| February 7, 2013
Sticker shock: Oklahomans' health insurance costs could double
The cost of health insurance in Oklahoma is going up.
As Merrill Matthews and Mark E. Litow recently wrote in The Wall Street Journal (“Obamacare’s Health-Insurance Sticker Shock”), “thanks to mandates that take effect in 2014, premiums in individual markets will shoot up. Some may double.” Matthews, you may recall, is a co-author of the OCPA report “Has SoonerCare Achieved Its Objectives?” Litow is a past chairman of the Social Insurance & Public Finance Section of the Society of Actuaries.
Though we were all promised in 2009 that “if you like your plan you can keep it” and that our insurance costs would see little change, Matthews and Litow predict Oklahoma will see prices increase between 65 percent and 100 percent. Indeed, based on their estimated ranking of the states by average cost of covered benefits, Oklahomans could see the biggest increases in the nation.
Unsurprisingly, Obamacare is now pricing some families out of their health care altogether. The Wall Street Journal reports that even some of Obamacare’s biggest boosters — labor unions — are now souring on the law.
Nationally, instead of premiums for the average family being below $2,500, as we were promised they would be by now, they are now closer to $5,500. Why is this so, you ask? Mostly because of something called “guaranteed issue,” which is mandated by Obamacare. Under guaranteed issue, insurance companies are required to issue a policy to anyone wanting to buy one. The increased cost of insuring more expensive customers is then passed on to all customers. But, this is not the only reason our costs are going up. An additional cost will occur when some people purchase a policy when they are ill, then cease being insured when they are healthier. This will leave insurance companies covering only those who are the least healthy and costing the most money. For many of these healthy people, who are generally younger, the fine — or is it a tax? — that is levied on those without insurance is lower than the cost of purchasing coverage. A recent estimate by the nonpartisan Congressional Budget Office stated that around six million people will opt to pay the fine/tax rather than purchase health insurance. Since these six million will not be paying into the system, insurance companies will be forced either to raise rates on those currently insured to cover the cost of insuring those with more health issues, or they will be forced to stop offering health insurance completely. The coming uncertainty and volatility is evidenced by some insurers ceasing to guarantee rates for a 12-month period, as both Matthews and Dr. Keith Smith have pointed out.
It is worth noting that when insurance companies began being forced to pay out large sums of money due to medical malpractice lawsuits, more and more of them ceased providing that type of coverage. Obamacare is already preventing families from finding coverage which previously existed. As the cost of providing health insurance continues to rise, we should be ready for the day that companies stop offering individual health plans. Then, those needing coverage will be forced to turn to whom? The government and the American taxpayers. Maybe that was the plan all along.
By Jonathan Small and Derek Osborn
Photo credit: Christopher Halloran / Shutterstock.com