Yes, Virginia, Obamacare Is Already Raising Your Insurance Premiums

Published April 17, 2012

First as a candidate and then as president, Barack Obama repeatedly promised his administration would “have a health care plan that would save the average family $2,500 on their premiums,” with his campaign promising this would be accomplished by the end of his first term. He’s got six months to go, and he’s not going to keep his promise.

Ever since the president passed his namesake health care law, insurance premiums have continued to rise, and more quickly than before. Every piece of data we have indicates these premium increases are due at least in part to Obama’s law and the impending regulations and costly mandates on what coverage must be provided.

A recent study by the Kaiser Family Foundation illustrates the problem. The average employer health insurance premium rose by 9 percent in 2011, three times the increase of 2010, and family premiums exceeded $15,000 a year for the first time. In some states, premiums rose by even more–they have now risen by $2,213 since Obama took office. Health insurance premiums are rising for six of every 10 Americans.

Here’s why. According to a survey of insurers conducted by AON Hewitt, the individual insurance market is suffering disproportionate harm from Obama’s law. Insurance carriers note the handful of elements of Obama’s law that already have gone into effect “have a significant impact on premium increases”–including increasing the hikes in premiums for the individual market from 13.5 percent to 18.2 percent. The report notes, “[I]t is important to consider the additional factors that contribute to overall premium increases–including changes in the covered population, deductible leveraging, and benefit changes driven by [Obama’s law].”

This is just the beginning. We now have a multitude of reports from state administrators about their expectations of premium increases that lie ahead relative to what would have happened without Obamacare. In Indiana, a recent report found 75 to 95 percent of the premium rate changes for the individual insured market beginning in 2014 are because of Obama’s law. In Ohio, the law is expected to be responsible for 55 to 85 percent of the coming increases.

Even Obamacare architect Jonathan Gruber now anticipates premium increases. In Wisconsin, he predicts premiums will increase 30 percent by 2016 in the individual market; in Colorado, 19 percent; and in Minnesota, 29 percent relative to what costs would’ve been without Obamacare.

The White House can’t claim it wasn’t warned. Before the law was passed, the nonpartisan Congressional Budget Office (CBO) found Obama’s requirements would cause premiums to increase by a significant amount. The CBO also predicted average premiums would be roughly $15,200 for family policies in 2016 compared with $13,100 for family policies under then-current law.

In other words, CBO told the White House that Obama’s law wouldn’t even keep his promise by the end of his second term, let alone his first–and that was before average family premiums went up by more than $2,000.

This isn’t just about mandates on insurers. It’s also about an accelerating increase in health care spending. When you subsidize something, you’re going to get more of it. According to a comprehensive look at national health spending projections through 2020 published recently in Health Affairs, we’re due to see a 10.7 percent increase in prescription drug spending in 2014, an 8.9 percent increase in physician and clinical services in 2014, and a 7.2 percent increase in hospital spending in 2014–all higher than the spending anticipated without Obama’s law.

Who’s paying for this new spending? The insurers and the taxpayers. What, then, would you expect to happen to premiums, exactly?

The evidence is clear. Obamacare is making health insurance more expensive, not less; premiums show no signs of slowing their rate of growth; and the coming additional mandates and regulations will further increase those premiums. Cost-cutting will then be up to price controls and bureaucratic regulators–just like the White House planned all along. Bottom line: We’ll all be paying much more for much less health care.

Benjamin Domenech ([email protected]) is a research fellow with the Heartland Institute and managing editor of Health Care News.