ObamaCare Works Its Magic: Insurance Premiums Skyrocket

It looks like ObamaCare is finally on its way to the Supreme Court, as the Obama Administration decided not to ask for a new hearing in the 11th Circuit Court of Appeals on Monday.  We’ve always known the fate of the “individual mandate” would be settled there… but while ObamaCare was passed in a blind rush during the dead of night, determining its constitutionality is a long and tortured process that grinds along for years, while Americans lose tens of thousands of jobs, and millions of dollars.

For example, the Kaiser Family Foundation just released a new survey showing that health insurance premiums have skyrocketed 9% over the past year:

On average, workers pay $4,129 and employers pay $10,944 toward those annual premiums.
Premiums increased significantly faster than workers’ wages (2.1 percent) and general inflation (3.2 percent).  Since 2001, family premiums have increased 113 percent, compared with 34 percent for workers’ wages and 27 percent for inflation.

“This year’s nine percent increase in premiums is especially painful for workers and employers struggling through a weak recovery,” Kaiser President and CEO Drew Altman, Ph.D. said. 

Wait a second!  What happened to “bending the cost curve down?”  Why is this marvelous gift to posterity from our beloved President “especially painful for workers and employers struggling through a weak recovery?”  And, what recovery is Dr. Altman talking about?

Part of the increase in cost comes from ObamaCare’s declaration that childhood lasts until age 26:

In particular, the survey estimates that employers added 2.3 million young adults to their parents’ family health insurance policies as a result of the health reform provision that allows young adults up to age 26 without employer coverage on their own to be covered as dependents on their parents’ plan.  Young adults historically are more likely to be uninsured than any other age group.
“The law is helping millions of young adults to obtain health coverage.  In the past, many of these young adults would have lost coverage when they left home or graduated college,” said study lead author Gary Claxton, a Kaiser vice president and co-executive director of the Kaiser Initiative on Health Reform and Private Insurance.  

Let’s do a little quick back-of-the-envelope math.  According to the 2010 Census, the total number of Americans covered by health insurance was 256.2 million.  Adding 2.3 million toddlers, aged 312 months and younger, would represent an increase in the total insured population of just under 0.9%, or roughly one-tenth of the percentage that our health insurance premiums increased.  That doesn’t sound like a very good deal.

This nonsense about adding “children” in their twenties to “adult” insurance plans also intensifies the worst problem with American health care before Obama got hold of it: nobody knows what anything really costs.  A fit person of 26 has very different health care needs from parents in their fifties or sixties, but instead of shopping for competitively priced coverage, we’ll just let him tag along on Mom and Dad’s family plan.  When benefits are inevitably cut due to Obama’s health care socialism, young adults will be crying about the decline in quality of a product they’re still six years away from purchasing for themselves.

Speaking of declines in quality, President Obama has already arranged for some, and more are on the way.  Co-payments and deductibles are up, as related by the New York Times – which also previews the new liberal spin on ObamaCare’s abject failure by muttering darkly about the “higher profits” of health insurance companies:

Throughout this year, major health insurers have defended higher premiums — and higher profits — saying that their expenses would rise once the economy recovered and people believed they could again afford medical care. The struggling economy will probably keep suppressing demand for medical care, particularly as people pay a larger share of their own medical bills through higher deductibles and co-payments, according to benefits consultants and others. About three-quarters of workers now pay part of the bill when they go see a doctor, and nearly a third have a deductible of at least $1,000 if they have single coverage, up from just one in 10 in 2006, according Kaiser.

(Emphasis mine.)  Supposedly workers are afraid to use their health benefits because of the confusion and fear ObamaCare has caused, and their general apprehension over the lousy economy, so actual health care costs are going down a bit – hence those evil profits enjoyed by insurance companies.  Too bad we can’t let people make rational decisions about how much health care they use, based on actually paying for it, but I guess that’s totally off the table.

Fortunately, the Times reports that premium “moderation” could be on the way:

Some small business say they expect their premiums to moderate, but only because of changes in their work force — partly caused by younger, healthier employees — that make it less likely that the companies will incur high medical claims. “Up until last year, we saw very hefty increases — double digits,” said Heather Gombos, an executive for R. M. Jones & Company and affiliated businesses in New Britain, Conn., a group that insures about 50 of its 80 employees.

There you have it, employers: a built-in incentive to fire older workers and replace them with younger ones.  At some dreadful tipping point, the ability and experience of senior employees is no longer worth the mandated overhead cost of their labor.

Altman says of the 9% premium increase his foundation discovered, “The open question is whether that’s a one-time spike or the start of a period of higher increases.”  I believe a significant fact uncovered by his study might go a long way toward closing that open question:

The survey finds that 56 percent of covered workers are in “grandfathered” plans as defined under health reform.  Grandfathered plans are exempted from some health reform requirements, including covering preventive benefits with no cost sharing and having an external appeals process.  To obtain this status, employers cannot make significant changes to their plans that reduce benefits or increase employee cost.

In other words, as soon as the employers make any changes in this huge number of “grandfathered” plans, Grandpa falls into the jaws of ObamaCare.  And here I thought we were supposed to embrace “change!”  The most likely change businesses will decide to make is canceling private coverage altogether, as the fine for non-compliance with ObamaCare becomes an increasingly reasonable fee for wiping their hands of medical insurance altogether.  And once we’re all floating in the public system together, 9% price spikes and today’s reductions in service quality will be remembered as the good old days.