Affordable Care Act


We have been treated to a barrage of news and commentary on insurance rates as they are announced for state exchanges.  Those who believe, unfailingly, that the ACA will cause rates to drop point at the market places in New York and California where announced rates are below current ones in the individual insurance market.  Those who believe the opposite point to market place rates in Ohio and Indiana.  Which believers are correct?  Actually, both are.  Here is a short video explaining some of the issues driving costs.

Private in and individual insurance rates in California and New York have been community rated for quite some, so the primary factors driving up rate costs in Ohio and Indiana have been long normalized in their markets.  In fact, both states had such heavy regulation of their individual markets that the ACA actually liberalized them and allows for greater competition by insurance providers.

One thing is absolutely certain for young people in more than 45 states:  their costs are going up.  The question for this group is will they buy?  Their numbers are critical to the financial support of the ACA; without them the model will fail.  The task of getting them enrolled will be daunting for 3 major reasons:  1)  More than 65% of young people under age 30 turn down the opportunity for employer sponsored health insurance that is usually cheaper than what a market place insurance plan will cost; 2) Fewer young people are covered under health insurance plans of any type than when President Obama entered office (largely due to the high unemployment of  youth) , and; 3) The penalty of not having health insurance coverage in 2014 is only $95 or 1% of income, whichever is more.  This amount is 10 times less than the likely cost of a market place plan.

We already know costs will rise in most all states and drop in a few.  Likewise we know that the market place plans will have very narrow networks and the likelihood that a person migrating to such plans will have low odds of keeping their doctor regardless of what the President says.  Buckle up folks, it’s going to be a bumpy ride.