One of the stranger bits of Obamacare news this week is the announcement from New York that the insured in that state will save money on their policies once Obamacare goes into full effect. Just today, president Obama pointed to that news as one of the big positives coming from his healthcare law. The problem, however, is that few people actually understand what this all means. Let's try to explain it all.
Until now, health insurance has been strictly a state by state matter. In all but a handful of states, insurance companies were allowed to price insurance premiums based upon the likely costs to be incurred for a type of customer. In other words, older folks paid more than younger ones. Smokers paid more than non-smokers. People with chronic diseases paid more than those who were totally healthy. Folks with very serious conditions had to get insurance from special pools that were set up just for them. What this meant is that in about 46 states, people who were less likely to get sick paid much less for their insurance. In the other 4 states, however, that was not the case. For example, in New York, insurance companies were not allowed to vary the rates depending on the age, sex, health, or habits of those seeking insurance. As a result, New York insurance rates were the highest in the country. Those high rates forced many people not to get insurance; it was just too expensive.
Obamacare imposes a New York style limitation on insurance across the country. Now insurers in every state can no longer price insurance based upon what they expect to pay out for an individual. As a result, the costs for individuals in those 46 states where the companies used to be able to do this will necessarily soar. For example, in Ohio the estimate is that individual insurance rates will rise on average by 88%. Similar numbers show up in state after state across the country. In New York, however, all those people who did not get insurance because it was too expensive are now required by law to buy it. They no long have a choice. That means that more premiums will be coming in, so the cost for the average New Yorker will go down. That is all that has happened.
Overall, the people in the states like New York are less than ten percent of the population. That means that policy costs will skyrocket for over 90% of individuals while less than 10% will see a drop. Obama should be careful before he touts this great benefit for a few folks that comes at the great expense to nearly everyone in the country.
Until now, health insurance has been strictly a state by state matter. In all but a handful of states, insurance companies were allowed to price insurance premiums based upon the likely costs to be incurred for a type of customer. In other words, older folks paid more than younger ones. Smokers paid more than non-smokers. People with chronic diseases paid more than those who were totally healthy. Folks with very serious conditions had to get insurance from special pools that were set up just for them. What this meant is that in about 46 states, people who were less likely to get sick paid much less for their insurance. In the other 4 states, however, that was not the case. For example, in New York, insurance companies were not allowed to vary the rates depending on the age, sex, health, or habits of those seeking insurance. As a result, New York insurance rates were the highest in the country. Those high rates forced many people not to get insurance; it was just too expensive.
Obamacare imposes a New York style limitation on insurance across the country. Now insurers in every state can no longer price insurance based upon what they expect to pay out for an individual. As a result, the costs for individuals in those 46 states where the companies used to be able to do this will necessarily soar. For example, in Ohio the estimate is that individual insurance rates will rise on average by 88%. Similar numbers show up in state after state across the country. In New York, however, all those people who did not get insurance because it was too expensive are now required by law to buy it. They no long have a choice. That means that more premiums will be coming in, so the cost for the average New Yorker will go down. That is all that has happened.
Overall, the people in the states like New York are less than ten percent of the population. That means that policy costs will skyrocket for over 90% of individuals while less than 10% will see a drop. Obama should be careful before he touts this great benefit for a few folks that comes at the great expense to nearly everyone in the country.
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