I’ve been talking for a long time about how rates are going to be going up as the “Affordable” Care Act gets further implemented. And gradually, the truth is coming into clearer focus for more and more people.
Last week the Society of Actuaries released a study that predicts a 32% increase in claims cost under the new healthcare reform law. They believe that the large number of sicker people entering the market will drive this increase in claims.
Unfortunately for everyone in the individual market, this is going to further drive up premiums. To the shock of many, Kathleen Sebelius actually admitted the same. She told reporters “there may be a higher cost associated with getting into that market”.
She also noted that people will receive government subsidies to help pay for their health insurance: “But we feel pretty strongly that with subsidies available to a lot of that population that they are really going to see much better benefit for the money that they’re spending.”
She didn’t seem to even consider the millions of hard-working middle-class citizens who are buying their own health insurance, without having someone else pay for it. These are of course the same citizens who are paying the taxes that fund these subsidies.
And lastly, she admitted that young people will pay even higher premiums in order to subsidize older policyholders; and that men would pay more in order to subsidize women’s premiums.
The big question related to this issue, is whether the young, the males, the healthy – are going to be willing and able to pay these higher premiums. Those who don’t will have to pay a tax-fine in 2014 ($95, or 1% of income).
If large numbers opt out, those still in are paying even more.
The administration is hoping that competition among insurance companies will bring down premiums. But all signs are that competition will actually decrease, as it becomes more difficult for smaller insurance companies to manage the more highly regulated business climate.
The very best option at this point remains going with a high deductible HSA plan, fully funding it, and paying for it (if you qualify) through your Health Reimbursement Arrangement. If you currently have a grandfathered plan, consider keeping it.