Wednesday, March 27, 2024
Hawai'i Free Press

Current Articles | Archives

Tuesday, November 26, 2013
Obamacare Gives Insurance Commissioner Powerful Incentive to Raise Rates
By NCPA @ 12:22 PM :: 3910 Views :: Health Care

Another Way Taxpayers Lose Under ObamaCare

NCPA November 26, 2013

State insurance commissioners have long seen themselves as protectors of the public's wallets -- the officials who say "no" to insurers' requests to increase health insurance premiums. It has not yet sunk in that on this coming New Year's Day, the Affordable Care Act (ACA) will flip the commissioners' motives upside-down, prompting them to approve and even encourage premium increases, says Robert F. Graboyes, a senior research fellow with the Mercatus Center and professor of health economics at Virginia Commonwealth University.

  • Under the ACA, a family of four with $30,000 in income will only pay $600 for, say, a $10,000 insurance policy. The federal government will cover the remaining $9,400.
  • Under the "medical loss ratio" rules, the insurer can keep $2,000 for overhead and profit. The remaining $8,000 must go to health care providers -- doctors, hospitals, therapists, etc.

Now, suppose the insurer raises the premium to $20,000.

  • The family of four will still pay only $600. The federal government absorbs 100 percent of the increases and must now kick in $19,400 instead of $9,400.
  • The insurer doubles payments to providers by paying higher reimbursement rates and by expanding the menu of benefits, (e.g., more tests, more surgeries, lengthy spa visits.)

Again, the enrollee pays no more for insurance, but providers get $16,000 in income rather than $8,000 -- and insurers retain $4,000 instead of $2,000. Plus, the enrollee gets much more generous benefits. No insurer has any motive to reduce premiums, since no purchasers will benefit.

Some critics argue that a swelling-premiums scenario would never occur because state regulators would never approve such increases. But why not?

  • Until now, commissioners were strongly motivated to hold the line on costs. Until now, forbidding insurers to raise premiums meant more money in the wallets of the state's voters and possibly the state's health care providers, too.
  • Now the commissioner who insists on lower premiums reduces the amount of care available to subsidized voters and doesn't save them a dime.
  • Because of the ACA's bizarre structure, higher premiums now mean better benefits for subsidized enrollees; higher incomes for doctors, hospitals, other providers and insurers; and higher state tax revenues from now-richer providers and insurers.

The only loser is the U.S. taxpayer, who must pay for these swelling costs.

Source: Robert F. Graboyes, "Another Way Taxpayers Lose Under ObamaCare," U.S. News & World Report, November 11, 2013.

Links

TEXT "follow HawaiiFreePress" to 40404

Register to Vote

2aHawaii

808 Silent Majority

Aloha Pregnancy Care Center

AntiPlanner

Antonio Gramsci Reading List

A Place for Women in Waipio

Ballotpedia Hawaii

Broken Trust

Build More Hawaiian Homes Working Group

Christian Homeschoolers of Hawaii

Cliff Slater's Second Opinion

DVids Hawaii

FIRE

Fix Oahu!

Frontline: The Fixers

Genetic Literacy Project

Grassroot Institute

Habele.org

Hawaii Aquarium Fish Report

Hawaii Aviation Preservation Society

Hawaii Catholic TV

Hawaii Christian Coalition

Hawaii Cigar Association

Hawaii ConCon Info

Hawaii Debt Clock

Hawaii Defense Foundation

Hawaii Family Forum

Hawaii Farmers and Ranchers United

Hawaii Farmer's Daughter

Hawaii Federalist Society

Hawaii Federation of Republican Women

Hawaii History Blog

Hawaii Homeschool Association

Hawaii Jihadi Trial

Hawaii Legal News

Hawaii Legal Short-Term Rental Alliance

Hawaii Matters

Hawaii's Partnership for Appropriate & Compassionate Care

Hawaii Public Charter School Network

Hawaii Rifle Association

Hawaii Shippers Council

Hawaii Smokers Alliance

Hawaii State Data Lab

Hawaii Together

HIEC.Coop

HiFiCo

Hiram Fong Papers

Homeschool Legal Defense Hawaii

Honolulu Moms for Liberty

Honolulu Navy League

Honolulu Traffic

House Minority Blog

Imua TMT

Inouye-Kwock, NYT 1992

Inside the Nature Conservancy

Inverse Condemnation

Investigative Project on Terrorism

July 4 in Hawaii

Kakaako Cares

Keep Hawaii's Heroes

Land and Power in Hawaii

Legislative Committee Analysis Tool

Lessons in Firearm Education

Lingle Years

Managed Care Matters -- Hawaii

Malama Pregnancy Center of Maui

MentalIllnessPolicy.org

Military Home Educators' Network Oahu

Missile Defense Advocacy

MIS Veterans Hawaii

NAMI Hawaii

Natatorium.org

National Christian Foundation Hawaii

National Parents Org Hawaii

NFIB Hawaii News

No GMO Means No Aloha

Not Dead Yet, Hawaii

NRA-ILA Hawaii

Oahu Alternative Transport

Obookiah

OHA Lies

Opt Out Today

OurFutureHawaii.com

Patients Rights Council Hawaii

PEACE Hawaii

People vs Machine

Practical Policy Institute of Hawaii

Pritchett Cartoons

Pro-GMO Hawaii

P.U.E.O.

RailRipoff.com

Rental by Owner Awareness Assn

ReRoute the Rail

Research Institute for Hawaii USA

Rick Hamada Show

RJ Rummel

Robotics Organizing Committee

School Choice in Hawaii

SenatorFong.com

Sink the Jones Act

Statehood for Guam

Talking Tax

Tax Foundation of Hawaii

The Real Hanabusa

Time Out Honolulu

Trustee Akina KWO Columns

UCC Truths

US Tax Foundation Hawaii Info

VAREP Honolulu

Waagey.org

West Maui Taxpayers Association

What Natalie Thinks

Whole Life Hawaii

Yes2TMT