Remember that Nancy Pelosi told us that we needed to pass ObamaCare to find out what’s in it. Barack Obama promised to “bend the cost curve,” too. Looks like both of them were right, at least according to the Paper of Record, which discovers to its surprise that dumping nebulous mandates on insurers causes them to bend the cost curve sharply upward (via Instapundit):
Health insurance companies across the country are seeking and winning double-digit increases in premiums for some customers, even though one of the biggest objectives of the Obama administration’s health care law was to stem the rapid rise in insurance costs for consumers.
Particularly vulnerable to the high rates are small businesses and people who do not have employer-provided insurance and must buy it on their own.
In California, Aetna is proposing rate increases of as much as 22 percent, Anthem Blue Cross 26 percent and Blue Shield of California 20 percent for some of those policy holders, according to the insurers’ filings with the state for 2013. These rate requests are all the more striking after a 39 percent rise sought by Anthem Blue Cross in 2010 helped give impetus to the law, known as the Affordable Care Act, which was passed the same year and will not be fully in effect until 2014.
In other states, like Florida and Ohio, insurers have been able to raise rates by at least 20 percent for some policy holders. The rate increases can amount to several hundred dollars a month.
Why should this surprise? The must-issue regulation built into ObamaCare increases costs for the insurers, who cannot draw all of the needed revenues from the high-risk pool, thanks to mandates on rates. That means those costs have to get spread out to everyone in the pool. This is nothing more than Risk Pool 101, a course that Congress flunked repeatedly in the ObamaCare debate.
And why are rates rising higher on individual premiums than employer-based premiums? First off, the economics of aggregation are always going to work out that way; insurers want large groups of customers, and it’s less costly in the long run to find customers that way rather than one at a time. I’d guess that the employer-aggregate pool might generate somewhat lower costs than the general population too (especially after must-issue), but that’s just speculation. What isn’t speculation is that ObamaCare heavily regulates the individual markets in 2014 based on a law that doesn’t have many details in how that is supposed to be accomplished, based on state exchanges that may never exist in more than half of the states. In that kind of environment, can anyone blame the insurers for basing premiums on worst-case scenarios this year?
None of this surprises those who both understand risk pools and the dynamic reaction to regulation. It’s amusing to see everyone else be shocked, shocked that ObamaCare ends up driving costs upward even further.