President Obama can rearrange the deck chairs on the Titanic all he wants. But his Affordable Health Care Act is still a sinking ship. And in 2014, you may well want to jump off the ship.
You probably know that the new law will require insurance coverage for all Americans. But it does nothing to curb skyrocketing premium costs. Now, not only are you required to have health insurance…you’re also going to pay a lot more for it. Especially if you’re among the already beleaguered self-employed or own a small business.
Here’s where yet another problem starts…
The new law doesn’t give all state regulators the power to deny excessive rate increases. In other words, insurance companies can raise rates just as much as, or more than, they did before this “affordable” care law passed.
“This is a huge loophole…in the federal Affordable Care Act,” California Insurance Commissioner Dave Jones told the Los Angeles Times earlier this month. And insurance companies in California couldn’t be more complacent with the situation…
For example, in California, Aetna proposes a 22 percent increase in 2013. Blue Shield wants a 20 percent increase this year. And Blue Cross wants a 26 percent increase.
And I feel particularly bad for anyone stuck with Blue Cross insurance in the Sunshine State. On top of this year’s 26 percent increase, the company raised rates by nearly 40 percent just three years ago!
That’s a possible 66 percent rate hike in just four years! In fact, lawmakers often cited California Blue Cross’ abuses as the reason why the country needed a new healthcare law! Now we have the law, but the abuses continue.
Granted, California is an economic basket case right across the board, but problems abound in other states, too.
For example, in Florida and Ohio, insurance companies plan 20 percent hikes in 2013. Plus, federal officials recently cited two insurers for excessively raising rates in nine other states. These rate increases continue across the country, despite lack of compliance with the new Affordable Health Care Act guidelines.
The last attempt at healthcare reform occurred in the mid-1990s, under Bill and Hillary Clinton. Back then, the Clintons asked insurers into the back rooms in Washington for their opinion. But they locked out both mainstream and alternative health practitioners. Eventually, Senators Robert Dole and Arlen Specter teamed up to defeat that attempt to rearrange the deck chairs on the Titanic.
But the current attempt at reform seems far worse…
Besides the never-ending rate hikes, there seems to be a hidden agenda. The new law punishes independent, entrepreneurial, self-employed, and small business owners with especially hefty increases.
Sure, families who hold large employer-based policies may only see four percent increases each year under the new law. But if you’re self-employed, the new law will hit you much harder–or even put you out of business.
In Wisconsin, an independent watchdog group projects 31 percent insurance rate hikes for anyone not on a lavish government employee plan or on employee-sponsored health insurance. So if you work for yourself and have to buy your own insurance, expect a huge increase in the years to come.
To be fair, there is some wiggle room depending upon the state in which you work…
In New York, for example, the state already had sweeping powers to hold rate increases for the self-employed and small business owners to less than 10 percent. After all, New York is known for “rent control.” Now it will have “insurance control,” too.
Still, 10 percent increases year after year is nothing to sneeze at, even if you are healthy. Especially in an economy with low inflation and low consumer price increases. Of course, that’s if you believe the artificially low numbers cooked up by the federal government.
In the state of Massachusetts, they already have a state-based plan. This plan extends coverage to greater numbers of people. And it helps control costs. Plus, it’s working far better than the chaos created by the new one-size-fits-all federal law.
The federal law won’t go into full effect until 2014. So we haven’t even felt the full brunt of its impact yet!
But Massachusetts is being punished for solving its healthcare problem. And it will be the 10th-hardest hit state. The new law will hand Massachusetts nearly $4 billion in health insurance surcharges. Plus, families that buy their premiums privately will pay nearly $10,000 more over the next 10 years. Only families in New York will face steeper rate hikes.
Businesses will also feel the pinch. The new law includes a “Medical Device Excise Tax” that targets makers and importers of medical devices. So states with huge high-tech medical industries are bracing for the worst.
Lastly, the new federal law wipes out the most basic tenet of insurance: underwriting.
As with any insurance plan–whether it’s life, casualty, auto, or medical–underwriting is important. It allows a company to account for risk factors. In the case of medical insurance, underwriting considers the applicant’s health. The company offers a policy at a specific cost, based on the applicant’s risk of getting sick.
The new law takes away that ability.
This is like forcing a life insurance company to provide life insurance without knowing the age of the applicant. Since health insurance companies will now operate in the dark, they say they need to issue steep rate increases. These increases build in their own kind of “insurance.”
In other words, it protects Aetna against the 65-year-old lifelong three pack-a-day smoker who sits on his couch eating French fries every day. Under the new law, Aetna has to charge him the same rate as his 25-year-old fitness buff neighbor. So, Aetna figures, we might as well charge them both a bundle. After all, it’s just business!
Well, as I said earlier, it’s a sinking ship.
But it seems that this time, the government has not just rearranged the deck chairs on the Titanic. It has given this “ship of fools” a new propeller. And now, it’s speeding even faster and harder into the icebergs looming right in front of us.