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Side Effects: Premiums Will Rise Because of Obamacare

Posted By Kathryn Nix On September 23, 2010 @ 1:30 pm In Obamacare | Comments Disabled

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By now, most Americans who have been following the effects of the Patient Protection and Affordable Care Act (PPACA) realize that the health care overhaul is going to cause health insurance premiums to increase. Even President Obama admitted that his health care plan was “going to increase our costs—we knew that.”

However, the number of provisions in Obamacare that will increase premiums is likely far larger than most people realize. In recent research [2], Heritage analysts Brian Blase and Rea Hederman, Jr., highlight a dozen ways in which Obamacare will raise premiums. Three of the reasons they cover are listed below. To read about all twelve, check out this link [2].

Mandated Benefits

“Obamacare mandates that insurance companies cover a minimum package of benefits. The more comprehensive and generous the insurance, however, the more expensive it will be.”

Minimized Youth Discount

“The average 60-year-old consumes about six times as much health care as the average 20-year-old, but Obamacare mandates that insurers charge the oldest individuals in the risk pool no more than three times the lowest rate. As a result, young individuals will pay much more than the actuarially fair amount for their premiums.”

Adverse Selection

“Since heath plans will be required to extend coverage to any qualified applicant and will not be allowed to vary premiums based on health status, healthier individuals will likely wait until they are sick before they buy health insurance. With fewer healthy individuals buying coverage, premiums will need to rise to cover the costs of the sick, which will in turn drive even more individuals in good or even fair health to drop coverage.”

In their research, Blase and Hederman delve into these and nine other provisions of the new health care law that will increase premiums. For more information, please read “Obamacare Increases Health Insurance Premiums [2].”

This post was co-authored by Charles Adair.


Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org

URL to article: http://blog.heritage.org/2010/09/23/side-effects-premiums-will-rise-because-of-obamacare/

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[1] Image: http://www.foundry.org/wp-content/uploads/SideEffectsLogo4.jpg

[2] In recent research: http://www.heritage.org/Research/Reports/2010/09/Obamacare-Increases-Health-Insurance-Premiums

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