Rhetoric vs. reality – Obamacare will increase health care premiums

Once again, what the proponents of Obamacare say about it is, well… not exactly. Rhetoric: Obamacare, by establishing insurance exchanges, will reduce health insurance premiums for all. Reality: Obamacare will increase health insurance premiums for all far beyond what they would have been if Congress did nothing.

Ignoring for the moment the $6.7 billion annual tax on insurers (which will be passed on to you in increased premiums), three other sections of the Reid version of Obamacare will make your insurance more unaffordable.

First, Section 1201 amends the Public Health Service Act to add Section 2704 (beginning at page 78), and Section 2701 (beginning at page 80). Taken together, these sections require all insurance companies to accept any applicant regardless of their current health condition, and to charge them a premium that is no more than a healthy person of the same age. This is called “guaranteed issue and community rating”.

And, second, Section 1301 (at page 100) requires all insurance policies sold in this country to be “qualified” plans. This is government speak for the federal government, not you, deciding what benefits, co-pays, and deductibles you must have.

As to the first point, paying for medical care for the very sick costs money, and, since those who are sick cannot be charged more in premiums than someone who is healthy, your premiums will rise.  The Congressional Budget Office reports:

CBO found 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.

The only surprise here is the CBO’s number is so low.  In Massachusetts, Maine and New Jersey, when “guaranteed issue and community rating” became law, premiums rose dramatically.  In Maine, premiums rose by 74 percent in five years.  In Massachusetts

Insurance premiums rose by 7.4 percent in 2007, 8-12 percent in 2008, and are expected to rise 9 percent this year.

And, in New Jersey, premiums increased by as much as 227 percent.

“Insurance exchanges” will do nothing to alter these numbers because competition and choice have been rendered meaningless by government mandating what must be in a “qualified” plan.  As long as every plan must contain the same benefits, co-pays and deductibles, premiums will be virtually identical and, rising annually at virtually the same rate, regardless of which company you choose.

Why can’t Congress figure this out?

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The Sound Off Sister was an Assistant United States Attorney for the Southern District of Florida, and special trial attorney for the Department of Justice, Criminal Division; a partner in the Florida law firm of Shutts & Bowen, and an adjunct professor at the University of Miami, School of Law. The Sound Off Sister offers frequent commentary concerning legislation making its way through Congress, including the health reform legislation passed in early 2010.


  1. sammy22 on December 4, 2009 at 3:51 am

    In other words, one will see lower premiums only when one buys less insurance and/or pays higher co-pays and deductibles. This happens with or without government "intervention". My premium for 2010 is going up 11% for the same coverage.

    • SoundOffSister on December 4, 2009 at 3:45 pm


      You may have misread what the Congressional Budget Office has reported.  If your premiums rise by 11% next year, under Obamacare, they would rise by an additional 10 -13%.  That additional 10-13% is caused by government intervention.  Would you rather have your premiums rise by 11% or 21-24%?

  2. sammy22 on December 5, 2009 at 6:25 am

    Amusing comeback. Now, I know that my premium is 11% higher (reality). When I get the new number (currently a conjecture, an estimate), I'll report back.

  3. Mike Tolland on December 5, 2009 at 11:36 am

    The congress wants to elimate Advantage programs because the premium is paid to the insurance company that can give more services and run a profit for lower costs; this is characterized as the insurance companies being over paid. 

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