Obamacare Will Increase Health Insurance Costs In California, Washington, D.C., And Elsewhere

by Hans Bader on October 31, 2012 · 1 comment

in Healthcare, Politics as Usual, Regulation

California officials concede that their state’s Obamacare exchange will hike premiums for policyholders by up to 25 percent. In the District of Columbia, small businesses are being forced to buy overpriced insurance on an Obamacare exchange by the “District of Columbia Health Benefit Exchange Authority,” which “voted . . . to require D.C. small businesses to buy coverage through the exchange. Although President Obama falsely claimed when Obamacare was enacted that “if you like your present health insurance, you can keep it,” Washington’s small “employers can stick with their current health insurer” only “if that provider opts into D.C.’s exchange.” Even if it does, employers “may see their rates increase . . . experts said.” The forced participation in the exchange will “apply to any company that has an office in the District with 50 or fewer employees. ‘If you have a business license here in the District of Columbia, then you participate through the exchange,’ said Dr. Mohammad Akhter, chairman of the D.C. Health Benefit Exchange board.” Earlier, Obamacare resulted in hikes of 41-47% in health insurance premiums for some policyholders in Connecticut.

Obamacare also increases costs to taxpayers.  Obamacare will increase welfare spending by reducing levels of employment, leading to more people being poor enough to qualify for means-tested government benefits. Employers are now cutting full-time workers and replacing them with part-time workers (which helps conceal high unemployment) to avoid Obamacare mandates that apply to full-time employees, a phenomenon chronicled at the Huffington Post and on Fox News. Obamacare will reduce employment by an additional 800,000 due to work disincentives and bizarre income-cliffs, in addition to wiping out thousands of jobs in medical device manufacturing. The Dean of Harvard Medical School, Jeffrey Flier, concluded that Obamacare will harm life-saving medical innovation. Obamacare taxes medical devices and cosmetic surgery, and raises taxes starting in 2013 on investors. The Associated Press and others have reported that it breaks a number of Obama campaign promises.

Mike Flagg November 1, 2012 at 4:55 pm

We don’t expect a conservative organization like CEI to favor the Affordable Care Act, but we do expect you to get the facts right.

First, you fail to note the reason the District of Columbia is unifying its market for individual buyers of health insurance and small businesses: The District has such a uniquely small population – a little more than 600,000 – that the experts tell us it can’t sustain a federally mandated exchange without consolidating all these customers on the exchange.

What they get in return is a market that’s fair and transparent instead of the murky way insurance is sold now, with no way for consumers to effectively compare prices and benefits for themselves. That far more competitive market envisioned by the District is going to hold down premiums and increase benefits – the epitome of the free market.

In fact, according to the New England Journal of Medicine, in Europe health-insurance exchanges “are seen as pro-market – and as such are quite controversial.” In other words, says the Journal, if Europeans don’t like exchanges, there must be something competitive about them.

So, yes, our District consumers are being “forced,” as you put it, into a market that will offer them more choice and transparency and hold their premiums down. You produce not a shred of evidence to show this insurance will be what you characterize as “overpriced,” because there is none.

Right now one major health insurer dominates the market for individuals and small businesses in the District. In a more competitive market, our experts tell us we’re likely to see new, strong competitors emerge – something CEI should appreciate, right?

Finally, take a close look at the controversy over the District’s exchange and you will find it is being driven by brokers threatened by the newly transparent market the exchange will bring. It is they who are frightening small business people in the District into opposing a reform that will actually benefit them.

The difference is pretty clear – a freer, more transparent, more competitive market with more choice, or business as usual in an opaque market at which buyers are at an unfair advantage regarding sellers.

Mike Flagg
Communications Director, DC Department of Insurance, Securities and Banking

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