Despite all of the uncertainty that still plagues America’s businesses and workforce in terms of the Affordable Care Act, it appears there is one constant: many health insurance premiums will increase. The only question is by how much and for whom.
The Hill cited health industry officials who say we will hear about these rate hikes in the coming months and that premium increases will vary by “region, state and carrier,” with some parts of the country seeing “double”
“Areas of the country with older, sicker or smaller populations are likely to be hit hardest, while others might not see substantial increases at all.”
Nobody should be surprised that the people most in need of health care will end up with the health insurance sticker shock.
“If an insurance pool turns out to be more expensive than originally thought, the insurer must raise its premiums. As the premium rises, some healthy people drop their coverage. With a sicker group of enrollees, the average cost per enrollee will be higher and premiums must be increased again. That leads more healthy people to drop out — leading to more premium increases.”
From the outset, this “house of cards” has the healthiest people at the bottom. They support the rest of the structure by paying more for their coverage to help cover the costs of the older, sicker people at the top. This, according to Goodman, is unsustainable:
“Healthy people leave the pool because they are being over-charged. Sick people remain because they are being undercharged. This would not occur if each enrollee were charged a premium that reflects his/her actuarial risk.”
And in the end, the cards collapse in what’s commonly referred to as a “death spiral”.
If there are no more healthy people left in the exchange to help pay for the coverage of the older, sicker people, insurance companies have no choice but to charge the latter with premiums that actually reflect the cost of their care:
“But this is a premium they can’t afford, of course, and so it is a premium the insurer cannot collect. The ultimate end of a death spiral is the insurance pool equivalent of bankruptcy.”
This helps explain the full-court press to get people in their 20s and 30s to sign up for ACA health insurance exchanges before the March 31 deadline. What it doesn’t explain is how the ACA, with its requirements, rules, regulations and taxes – along with tenuous funding structure – is supposed to fix the real problem of out of control healthcare costs. Instead, the ACA puts more people into an already broken system.
Like Goodman, Job Creators Network Foundation believes a better alternative is to allow people to be in charge of their own health care dollars. Check out and share this video that gives more reasons to re-think the Affordable Care Act: