Actuaries: Yes, Obamacare Bends the Costcurve…Straight Upwards

“If you already have health insurance and you want to keep that health insurance, we will bring down premiums by $2,500 for the typical family,” then-Sen. Barack Obama at a campaign event in 2008.

Maybe you could chalk those comments up to a presidential candidate saying what he needs to to get elected. But throughout the formation and evolution of Obamacare Obama continued to sell the concept on the idea that it would “bend the costcurve.” As Obama stated unequivocally in 2011, “this law will lower premiums.”

Kathleen Sebelius, the Secretary of Health and Human Services, who is responsible for implementing Obamacare has also attempted to sell Americans on the bill’s ability to control costs. “It’s estimated that premiums for many consumers will go down 14 to 20 percent for comparable coverage,” she wrote in an op-ed in 2010.

But now the jig is up. In the coming weeks insurance companies will begin releasing their rates for plans that will start in January 2014, when many of Obamacare’s regulations and requirements go into effect. This leaves Secretary Sebelius with few places to hide. CNN reports:

“At an off-camera briefing with economics reporters on Tuesday, Secretary of Health and Human Services Kathleen Sebelius acknowledged that some individuals in what she called the “underinsured market” could see health care costs increase in coming years, but she largely attributed those increases to improvements in the quality of insurance plans.

“These folks will be moving into a really fully insured product for the first time, and so there may be a higher cost associated with getting into that market,” Sebelius said. “But we feel pretty strongly that with subsidies available to a lot of that population, that they are really going to see much better benefit for the money that they’re spending.”

After you weed through the nice-sounding gobbledy gook that Washington bureaucrats have perfected, you realize just how terrible of a deal this is. What Sebelius was admitting was that health care premiums are going to soar because the federal government removed individuals’ ability to choose a plan that fits them. Then, she tacitly confessed that not only will the bill raise premiums, but it will also raise your taxes. As Avik Roy explains in Forbes:

What makes this doubly bad, in terms of policy, is that Obamacare spends trillions of dollars subsidizing the cost of insurance for the uninsured. And most people who are uninsured are young. In other words, Obamacare will more than double the cost of health insurance for many young people, and then the law will turn around and spend taxpayer dollars to subsidize the purchase of this newly costly insurance. Only in Washington does this make any sense.

Even in Washington this doesn’t make any sense, but sadly it’s true. So just how high are insurance premiums expected to soar because of Obamacare? You’ll notice that Secretary Sebelius stayed far away from actual figures. Fortunately, a new report by the Society of Actuaries, a group who knows a thing or two about numbers, clears that up for us.

“The non-group cost per member per month will increase 32 percent under ACA compared to pre-ACA projections,” the actuaries found.

The report shows that the financial impact will vary widely across states. Although some may see modest declines in premium costs, the vast majority will see double-digit increases. For instance, by 2017 the actuaries found that claims cost would increase about 62 percent in California, 80 percent in Ohio, and 67 percent in Maryland.

So much for reducing premium costs! And don’t even get us started on bending the cost curve. This bill is and was always about one thing – expanding health insurance coverage by mandating that people carry insurance. Wouldn’t it have been better to implement reforms to reduce costs, thereby making insurance more affordable, and expanding coverage that way? The answer to that question is a clear ‘yes,’ at least in our view, and we look forward to supporting Republicans in their continued efforts to replace Obamacare with a real reform plan that does just that.