Obamacare Sticker Shock Arrives: Insurance Premiums To Soar 20-40%

Tyler Durden's picture

Two months ago, we outlined why the CPI-boosting Affordable Care Act is on the verge of bankrupting that all important driver of the US economic growth engine — the American consumer.

Put simply, inflation in medical care services costs hadn’t yet reared its ugly head because many insurers were as yet unable to gauge the full base-effect impact of Obamacare on their P&L. That, we said, was about to change: “After finally digesting the true cost of Obamacare, any recent insurance prime hikes will seem like a walk in the park compared to what is coming.

 

Sure enough, insurers have now taken a close look at exactly how much socialized medicine is costing them.

Not surprisingly, the picture isn’t pretty.

In some cases, forecasters grossly underestimated the number of claims they would likely receive, and indeed, even a PhD economist can tell you that when the amount going out for claims is greater than the amount coming in via premiums, there’s a problem with the model and because staunching the outflow is effectively now forbidden, something has to give on the receivables side of the equation which means dramatically higher premiums.

NY Times has the story:

Health insurance companies around the country are seeking rate increases of 20 percent to 40 percent or more, saying their new customers under the Affordable Care Act turned out to be sicker than expected. Federal officials say they are determined to see that the requests are scaled back.

 

Blue Cross and Blue Shield plans — market leaders in many states — are seeking rate increases that average 23 percent in Illinois, 25 percent in North Carolina, 31 percent in Oklahoma, 36 percent in Tennessee and 54 percent in Minnesota, according to documents posted online by the federal government and state insurance commissioners and interviews with insurance executives.

 

 

The Oregon insurance commissioner, Laura N. Cali, has just approved 2016 rate increases for companies that cover more than 220,000 people. Moda Health Plan, which has the largest enrollment in the state, received a 25 percent increase, and the second-largest plan, LifeWise, received a 33 percent increase.

 

Jesse Ellis O’Brien, a health advocate at the Oregon State Public Interest Research Group, said: “Rate increases will be bigger in 2016 than they have been for years and years and will have a profound effect on consumers here. Some may start wondering if insurance is affordable or if it’s worth the money.”

 

The rate requests, from some of the more popular health plans, suggest that insurance markets are still adjusting to shock waves set off by the Affordable Care Act.

 

Blue Cross and Blue Shield of New Mexico has requested rate increases averaging 51 percent for its 33,000 members. The proposal elicited tart online comments from consumers.

“This rate increase is ridiculous,” one subscriber wrote on the website of the New Mexico insurance superintendent.

 

In their submissions to federal and state regulators, insurers cite several reasons for big rate increases. These include the needs of consumers, some of whom were previously uninsured; the high cost of specialty drugs; and a policy adopted by the Obama administration in late 2013 that allowed some people to keep insurance that did not meet new federal standards.

 

“Our enrollees generated 24 percent more claims than we thought they would when we set our 2014 rates,” said Nathan T. Johns, the chief financial officer of Arches Health Plan, which covers about one-fourth of the people who bought insurance through the federal exchange in Utah. As a result, the company said, it collected premiums of $39.7 million and had claims of $56.3 million in 2014. It has requested rate increases averaging 45 percent for 2016.

 

The rate requests are the first to reflect a full year of experience with the new insurance exchanges and federal standards that require insurers to accept all applicants, without charging higher prices because of a person’s illness or disability.

There you go. Precisely as we said, the ACA and of course the ballooning cost of new drugs proxied by Janet Yellen's "stretched" biotech sector mean manidtorily insured Americans will now be charged more. Much more.

But do not despair because where there's an Obama there's always "hope". And on that note, we'll leave you with the following, from the President:

If insurance regulators “do their job, my expectation is that [rates hikes] will come in significantly lower than what’s being requested.”

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trader1's picture

#2 this time...;-)

Looney's picture

Does Obamacare cover Stripper Poles, ummm... for therapeutic purposes? ;-)

Looney

BlackChicken's picture

Obama could Care Less; bitch got paid.

Save_America1st's picture

And squeeze will be on year after year until they get to their goal of destroying everything and moving the sheeple to "single payer" healthcare completely run by the Fed-gov-scum.

