Frank McCauley, Aetna’s executive vice president of commercial (non-government) business, had earlier noted that Aetna did not expect many small businesses to participate in the exchanges, because the cost of insurance on the exchanges would be quite high.
2014 non-group premiums to increase 20-50 percent on average
“Premium rate shock for 2014,” responded Bertolini, “absent subsidies and everything else, is going to be in the neighborhood of 20 percent to 50 percent. And we’re going to see some markets [and] in sub-segments in some markets go as high as 100 percent.”
As I’ve noted before, there are a number of ways in which Obamacare drives up the cost of insurance in the individual market—the market for people who buy insurance for themselves, instead of getting it through the government or their employer.
Most important of these are: (1) the “minimum actuarial value” requirement that forces insurers to provide more financially generous coverage with fewer co-pays and deductibles; (2) the “community rating” provision that forces younger beneficiaries to pay far more for insurance in order to partially subsidize older beneficiaries; (3) the “guaranteed issue” provision that forces insurers to take all comers, even if they are already sick; and (4) the “essential health benefits” mandate that forces insurers to cover health-care services that many customers wouldn’t otherwise want to pay for.
“Just one piece alone, more than half of the U.S. public [in the individual insurance market] is in a plan at 50 percent or lower actuarial benefit. If you go up to 60 percent, as required by law, you’ve got a huge bump already,” Bertolini noted. “And this is the reason why you’re seeing such pressure between the states and the federal government on exchanges. Whose exchange do you want to show that price increase on? And surely, the federal government doesn’t want to show that. So I think this is going to be a big debate. And as Frank mentioned earlier, we’re putting these things through into rate increases and we’re getting them through the regulators. So I think that is going to be the big story for 2014, as these rates start going to the market, probably the latter part of this year, 2013.”
They voted for this. Let them learn the hard way.