Sebelius Admits: Obamacare Will Hike Your Premiums

Published March 27, 2013

Surprise, surprise: Kathleen Sebelius is now admitting that President Obama’s health care law is going to lead to higher premiums, and in short order, too. Not even cabinet secretaries can escape math forever:

Health and Human Services (HHS) Secretary Kathleen Sebelius told reporters that “there may be a higher cost associated with getting into that market” where “folks will be moving into a really fully insured product for the first time.” 

The comment was among the first from the Obama administration to reveal a degree of uncertainty about the impact of the law on insurance premiums.

Sebelius said that transparency and “market strategies” will ease any potential instances of rate shock for consumer buying insurance.

“This is the first time ever in the history of the United States that insurance companies have to file their rates, it has to be very transparent, they have to offer the same kind of coverage without 5,000 tiny little lines and internal caps, and they have to compete for customers. And I am a believer in the market strategies that in and of itself will minimize the rate impact,” Sebelius said.

Sebelius added that people “are really going to see much better benefit for the money that they’re spending” as the law kicks in, and noted that many will receive subsidies from the government to help pay for insurance.

Several key provisions of the Affordable Care Act will take effect next year, and the two parties are battling over how it should be implemented. 

How much could costs be going up? The Society of Actuaries has a handy report detailing the increased claims costs in the individual market:

Research sponsored by the Society of Actuaries (SOA) predicts ACA-driven changes in individual market composition of the individual health care market could drive up underlying claims costs by an average of 32 percent nationally by 2017. The research also predicts high variability among states, with as many as 43 states experiencing a double-digit claims cost increase.

That’s just the average – some states have much higher costs coming their way. Of course, these claims costs will be passed on to everyone in the form of higher premiums. Sebelius knows this – and she knows that the only direction these premiums are headed is higher.