Then the real fun starts with these fucking sociopaths.

Publicus's picture

Soon, they will throw you in jail for not paying that $10,000 a month insurance tax.

CrazyCooter's picture

I don't go to the doctor anymore. Period. Emergency stuff only like cuts and accidents.

Regards,

Cooter

wee-weed up's picture

Everything Obozo touches turns to shit.

He's the "gift" that keeps on giving...

James_Cole's picture

Americans will fight to the death to stop single payer but are Ok with this: http://www.wsj.com/articles/with-merger-deal-aetna-humana-get-ahead-of-t...

Both CEOs said their combination would result in lower costs for consumers.

http://images.bwbx.io/cms/2014-08-12/index-chart2.png

https://goo.gl/8ca67H 

Bumpo's picture

Millions like me are glad. No way will I sign up for this piece of shit. Let it die of its own weight. Fuck Obamacare!

wee-weed up's picture

 

 

Let it die of its own weight. Fuck Obamacare!

-------------------------------------------------

Unfortunately, now it has the SCROTUS Seal of Approval.

And if you think the likes of Boehner and McConnell will kill it...

I've got some oceanfront land in Iowa I'll sell you.

No, it will turn into a huge black-hole that will continue...

To suck the financial health out of the Nation for decades to come.

Son of Loki's picture

Winning !

 

This bill was a huge win for the insurance companies that soared 200%-to 4005 after it passed by grabbing fat premiums while actual payouts for health services dwindled. [and will keep dwindling my neighbor doctor tells us since fewer and fewer docs will accept various forms of this so-called insurance].

 

The Obamacare Tax Bill is sucking the last breath of life out of the American Middle Class, and, as you aptly state, even received the Seal of Approval from SCROTUS.

Jlasoon's picture

Quite simple really, GDP needs a boost, Americans aren't spending, the government requires the purchase of health care, insurance companies lubricate the "shlong", and you my friend take it nice and slow for the red-white & blue. Oorah!!!!!!!!!!!

Temporalist's picture

20-40% of free is still FREE!

Boris Alatovkrap's picture

State must control every aspect of life of citizenry, include management of prescious bodily fluid.

Government needs you to pay taxes's picture

You jest, but what is coming is 'voluntary' organ donation in exchange for a 10% rebate on your health insurance.  And 'voluntary' mandatory (I meant to use those words in that order) genetic/diagnostic testing.  You might even get lucky and be offered a 'voluntary' clinical trial drug in exchange for a 30% reduction in your health insurance premium . . . for the duration of the clinical trial.

the kings whore's picture

What we need is government health care.  I could also use a free FEMA trailer.  While your at it, give me some food stamps.  I be hungry.

detached.amusement's picture

Spot on, they've been offering "discounts" for volunteering all of your personal and health information for years now.  I used to click the checkbox that says I dont smoke and took my discount, but by this point it is so invasive, up yours I'm not giving you anything.  Once my son's old enough I'm getting rid of my insurance, f this racket.

jwoop66's picture

win for the short term at best.   This will ultimately drive them all out of business.

 

AND,  as the poster said above .gov will swoop in to the rescue to offer his NEW IMPROVED govt health care.   

 

Once again, its govt who dominates over the corporations.  Both may be scummy, but only one rules.

jwoop66's picture

oh, and as Oldwood puts so eloquently below....

 

+1

t0mmyBerg's picture

I have always intended to put up a page on my site that lists those who voted for The Affordable Care Act (bwah ha ha ha ha ha) along with pertinent information like state, office and party (well obvious isnt it except for Roberts I suppose) as well as the day they ceased to exist on this earth.  I think I will get around to it at some point as the farce plays out and people start to get angrier.

Oldwood's picture

Watch and wait.

I have always contended that this was absolutely a deliberate path to single payer government takeover of health insurance. Many many people have predicted that this would lead to huge cost increases in healthcare. For those who care to recall, all of this started with the vilification of insurance companies and when it became apparent they lacked the political power to take the whole thing in one bite, they co-opted the insurance company CEOs. These guys could give a shit if "their" insurance companies survive this. Most made huge money from it and had no problem capitulating to government pressures. Those CEOs who chose to speak out about their predictions were threatened with sanctions from our benevolent keepers.

