Ohio Study Confirms: Obamacare Will Raise Premiums, Kill Current Coverage

Last month, Wisconsin released a study showing how Obamacare will raise premiums and lead firms to drop coverage.  Yesterday, the state of Ohio released a report from independent actuaries at Milliman that came to much the same conclusions – nearly 700,000 individuals leaving employer-sponsored coverage in Ohio alone, along with premium increases for individual policies averaging 55-85%.  The report is over 150 pages long, but the key section is from pages 26-45, which highlights the major changes in both premiums and coverage scheduled to take place thanks to Obamacare:

Dropped Coverage

  • A total of 688,000 Ohio residents will move OUT of employer coverage; “population decreases in the [employer insurance] markets will be driven by low-income individuals opting out of these plans for Medicaid.”
  • While 503,000 previously uninsured residents will obtain Medicaid coverage, a greater number of individuals (569,000) who already have coverage will move into government-run Medicaid – suggesting Obamacare encourages both employers and employees to quit private coverage in order to join taxpayer-funded programs.  As the report notes, “The other half of new Medicaid enrollees will consist of individuals who currently have ESI [employer-sponsored insurance] or individual coverage.”
  • Likewise, while 289,000 previously uninsured residents will obtain new coverage in Exchanges, almost as many (204,000) will join Exchanges after having employer coverage – likely because Obamacare will encourage firms to “dump” their workers.
  • “The estimated prevalence of grandfathered plans is expected to diminish quickly and be almost non-existent by 2014” – meaning virtually everyone will lose their current plan within three short years of Obamacare’s passage.

Higher Premiums

  • Before subsidies, “the individual health insurance premiums are estimated to increase by 55% to 85% above current market average rates (excluding the impact of medical inflation).”  The report goes on to delineate the specific reasons for these skyrocketing premiums.
  • “Individual health insurance market premium rates are estimated to increase between 20% and 30% on average due to benefit expansion requirements” – i.e., Washington bureaucrats forcing individuals to buy more health coverage than they may want or need.
  • Premium rates on the individual market will increase between 35% and 40% because high-risk pools will close and the individuals purchasing insurance through Exchanges will be sicker than the population as a whole.  This conclusion is noteworthy because it contradicts the Congressional Budget Office, which predicted that individuals in Exchanges would be healthier than average.
  • Premiums will also increase by 2-3% due to the various taxes – on device manufacturers, drug companies, and insurers – included in Obamacare; “as with any tax on businesses, these fees will be passed along to the consumer to the extent possible.”
  • Requirements under [Obamacare] to cover preventive services at 0% cost-sharing have already caused premiums to increase.”
  • For small businesses, premiums could rise 150% for some firms with healthy populations – but the firms with the highest-risk (i.e., least healthy) populations would see their premiums fall by only 38%.
  • The cumulative effect of these rating changes may result in a majority of [small businesses] experiencing premium rate increases or decreases beyond the average estimated market change of 5% to 15%.  In many cases these changes could be greater than 25%, ignoring changes in medical inflation. Premium rate volatility may affect the stability of the ESI-small group market by creating greater financial incentives for employers to self-fund or terminate their plan.  Employers wanting to continue their plan may address the issue of substantial premium rate increases by changing plan designs to shift more cost to employees, as current benefit plans may become unaffordable.”

The report also includes a separate study indicating that the Exchanges will likely cost at least $20 million dollars per year to maintain (exclusive of implementation costs) just in Ohio alone.  These administrative costs could raise premiums by more than 1% – over $50 per year – for individuals enrolling in Exchange plans.

Candidate Obama repeatedly promised to cut insurance premiums by an average of $2,500 per family, and also promised that “for those of you who have insurance now, nothing will change under the Obama plan – except that you will pay less.”  Today’s report once again illustrates how Democrats’ 2700-page health care law fails on both counts.