So, under Obamacare, insurance companies are going to be unable to deny people because of pre-existing conditions starting in 2014. On the one hand, that’s good news, because it gives the USA four years to vote in some people into office that will turn over this crap. Insurance companies are also going to be subject to a premium tax on what they call Cadillac plans, plans that cost some high amount of money and provide comprehensive benefits. So, these issues and figure the consequences.
N.B. I have not read all the provisions of this bill. (I highly doubt most of Congress has read it either.) I am just going by what I’ve seen in some media reports. I would hope that some of these issues may have already been ironed out by the people that crafted this package, but I have a feeling that they weren’t.
First, pre-existing conditions denials. Frankly, they exist today in an effort to save insurance companies, and the people who participate in their plans, money. By limiting who the company will issue a plan to, they eliminate the excessive risk that comes from people with extremely expensive, chronic conditions. This lowers premiums for people.
Any insurance company that wants to stay (1) in business and (2) competitive in the market needs to keep premiums low. The way to do this is by charging higher risk individuals a higher rate (500% higher than base is not unheard of). Those who are the highest risks are denied coverage. True, it’s not compassionate; it’s not exactly the kindest thing to do. It’s business. And insurance companies are in business to make money, just like any other business.
So now, under the new plan, private insurers will have to accept everyone, regardless. That’s great for the consumer. But, what actually happens? The sickest of the sick come in and rack up the claims. Insurance companies will have to charge higher rates to make up for the higher claims. They may be able to rate up the most chronically ill, but that only works to a point, and costs for the entire plan will go up. So now, everyone will pay more. Which is going to make health insurance more costly for everyone, and I imagine more people will drop coverage because they simply can’t afford it.
Looking at the premium tax, it’s another case of Insurance Pricing 101. I’m not sure at what point a plan is considered a “Cadillac” plan. But, if the government is going to charge a 40% premium tax, one of two consequences will occur. Either (1) companies will have to raise their premiums 40%+ to offset the tax, or (2) they’ll simply stop offering the plans. How else is the plan going to pay the tax?Either way, people will no longer have these plans. Which will force them into lower-benefit plans, which means higher out-of-pocket costs and fewer things covered.
The natural consequence of both of these provisions is higher costs for health insurance, and higher incidence of people being uninsured because they are unable to afford coverage.
Exactly how does this help our health care system?
March 27, 2010 at 11:59 am
Doesn’t this just mean that people will buy plans when they need them and cancel them after treatment?
All in all, bad deal. But the whole point is to force socialized medicine on us all, as our dear leader himself admitted on the campaign trail. “All hail the great single payer!”
July 1, 2011 at 9:06 am
I am baffled to see a Catholic man choose business over compassion/kindness. Is this the way of Jesus Christ? Individuals at high risk are the ones who need care more than anyone else. We should be willing to put forward a fraction of our salary in higher healthcare costs to support such high-risk individuals. Even a modest income as mine can afford to be cut slightly in the name of compassion.