These costs cannot be sustained and they know it. What was called a healthcare crisis has now been made to truly be one, and THEY offer the only solution....effective nationalization of health insurance, because the obviously obscene profits of 5% are just too damned high. We will be told that only they, our benevolent protectors can save us from the evils of the marketplace, something that has been under attack for decades.

This is the constant usurpation of the what were once relatively free markets with government intervention while pretending it is the lack of government intervention that is perpetuating its collapse.

We will soon go Greek and vote to NOT suffer austerity that the evil markets have brought down upon us and DEMAND that government do a better job of looking out for our interests and punishing those evil companies that remain still struggling to survive.

Oldwood's picture

And for all of those living the dream of single payer, they obviously don't give one shit who it hurts and what it costs. That's what TRUE ideological extremism looks like.

James_Cole's picture

Really? Who does it cost and who does it hurt? Why are the best ranked healthcare systems in the world often single payer?

http://www.businessinsider.com/best-healthcare-systems-in-the-world-2012...

With a few minor exceptions (major one being switzerland) these are all largely publically funded systems, a bunch are universal and all of them cheaper than the US per capita.

Miffed Microbiologist's picture

Your premise is wrong James. A comparison between Switzerland and USA at this point in time is not even remotely valid. When do monopolies lower costs unless by restricting care? And we can guess which will segment of the population will be sacrosanct and who will ultimately pay.

Yes, I am cynical but it's really caused from personal experience.

Miffed

James_Cole's picture

When do monopolies lower costs unless by restricting care?

In healthcare one area single payer saves money is in adminsitration costs. US has BY FAR the highest administration costs of any OECD country.

http://www.beckershospitalreview.com/finance/why-u-s-hospital-administra...

7. The researchers concluded that reforming the U.S. healthcare system to a single-payer model would result in significant administrative savings. Reducing U.S. administrative spending to the level of Canada or Scotland per capita in 2011 would have saved $158 billion or $156 billion, respectively.

It's not a new phenomenon either: http://www.nejm.org/doi/full/10.1056/NEJM199105023241805

administration constituted some 30 percent of U.S. health-care costs and that the share of the health-care labor force comprising administrative (as opposed to care delivery) workers had grown 50 percent to constitute more than one of every four health-sector employees.

That's just one broad example but US healthcare is so vast, so many fingers in the pie and overall monstrously complex there is clearly money bled everywhere and often arbitrarily.

http://swampland.time.com/2013/02/21/health-care-is-a-buisness-and-all-t...

Miffed Microbiologist's picture

These links do not reveal the major reason for increased costs today in the USA. Government intervention and mandate. Over the last thirty years I have witnessed the ever increasing complex requirements for Medicare reimbursement. The newest is any hospital acquired infection will not be reimbursed. Therefore, we must do more non billable testing to prove the patient has the infection or colonization BEFORE he enters the hospital. Every time he goes from one unit to the next, he must be tested again. Just for MRSA testing alone, my hospital spends 87k every month. This is just one test. Compliance is a massive cost in healthcare.

Those who are insured must fund those without insurance. Because the government mandates that no patients can be turned away if they have no ability to pay, costs must be born by those who have insurance or cash. Unfortunately, the ERs in San Diego are full of non paying patients. It is simple math and at some point it will break. Restricting care is the next step. This includes delay tactics as seen in Canada. So the wealthy come here and pay cash to get the care they wish in a timely fashion.

Single payer won't stop these costs and they are rising every year.

Miffed

James_Cole's picture

You don't quantify your claim or back it up with anything. But let's say that's correct, compliance costs are a huge problem. The obvious question is, why aren't compliance costs as big of a factor in other healthcare systems? According to my links administration costs are in the ballpark of ~18% higher in US than Canada, how do you explain that?

As far as quality of care, explain this:

http://www.commonwealthfund.org/publications/fund-reports/2014/jun/mirro...

Based on the above also good luck explaining these spending stats:

per capita, 2006: ~$3600 canada, ~$7200 US. 2011: $4522 canada, $8508 US.

2011 per capita UK (#1 overall according to commonwealth fund): $3405.... a universal healthcare system.

