Obamacare sticker shock: “I was all for Obamacare until I found out I was paying for it”

Posted on October 28, 2013 by

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There are so many dimensions of possible problems with Obamacare; the technical problems with the website are masking other much more problematic concerns.  Higher costs, fewer choices, and coercive mandates are only now being considered by consumers as the actual implementation of the law is upon us.  As I listen to the debates of the Obamacare implementation, conservatives against the bill are pointing to the lack of enrollment and choices in many areas.  Liberal supporters blame Republican lack of support–and point to California, where the state embraced Obamacare and set up its own exchange as a model for what could be.  So what is happening in California?  This story in the LA Times is very informative.

Pam Kehaly, president of Anthem Blue Cross in California, said she received a recent letter from a young woman complaining about a 50% rate hike related to the healthcare law.  “She said, ‘I was all for Obamacare until I found out I was paying for it,'” Kehaly said.

One of the common assertions of modern liberalism is “we’re all in this together,” suggesting we need collective action to mutually support each other in many dimensions of life.  Ostensibly, Americans who do not share this vision (or at least its coercive application) are selfish.  Yet the practical implementation is that they’re all for mutual support, as long as it’s the rich who are supporting the poor.  They’re shocked to find out that “we’re all in this together” might mean we’re all in this together.  The manifestation of this is now coming due, revealing the central problem of Obamacare:  how do we get younger, healthier people to enroll and pay more?  Or to pay much more?

Fullerton resident Jennifer Harris thought she had a great deal, paying $98 a month for an individual plan through Health Net Inc. She got a rude surprise this month when the company said it would cancel her policy at the end of this year. Her current plan does not conform with the new federal rules, which require more generous levels of coverage.  Now Harris, a self-employed lawyer, must shop for replacement insurance. The cheapest plan she has found will cost her $238 a month. She and her husband don’t qualify for federal premium subsidies because they earn too much money, about $80,000 a year combined.  “It doesn’t seem right to make the middle class pay so much more in order to give health insurance to everybody else,” said Harris, who is three months pregnant. “This increase is simply not affordable.”

Part of the problem is the lack of choice; Obamacare supporters note that where it has been embraced, such as in California, there are many competitors to give consumers choice.  While this may be true in some cities it doesn’t seem to be true across large parts of the country, but more importantly, it misses the point.  We get less choice with Obamacare because we are mandated to purchase insurance for issues we don’t need or want.  For just one example, many 50+ year old women are being forced to buy health insurance which requires pregnancy care.  We can’t choose any level of coverage–we must choose the minimum coverage Mr. Obama has mandated.  And if we choose too many coverage options, we can pay a “cadillac” tax.  What about lower priced plans that meet consumer needs and price points?

Blue Shield of California sent termination letters to 119,000 customers last month whose plans don’t meet the new federal requirements. About two-thirds of those people will experience a rate increase from switching to a new health plan, according to the company……All these cancellations were prompted by a requirement from Covered California, the state’s new insurance exchange. The state didn’t want to give insurance companies the opportunity to hold on to the healthiest patients for up to a year, keeping them out of the larger risk pool that will influence future rates. Peter Lee, executive director of Covered California, said the state and insurers agreed that clearing the decks by Jan. 1 was best for consumers in the long run despite the initial disruption. Lee has heard the complaints — even from his sister-in-law, who recently groused about her 50% rate increase. “People could have kept their cheaper, bad coverage, and those people wouldn’t have been part of the common risk pool,” Lee said. “We are better off all being in this together. We are transforming the individual market and making it better.”

The “state and the insurers” agreed what was best!  Crony capitalism at its finest–the marriage of government and business and the consumer gets told what to do.  Don’t worry, “we are transforming the individual market and making it better.”  Better for whom?

So what does this mean economically?  We often assert that voters are rationally ignorant, in that they don’t pay attention to political issues because the costs exceed the benefits.  So when voters are told by Mr. Obama, “if you like your health care plan you can keep it,” many tune out.  Now that this is demonstrably false, the cost/benefit calculation is beginning to change.  Economic theory suggests that more and more voters will become informed.  Will they like what they see?  If not, what will they do?  I think there is a reason some at-risk Democrats in the Senate are heading for the tall grass…..

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