Obamacare to Hit Your Pocketbook—Big Time
In case you are one of the dwindling few who still believe that the Patient Protection and Affordable Care Act (also known as Obamacare) won’t massively impact you, a new study demolishes that idea.
The study by the Society of Actuaries finds that insurance companies will have to pay out an average of 32 percent more for medical claims under President Obama’s signature healthcare overhaul.
And you can take it to the bank that those health insurance companies will pass on as much of those costs to you as they can.
Amazingly, the Obama administration is still claiming that costs will go down—even though insurance cost estimates have continued to rise each year after passing the act.
cbs News summarizes:
The study says claims costs will go up largely because sicker people will join the insurance pool. That’s because the law forbids insurers from turning down those with pre-existing medical problems, effective January 1. Everyone gets sick sooner or later, but sicker people also use more health care services.
”Claims cost is the most important driver of health care premiums,” said Kristi Bohn, an actuary who worked on the study. Spending on sicker people and other high-cost groups will overwhelm an influx of younger, healthier people into the program, said the report.
Basically, the law mandates that insurance companies become charities that cover everyone’s medical needs, regardless of age or medical history. But charitable work costs money too—especially when it is covering astronomical medical costs often associated with people who have pre-existing conditions.
Those costs will simply be passed on to everyone else who is in the medical insurance pool.
Politicians’ claims that premiums will not go up will be exposed as lies once actual costs start hitting policy holders more dramatically later this year. Some costs have already hit as companies have raised fees in anticipation of Obamacare-mandated price caps.
The report says that by 2017, medical costs will jump by 62 percent for California, 67 percent for Maryland, and around 80 percent in Ohio. Some few states will see the cost of medical claims decline.
Meanwhile, the deadline to buy health insurance, or pay the government penalty is nearing. Beginning next year, an individual with $50,000 annual income would pay a $500 penalty. In 2015 it bumps up to $1,000 and then jumps to $1,250 in 2016. After that, the penalty increases each year with the inflation rate. For married couples, the penalties double.
The timing of Obamacare could hardly be worse, from an economic point of view. With the economy struggling to avoid recession, these increased costs will hit both the private sector and are already incentivizing companies to shift workers from full-time employment to part-time. Consumer spending is already struggling as people cope with official unemployment at 7.7 percent and real unemployment more than twice that level.
The Affordable Care Act may be attractive to people who don’t have insurance and are old or already sick because they will now be able to buy coverage. For everyone else, prepare to open your pocketbook—big time.