According to an article in the Wall Street Journal, those who buy health insurance as individuals or through a small business are about to be socked with huge premium increases, ironically as a result of efforts to make health care reform more palatable.
“Aetna Inc., some BlueCross BlueShield plans and other smaller carriers have asked for premium increases of between 1% and 9% to pay for extra benefits required under the law, according to filings with state regulators.
“These and other insurers say Congress’s landmark refashioning of U.S. health coverage, which passed in March after a brutal fight, is causing them to pass on more costs to consumers than Democrats predicted.”
When it became clear that health care reform was proving to be unpopular, the Obama administration decided to front load some of the benefits, such as an elimination of lifetime and annual coverage caps. They also included, “–letting children stay on their parents’ insurance policies until age 26, eliminating co-payments for preventive care and barring insurers from denying policies to children with pre-existing conditions.”
Unfortunately the addition of these benefits costs considerable money, which health insurance companies now propose to pass along to customers of individual and small business health care plans. Roughly 9 percent of Americans purchase health insurance as individuals and 20 percent through small businesses of 50 or fewer customers.
These proposed rate increases will come on top of increases to cover the rising cost of health care. The increases would take effect, depending on approval of state regulators, at the beginning of the fiscal year, Oct. 1, just over one month before the 2010 midterm elections.
The prospect of rate increases as a result of health care reform would seem to run counter to Obama administration promises that its signature legislation would restrain such cost increases. Obama officials are already protesting that the insurance companies are only using the added benefits as “an excuse” to call for rate increases. But that demonstrates an ignorance of basic economics.
If a company is subjected to huge and unexpected cost increases, it will naturally choose to pass that cost on to the consumer. That is why there is really, as a practically matter, no such thing as a business tax. Taxes, like unfunded mandates from health care reform, are costs which are factored into the price of a good or service. The customer pays for the added cost in the end.
The prospect of voters getting higher health insurance bills just before the election is yet another headache that the Obama administration and the congressional Democrats do not need. The added irony is that their front-loaded health care benefits did not work; Americans are even angrier about health care reform than they ever were. The Democrats who rammed through health care reform anyway have only themselves to blame.
Source: Health Insurers Plan Hikes, Janet Adamy, Wall Street Journal, September 7th, 2010