A major argument of those in favor of Obamacare is that it will stop cost shifting. The theory goes something like this…because so many people are not paying for medical care, health care providers make up that loss by increasing their prices, insurance companies pay those higher prices, and pass those higher prices on to their insureds in the form of higher premiums. However, if everyone is forced to buy health insurance, the cost shifting will go away, and premiums will be lowered.
Here is what you should know.
In the findings made by Congress to support Obamacare we are told that in 2008 cost shifting amounted to $43 billion, increasing premiums for family insurance coverage by $1000. (You can find the figures I will be using beginning at page 137 of the recent 11th Circuit opinion concerning the individual mandate.)
What does Obamacare do about that? Sadly, not much.
18.9% ($8 billion) of all cost shifters are illegal aliens or non-residents, and they are exempt from the requirement to purchase insurance. 34.8% ($15 billion) are low income individuals, but, they are either “excepted” from the penalty, or will be covered under the Medicaid expansion. So, these people will still continue to cost shift either by raising your premiums, or raising your taxes. 7.6% ($3.3 billion) have insurance, but cannot afford to pay their deductibles or co-pays, and Obamacare does nothing about that.
20.1% ($8.7 billion) are people who cannot get insurance because they have pre-existing medical conditions. Obamacare “solves” this problem by forcing insurance companies to accept these people, and to charge them the same rate as a healthy person. Obviously, everyone’s premiums will increase to cover the costs of insuring these people.
The other 19% ($8 billion) will continue to cost shift simply because it is far cheaper to pay the $2000 annual penalty, than what the CBO estimates will be the 2016 cost of the cheapest Obamacare “approved” policy…a $4500-5000 annual premium for an individual.
All of the above may well explain why the CBO stated that premiums:
…in the individual market will rise by 10% to 13% more than if Congress did nothing. Family policies under the status quo are projected to cost $13,100 on average, but under ObamaCare will jump to $15,200.
So, here is the bottom line…your current premiums, let’s say, would be $13,100 per year, and include a charge of $1000 to cover the cost shifters. But, under Obamacare , after dealing with the cost shifters, your premiums will grow to $15,200, an additional $1900 per year.
Thank you Mr. President for saving us from the cost shifters.