Policy Documents

Research & Commentary: The Effect of ObamaCare on Insurance Premiums

Peter Fotos –
January 7, 2010

According to the Kaiser Family Foundation, Americans were expected to spend $2.5 trillion on health care in 2009, or $8,160 per person--17.6 percent of gross domestic product (GDP). Projections for 2018 put U.S. health care spending at $4.3 trillion, or $13,100 per person, primarily spent by large employers through full-coverage health insurance plans.

One of the primary goals of health care reform is to cut the skyrocketing cost of health care, but the measures currently on the table will only exacerbate the problem. Experts at Wellpoint, the largest commercial health benefits company in the United States, evaluated 14 states and determined the Senate legislation would increase premiums for small businesses and individuals in every one. Younger consumers would bear the greatest burden, with premiums costing more than triple their current rates.

Several other independent reports released in the past few months predict health insurance premiums will continue increasing at an alarming rate under the planned government overhaul. Actuaries at Oliver Wyman, a leading international management consulting firm, found the proposed reforms would hike premiums in the individual market by 50 percent, not including the effect of medical inflation. The legislation would raise the cost of an individual policy by approximately $1,500 and the cost of a family plan by $3,300. The study found the youngest 30 percent of the population would see premium increases of 69 percent and as many as 2.5 million fewer people would be insured through small employer policies.

Independent firms such as PriceWaterhouseCoopers and government analysts at the Congressional Budget Office and Centers for Medicare and Medicaid Services have issued reports also concluding the current health care "reform" proposals will do nothing to bring down costs. As a result, the latest Rasmussen opinion poll (December 30) put support for ObamaCare at 39 percent and opposition at a staggering 58 percent.

The following articles shed light on the economic consequences of the government's proposed health care overhaul.

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Wellpoint's State-by-State Analysis
http://www.wellpoint.com/newsroom/stats_facts.asp
Wellpoint examines the effect current health care reform proposals will have on premiums in 14 states.

Oliver Wyman Examines Cost of Health Reform
http://www.heartland.org/policybot/results/26261/
International management consulting firm Oliver Wyman examines the costs of health reform and how the proposed legislation will affect premiums.

Heartland Policy Study: Obama Health Plan
http://www.heartland.org/article/25813/
Peter Ferrara examines the projected effects of ObamaCare in this policy study.

States and Businesses Will Pay the Most for Reform
http://www.heartland.org/article/26591/
As states across the country await the outcome of President Barack Obama's push for dramatic and wide-ranging health care reforms, this study indicates the consequences could be dire for some states and businesses.

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For further information on the subject, visit the Health Care Issue Suite on The Heartland Institute's Web site at http://www.heartland.org, or Heartland's new Web site devoted to health policy issues, www.healthpolicy-news.org.

Nothing in this message is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. If you have any questions about this issue or the Heartland Web site, contact Peter Fotos, director of government relations, at 312/377-4000 or pfotos@heartland.org.