 99 percent for men, 62 Percent for women....27-year-olds will face rate increases as high as 279 percent...40-year-olds will face rate increases as high as 305 percent."

Forbes (Nov 2013): "49-State Analysis: Obamacare to increase individual market premiums by average of 41%. Today, the Manhattan Institute released the most comprehensive analysis yet conducted of premiums under Obamacare for people who shop for coverage on their own. Here’s what we learned. In the average state, Obamacare will increase underlying premiums by 41 percent. As we have long expected, the steepest hikes will be imposed on the healthy, the young, and the male. And Obamacare’s taxpayer-funded subsidies will primarily benefit those nearing retirement—people who, unlike the young, have had their whole lives to save for their health-care needs. 41 states plus DC will experience premium hikes. See the Interactive Map to see Obamacare will affect premiums in your state."

Forbes (Nov 2013): "Obamacare will raise average insurance claims by 32% for individual coverage over the next four years."

Regarding deductibles, co-pays, and other out-of-pocket expenses, Forbes reports (Sept. 2013): "Though the Obama administration touted lower-than-expected premiums for individuals that will begin Tuesday taking to exchanges to shop for health benefits, consumers will also see high out-of-pocket expenses, a parade of states and study of those costs show. 'As has been the case for years for individuals or small groups who buy state-regulated insurance, they often can get lower premiums, but have a trade-off in the former of higher deductibles, co-payments and other cost-sharing. This will be common for individuals who beginning Tuesday, will be examining the myriad plans available to them under the Affordable Care Act.'"

Bloomberg reports (Nov. 2013): "Americans seeking cheap insurance on the Obamacare health exchanges may be in for sticker shock if they get sick next year, as consumers trade lower premiums for out-of-pocket costs that can top $6,000 a person. Expenses for some policies can reach $6,350 for a single person and $12,700 per family, the most allowed by the health-care law, according to a survey by HealthPocket Inc. of seven states, including California and Ohio. That’s 26 percent higher than the average deductible in the seven states, and a scenario likely repeated across the country, said Kev Coleman, head of research and data at Sunnyvale, California-based HealthPocket."

Government Health Insurance

Nearly 50 million Americans are covered under government-run Medicare insurance (see HERE), which represents nearly 15% of the population. This is a sizable segment, and so it is of value to determine the extent to which Obamacare may affect Medicare premiums and deductibles, particularly given that Obamacare cuts Medicare by $716 billion (see HERE and HERE and HERE), or $1.05 trillion in 10 years, or $4.95 trillion over 20 years (see HERE), which, as the Daily News indicates, hurts seniors just as the critics claimed. (See HERE)

An Article in MoneyMorrning points out: "Medicare is already feeling the impact. Faced with myriad long-term fiscal challenges, some of which are among the country's most pressing issues, Medicare's ills are merely amplified by Obamacare. On the fast-track to bankruptcy, estimates are that Medicare's Part A trust fund, which has long-term unfunded obligations of more than $35 trillion, will be insolvent by 2026, according to Washington, D.C. think-tank The Heritage Foundation. That means the U.S. government has made $35 trillion worth (more than double the nation's total current debt) of benefit promises to current and future seniors that aren't yet paid for. Furthermore, that staggering amount is expected to grow as millions more Americans are eligible for coverage."

Medicare is divisible into four parts (A,B,C,D). I will examine the trends in premiums and other expenses for each.
  • Part A--Hospital insurance. "Approximately 99% of Medicare beneficiaries do not have to pay Medicare premiums on Part A because they have over 10 years (or 40 quarters) of Medicare-covered employment." (See HERE and HERE) However, the deductibles increased from $1,132 in 2011 to $1,156 in 2012, $1,184 in 2013, and $1,216 in 2014. (ibid.)
  • Part B--Medical Insurance: The premiums are dependent upon income level. By law, the premiums stayed the same from 2008 to 2011, at $96.40 per month for the standard rate. However, when Obamacare kicked in, the standard rate increased from $99.90 in 2012 to $104.90 in 2013, and was expected to increase to $123.10 in 2014, but has since been slated to remain the same. Also, the deductible decreased from $162 in 2011 to $140 in 2012, but went up to $147 in 2013, and will remain the same in 2014.  (See HERE and HERE and HERE and HERE)
  • Part C--Advantage Plans. They combine Medicare parts A,B, and D. Premiums and other expenses vary depending upon the respective plans. For example, my mothers advantage plan will be charging her $29.00 a month in 2014, whereas before then there was not charge.
  • Part D--Drug Insurance. Premiums vary depending upon the plan and region. Since 2010 the average monthly premium was projected to hover around $30.00 (see HERE), whereas the premium for 2014 is set at $32.42. The standard deduction went up from $320 in 2012 to $325 in 2013, and will drop to $310 in 2014.

Summary of the Whole Health Insurance Market:

From what has been indicated above, the Leftist LUNC here is that the only thing that is universal about Obamacare, and cuts across all markets, is soaring premiums, deductibles, and other out-of-pocket expenses. "After ramming ObamaCare through Congress and signing it into law, costs for the average family will increase in a number of ways. Unfortunately, Obama did not lower health care costs for a typical family, but rather raise health care costs. Read this article to find out how." (See HERE)

The sad irony is, the rise in premiums and deductibles and out-of-pocket expenses will have the greatest negative financial impact on the poor and elderly and young, who can least afford it, and for whom Obamacare was allegedly designed to protect.

The graph below was posted at Frontpage Mag. It uses Bureau of Labor statistics and visually illustrates where insurance premiums are actually headed.

[Update 3/23/2014: this article lists four reasons that Obacare premiums will rise in 2015 even more than they did in 2014. (See HERE)


For an explanation as to why these Leftist LUNCs occur, please see: Gov: Wrong Tool for the Right Job - Introduction and Cold Nanny as well as The Politics of Compassion, Emotions, Ignorance, Denial, Blame-Shifting, and Victimization

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