• The Heritage Network
    • Resize:
    • A
    • A
    • A
  • Donate
  • Obamacare: Insurer Wants 25 Percent Premium Increase—but Will Still Lose Money



    Maryland’s largest individual market insurer, CareFirst BlueCross BlueShield, has submitted an average proposed rate increase of 25 percent for next year, plainly citing Obamacare’s new rules as the reason.

    But the most telling piece of the story is that it originally wanted a 50 percent increase, as reported by Kaiser Health News. Recognizing that this would make their insurance product too expensive to attract consumers, they instead asked for the 25 percent increase.

    But how will they reconcile the difference?

    They won’t. CareFirst plans to take a loss next year. “With the new, lower projected premiums, [CEO Chet] Burrell said, “we’re not expecting to make money. We’re expecting to lose money. If we’re going to lose it we’re going to lose it on behalf of subscribers and the community.” (Emphasis added.)

    Wow, a 25 percent premium increase will still leave an insurer selling its product at a loss. And while this is what CareFirst has chosen for 2014, surely losses cannot be sustained forever.

    But the huge premium increases themselves are no surprise. Insurance actuaries have been warning of big increases since before the law was passed.

    To that end, advocates of Obamacare claim that these huge premium increases aren’t that big of a deal, because many consumers will receive government subsidies to help offset the cost. As the Hoover Institution’s Daniel Kessler points out, “This argument is misleading. It fails to consider that the money for the subsidies has to come from somewhere. Although debt-financed transfer payments may make insurance look cheaper, they do not change its true social cost.”

    Indeed, the true cost of Obamacare’s exchange subsidies will be very high for taxpayers, estimated at over $1.2 trillion over 10 years by the Congressional Budget Office.

    With Obamacare taking full effect next year, large premium increases are likely in most states. See what premium increases are projected to be in your state: Obamacare: Projected Premium Increases by State.

    Posted in Obamacare [slideshow_deploy]

    Comments are closed.

    Comments are subject to approval and moderation. We remind everyone that The Heritage Foundation promotes a civil society where ideas and debate flourish. Please be respectful of each other and the subjects of any criticism. While we may not always agree on policy, we should all agree that being appropriately informed is everyone's intention visiting this site. Profanity, lewdness, personal attacks, and other forms of incivility will not be tolerated. Please keep your thoughts brief and avoid ALL CAPS. While we respect your first amendment rights, we are obligated to our readers to maintain these standards. Thanks for joining the conversation.

    Big Government Is NOT the Answer

    Your tax dollars are being spent on programs that we really don't need.

    I Agree I Disagree ×

    Get Heritage In Your Inbox — FREE!

    Heritage Foundation e-mails keep you updated on the ongoing policy battles in Washington and around the country.