Healthy lives: The U.S. ranks last overall with poor scores on all three indicators of healthy lives—mortality amenable to medical care, infant mortality, and healthy life expectancy at age 60.

Equity: The U.S. ranks a clear last on measures of equity. Americans with below-average incomes were much more likely than their counterparts in other countries to report not visiting a physician when sick; not getting a recommended test, treatment, or follow-up care; or not filling a prescription or skipping doses when needed because of costs. On each of these indicators, one-third or more lower-income adults in the U.S. said they went without needed care because of costs in the past year.

Miffed Microbiologist's picture

You imply healthcare equates to health in a population. This is not true in this country any longer hence our term " Sickcare". The average patient today is morbidly obese and on average taking 10-25 meds depending on age. Many are diabetics. I often see glucoses in the ER over 800 and after discharge around 200. Three weeks later they are back in the ER with glucoses over 800. This population has high rates of kidney disease, heart problems and bacterial sepsis. All high cost conditions. This is a non reimbursable admission if it is Medicare because they returned to the hospital too soon after discharge therefore deeming the hospital at fault. The rules are endless and unworkable.

Even if you have single payer and reduce these administrative costs, the rising costs of an aging,sick, obese, drug popping population will not be addressed. Just the reagents and supplies I use to do my job everyday have gone up 3X after Obamacare. It is estimated healthcare costs to treat chronic disease is about 75% of the spending in the USA. This is the crux of the problem.

Miffed

James_Cole's picture

Even if you have single payer and reduce these administrative costs, the rising costs of an aging,sick, obese, drug popping population will not be addressed.

UK is no slouch in that regard, US obesity rate is estimated at 33%, UK not far behind at 27%. Most western countries are facing similar things as you mention in the US but handling in a different manner. If you look at UK even though they have the best healthcare system and second cheapest per capita, their outcomes are actually second worse (to the US). Why this is the case is a whole other thing.

http://www.surroundfitness.com/wp-content/uploads/2013/10/Obesity-trends...

McDonalds biggest expansion was in the 80s, just sayin'

I get your argument - sick people cost more and being forced to care for them in theory pushes up costs - but the evidence points the other way. Countries with better / more accessible healthcare usually have healthier citizens and hence lower costs. And even in the UK the way the system is organized manages to keep costs down in spite of very unhealthy lifestyles. In many of the links I've shown above healthcare systems elsewhere have produced healthier citizens in all cases yet US remains a huge outlier on costs. Not just in the last 5 years, but in the last 30 years.

And again, I'm not arguing in favour of obamacare. Here's the far more sensible (and much cheaper!) version of obamacare:

https://www.youtube.com/watch?v=aMG1D4Z-4oY

Oldwood's picture

So please explain how our government's involvement has improved healthcare so greatly in the last three years.

 

James_Cole's picture

Is that my argument? No.

bigkahuna's picture

No, you just spend comment after comment extolling the virtues of government involvement in health care - thats all.

detached.amusement's picture

hahahahaha

 

"but oecd #s say"...

 

STFU and look at more than doctored numbers that are a ridiculously poor representation of reality on the ground, James.

jwoop66's picture

Dude. Seriously.  Wake the fuck up.   Those other health systems are great when you need to go to the clinic and get a band-aid.   When you need serious shit done, you are thrown into the abyss. Waiting...waiting...wanting...

Hide and Watch's picture

#36 - Costa Rica? Are you kidding me? When I lived there there was one dialysis machine in the entire country. When the government workers at the hospital burned it down, no more dialysis for three months. A lot of people died. But, it probably helped them in the cost-per capita rankings. 

A Nanny Moose's picture

Define "best." Who is the final arbiter of "best?" What are the criteria for being defined as "best?"

You forget the monopoly protections, granted by government to the sick care industrial complex.....may I remind you....in violation of the Sherman antitrust act.

Paveway IV's picture

This can't be true. EXPERTS said costs would go down. Just like the other racket: socialized car insurance. It can't possibly go up when everyone is forced to buy it because the overall risk level decreases. How can costs and risk go up when they're suppose to go down? Don't you people watch CNN?

