Friday, August 02, 2013

Ohio insurance rates to increase 41 percent due to Obamacare; subsidies may not help

Here's the latest from the Ohio Department of Insurance:

Health Insurance Premiums to Increase 41 Percent Due to Affordable Care Act

Premiums for Federal Exchange Show Higher Costs for Ohio Consumers and Small Businesses

COLUMBUS — The Ohio Department of Insurance announced today that individual consumers buying health insurance on the federal government's health insurance exchange for Ohio will pay an average of 41 percent more than they did in 2013.

In addition, ODI confirmed previously-released preliminary calculations that insurance companies’ costs to provide individual health coverage will increase by 83 percent.

“Ohio has traditionally had a more competitive health insurance market than other states with a wider range of prices and choices – from simple, high deductible coverage to comprehensive, full service plans,” Lieutenant Governor Mary Taylor said. “That level of diversity is essentially outlawed under Obamacare so Ohio's rates and premiums are going up significantly, and going up more than in other states where prices were already high.”


So Ohioans had a wide diversity of options and costs and with Obamacare, that much diversity is 'essentially outlawed'???

Did anyone who voted for and supported the Affordable Care Act really think about the implications?

Oh - wait - they had to pass to it to know what was in it. Even Congress doesn't like what it sees in the law and the IRS chief, charged with enforcing it, doesn't like it either.

For individuals plans in Ohio, the average cost is $236.29 per month. That cost will increase to $332.58 in 2014 due to the provisions of the Act.

The ACA is actually driving rates across the country closer together, the press release notes. Since Ohio had lower costs to begin with, we're seeing rate increases that are higher than other states, while some states with higher costs are seeing steady or even lower rates. Since the ACA is really a one-size-fits-all approach, Ohioans are also seeing fewer options when it comes to type of insurance because of the minimum level of coverage mandated by the federal law.

The states were supposed to be the place where innovations and 'experiments' could be tried. If a state was successful with an idea, other states could duplicate it. Conversely, they could avoid failures after seeing them elsewhere. Our federal government was never designed to be this involved in such affairs and the results, perhaps good for some, are very costly for Ohio.

Benjamin Franklin said:

"History affords us many instances of the ruin of states, by the prosecution of measures ill suited to the temper and genius of their people. The ordaining of laws in favor of one part of the nation, to the prejudice and oppression of another, is certainly the most erroneous and mistaken policy. An equal dispensation of protection, rights, privileges, and advantages, is what every part is entitled to, and ought to enjoy... These measures never fail to create great and violent jealousies and animosities between the people favored and the people oppressed; whence a total separation of affections, interests, political obligations, and all manner of connections, by which the whole state is weakened."

Apparently, our federal government took that as a prescription and not a warning when it came to Obamacare...

Photo from
Interestingly, I received an email from ProgressOhio about the latest estimate which said:

** This statement can be attributed in whole or in part to Brian Rothenberg, Executive Director, ProgressOhio.

"It goes against the trends seen in big states and doesn’t include the discounts created by the subsidies. Announcing them without the subsidies is cynical because that’s not how people are going to buy insurance. If the goal is to enroll people, announcing rates without examples of subsidies makes no sense.

It’s not surprising that this is how Republican Lt. Gov. Mary Taylor would handle this. Her well known hatred for the Affordable Care Act is causing her to take an action as the state's insurance commissioner that hurts the people of Ohio. She shouldn’t announce rates without illustrating what that means for real people benefiting from tax credits that can be substantial in some moderate income categories."

It raises a good point about including the offset due to expected subsidies, but it misses the bigger picture regarding the basic concept that taxpayers are seeing increased rates while at the same time paying for others to have those higher rates subsidized.

And the subsidies might not be there for Ohioans.

According to this article in the Washington Free Beacon, the legality of the subsidies is being challenged.

As the article explains, the subsidies were part of the deal for the states to set up exchanges.

The law says that the government can provide subsidies for insurance sold on an “Exchange established by the state.” Thirty-four states have refused to set up their own exchanges, leaving the federal government set them instead.

The Obama administration maintains that the subsidies can be applied to a federal exchange as well, though some legal experts and Republicans in Congress say that's outside the scope of the law.

“When Congress passed the health care act, they presented states a choice,” (Oklahoma Attorney General Scott) Pruitt told the congressmen. “That choice was to establish a state health care exchange or to opt for a federal exchange. The ACA included with that choice a set of consequences and benefits.”

