Premium Costs Aren’t the Only Thing Soaring Under Obamacare

It’s been almost painful to watch the Obama Administration’s constantly evolving messaging on Obamacare.

obamaInitially, the plan was sold by President Obama as a way to increase the number of the uninsured while also reducing American’s health insurance expenses. He even went so far as to explicitly promise that his bill “will cover every American and cut the cost of a typical family’s premium by up to $2,500 a year.”

That turned out not to be true. The Society of Actuaries, whose job it is to crunch numbers, estimated that the non-group cost per member per month would increase 32 percent under the Affordable Care Act. A separate analysis, this time based on a comprehensive analysis of insurer’s offered rates, found that in the average state Obamacare will increase underlying premiums by 41 percent.

Sensing defeat, the White House began to shift its messaging. They no longer talked about saving money, but instead talked glowingly about how those extra costs were going to be worth it because of all the pretty new bells and whistles the plans would come with.

“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,” Health and Human Services Secretary Kathleen Sebelius told reporters. “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.”

Secretary Sebelius even went on to say that many existing plans offer such skimpy protection that, “they’re really mortgage protection, not health insurance.”

Of course, this ivory-tower, government-knows-best philosophy is what so often gets the Obama White House into trouble. Rather than let you silly, know-nothing Americans decide what kind of insurance you want to buy, and at what price point you want to buy it, we’re going to mandate you spend a lot more to pay for things you may not need. Like, say, maternity coverage for aged men.

That philosophy fundamentally misunderstands the definition of insurance. As Megan McCardle writes, “Catastrophic coverage is ‘true insurance.’ Coverage of routine, predictable services is not insurance at all; it’s a spectacularly inefficient prepayment plan.” But most importantly, that philosophy is still a critique of Obamacare.

White House defenders may want to make Obamacare insurance plans out to be affordable and robust, but reality tells a different story. The Wall Street Journal reports:

The average individual deductible for what is called a bronze plan on the exchange—the lowest-priced coverage—is $5,081 a year, according to a new report on insurance offerings in 34 of the 36 states that rely on the federally run online marketplace.

That is 42% higher than the average deductible of $3,589 for an individually purchased plan in 2013 before much of the federal law took effect, according to HealthPocket Inc., a company that compares health-insurance plans for consumers. A deductible is the annual amount people must spend on health care before their insurer starts making payments. . .

That means some sick or injured people may avoid treatment so they don’t rack up high bills their insurance won’t cover, according to consumer activists, insurance brokers and public-policy analysts—subverting one of the health law’s goals, which is to ensure more people receive needed health care. Hospitals, meantime, are bracing for a rise in unpaid bills from bronze-plan policyholders, said industry officials and public-policy analysts.

This new reporting means that consumers are forced to choose between two bad options. Either they can pay out the wazoo each month for a high-cost premium plan, or they choose lower premiums (though often still higher than today) and gamble that they won’t get sick lest they have to go bankrupt before they meet their deductible. After all, what young couple has $10,000 lying around for health care expenses?

Now that we know the quality of the insurance being offered doesn’t live up to the Obama Administration’s billing I wonder what awesome feature of Obamacare they’ll rely on next?