Stop arguing with the EXPERTS (and CNN - same thing).

jwoop66's picture

Just imagine if that car insurance covered everything, including oil changes.  Because...fairness.   And if you could insure your car regardless of condition.  I could buy something without an engine, and file a claim to repair it to new condition. 

How much would that insurance cost?

ebworthen's picture

Not signing up means not paying your taxes, which means jail.

You can stay out of jail this next year for $395 or 2% of your income, whichever is GREATER.

Pretty soon it will be sign up and pay or leave the country.

The only other option wiill be joining the ranks of the intentionally poor.

Oldwood's picture

For those who are concerned about the evaporation of their constitutional rights, the simple process of making everything we do and treasure illegal effective makes us "outlaws" which is the quickest and most constitutional path of depriving us of our rights. It ensures that those outside of the law keep their mouth SHUT! It is the best possible way to silence people which is the most important tool in eliminating their freedoms but most importantly resistance.

This is what control looks like....there is no room for freedoms....the good of the collective (of which none of us seems to be part of) always outweighs the good of the few..or the one.

Bend over people!!!! your state mandated exam is up!!!

nmewn's picture

I relish returning to my outlaw ways. Now I will teach the REAL meaning of treason to the young. Someday they will be free again.

I'm pretty sure King John & King George thought it was treason as well.

Its all in your perspective isn't it? To the crony, the statist, the government employee pensioner, the parasites, the connected, its all TREASON!

Me, not so much ;-)

Paveway IV's picture

But nmewn... treason is against the law.

nmewn's picture

But of course, Stalin called it treason, so did Hitler and Mao, Pol Pot, King George etc. why should this state call it anything else?

I'm fine with it, history will be my judge ;-)

Miffed Microbiologist's picture

Returning to them? Hmmm. I think you and a few others here ( wink)have maintained outlaw status to be hauled off on trumped up charges of treason or sedition.

The productive class is under assault and may they rue the day for their actions when we take back what is ours.

Miffed;-)

nmewn's picture

Truth be known, I've always "accommodated the law" until now, not really believing in its social or moral character, as I'm not anti-social per se, its more of a toleration. I don't hold it dear or cherish it, just a nuisance most times to be avoided is how I really have always percieved it.

I had a very good...uuuhhh, hmmm, "professor" (no, I will not divulge) who knows what it is and definitely what it is not who helped me understand it clearly at a very early age, 25ísh ;-)

Bumpo's picture

Uhm, exactly .. That's the end result of socialism:  It makes more sense NOT to work, than to work. 

Oldwood's picture

The best part about collectivism is that we have no reason to complain for regardless of how bad it might get, we will all be equal, and as we know prosperity is meaningless without equality. If we all end up in cardboard boxes it will be worth it. After all our government and media will tell us what we are to be happy with and when to demand more.

DC Exile's picture

So true ebworthen.

I'm domiciled in CA.

Lost everything 2 years back. Qualified for Medi-Cal - pathetic...maybe. No premium, no co-pay. Free drugs.

I finally started using it this year when I realized my income was going to disqualify me.

Colonoscopy. Pre-cancer dermatology. Eye doctor. Heart doctor. Blood tests. Couple emegency room visits. A lot of deferred maintenance all in 3 mos.  And a couple weird ER events. Helped that I changed from a shitty primary care doctor to the last good doctor standing in LA (got his name word of mouth) - he's 80 years old and curses Obama but cares about his patients. I told him I was going to lose coverage soon. He said "you are my patient, I will see you whether you can pay me or not." He only makes $10 -yes - $10 per visit under MedCal. So wtf.

I'm now officially uninsured and realize I would've paid a shitload under Roberts(Bush appointee)-ObamaCare and still wouldn't have gotten the care I got in last 3 mos. Every illegal immigrant in CA now gets this. Don't make over $16,000 (declarable income) for MediCal. Grreat FREE coverage!!!

Important fact: health insurance DOES NOT EQUAL health care!!! You are a sucker to pay premiums with massive deductibles. I think my option now is medical vacations to Mexico & Thailand. PAy the Roberts-Obama tax penalty and use the money I'd spend on useless insurance for a trip to Phuket and my future Thai dermatologist.

Or maybe I could just stay poor.