If states opted to create an exchange themselves, then their citizens would receive federal subsidies to buy insurance on the exchange, but employers would also be subject to fines for not offering affordable health insurance, Pruitt argued. However, if they opted against the exchange, they would not receive subsidies and employers would not be subject to fines.

Pruitt has launched a lawsuit against the administration arguing that they do not have the power to offer the subsidies on federally run exchanges. Experts predict that Oklahoma’s lawsuit, if successful, could fatally cripple the law.

Since Ohio did not set up its own exchange, defaulting to the federal one, residents may not see any subsidies if the lawsuit is successful.

Of course, states will then be criticized as being evil, uncaring and 'responsible for deaths' along with all sorts of terrible things for not wanting their residents to have that handout. But if it could "fatally cripple the law," Ohioans would benefit by not having such huge increases in insurance rates while maintaining a large diversity of plan options and costs.

The problem is that no one in Congress writing this law could have the depth of knowledge to re-design an insurance program/health care coverage that will fit the needs of so many people. This is where a free market comes into play.

In a 'free' market, entrepreneurs can create a product or service that fits the needs of some, while not needing to fit the needs of all. Ohio is a good example with our current variety of options that fit a multitude of needs and budgets.

With the federal government, they've decided what everyone must have (forced it upon us, actually) and then told us we'll have to pay for it, even if we don't need or want it.

Well-baby care is an example. My husband and I don't have kids and have no need for well-baby care which includes office visits, immunizations, etc... But that coverage is mandated by the ACA and the state of Ohio. So I'm paying for a portion of insurance that I don't need and will never use. A 'free' market, would give me the option to have a plan that didn't include that at, hopefully, a lesser cost than one that did.

Another example is young people who are generally healthy and don't need a full-service comprehensive plan. In a 'free' market, they could choose something like the old 80-20 insurance plans where routine doctor visits were not covered, but hospital bills for emergencies, injuries or serious illness were covered at 80%.

The Affordable Care Act - Obamacare - has removed those options from us, forcing us to have to what a bunch of bureaucrats in D.C. *think* we need. There is no way they can ever meet individual wants and needs the way a free market does so we are all forced into the one-size-fits-all mandate - and you and I will pay more as a result.


Mad Jack said...

For individuals plans in Ohio, the average cost is $236.29 per month. That cost will increase to $332.58 in 2014 due to the provisions of the Act.

Would you cite a source for this figure? I can't find it anywhere.

In a 'free' market, entrepreneurs can create a product or service that fits the needs of some, while not needing to fit the needs of all. Ohio is a good example with our current variety of options that fit a multitude of needs and budgets.

Right. However the health insurance industry hasn't fit the free market model in years, and at this point never will.

Either of us could write reams of commentary about the health care system in Ohio and we still wouldn't be able to fix the real problem - the incredibly high cost of health care. Some procedures don't even have a price; the price gets assigned when the insurance company is billed.

Given all that, the only way out now is by regulation, and the insurance industry is one of the few industries that cannot possibly be over-regulated.

Maggie Thurber said...

Mad Jack - the figures come from the Dept. of Insurance notice which is linked.

Government regulation is NEVER the answer for a problem with an industry...all government regulation will do is make the matter more complicated, more costly (either due to mandates or reporting requirements) and worse.

Please show me any example where government regulation made a situation better overall (not just for some).

A truly free market would be the better solution.

You need to watch this:

or read this (scroll down for text):

and you will understand my point better

Mad Jack said...

Thanks, Maggie. I missed it.

I do not believe the quote of $239.29 per month for an individual plan, and my disbelief is at the point where I'll cheerfully call that statement a blatant lie. I have good reason for this that I don't have time or space to list here.

An example of beneficial government regulation? Easy. The airline industry is the first that comes to mind, and you're old enough to remember flying during the period of regulation.

The banking industry is another, including the mortgage industry.

Manufacturing and safety regulations as applied to workers.

There's more, but it's getting late and I do not want to be late for happy hour.

Maggie Thurber said...

Well, read the entire press notice and you'll get the specifics of the average rate...

I don't believe the airline industry is better with regulation - at least, not as good as it would be without.

I'll give you OSHA, but not the banking industry or the mortgage industry.

The banking industry would have 'self-corrected' if it hadn't been for government bailouts to save it. Of course, it it hadn't been for banks complying with federal regulations to grant mortgages to people based upon unemployment benefits, who knows if the mortgage industry would have had the problems it did. In fact, it was government regulation guaranteeing the mortgages and urging the sub-prime lending that led to the banking industry.

We could have a longer discussion on this, but I'm with you - it's cocktail hour!!!!

Have a great weekend!

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