ObamaCare Will Raise Costs On Most Plans

Investor's Business Daily

More than half of Americans expect that ObamaCare will increase their premiums, according to the latest IBD/TIPP poll. And they're most likely correct.

That poll, taken in late October, shows that 53% expect their premiums to climb due to the reform law. Just 9% think ObamaCare will cut their premiums. Even among Democrats, 26% think their premiums will go up vs. 16% who believe ObamaCare will push them down.

These findings fly in the face of assurances from President Obama and other ObamaCare supporters that most people will be largely immune from the Affordable Care Act's provisions.

Obama has repeatedly said, as he did this spring, that 85% of Americans have nothing to worry about from ObamaCare's implementation, since they "already have health insurance" and that part of ObamaCare is "pretty much already in place.

Justin Wolfers, a senior fellow at the Brookings Institution, produced a chart claiming that 80% of the insured will be "unaffected" by ObamaCare and only 3% are "potential losers.

Not Just Canceled Plans

Recent news has focused on the relatively few people who buy insurance on the individual market and who are now getting cancellation notices and learning that ObamaCare-approved policies will cost significantly more.

But ObamaCare is adding costs to almost anyone who buys private insurance, thanks to the law's myriad taxes, fees, regulations and benefit mandates.

ObamaCare imposes several new taxes, and one of the biggest is a tax on health insurers that will cost $100 billion over the next decade. Starting next year, insurance companies will have to pay a total of $8 billion toward this tax, with the annual amount climbing to $15 billion by 2018.

The nonpartisan Congressional Budget Office says this tax will be "largely passed through to consumers in the form of higher premiums.

And the Joint Committee on Taxation puts the amount of the hike at up to 2.5%. Consulting firm Oliver Wyman thinks the tax will ultimately hike premiums by nearly 4%.

There's also ObamaCare's $63 charge for every health plan enrollee. This "temporary" fee — it's supposed to last only three years — will raise $25 billion. Large employers say it will cost them tens of millions of dollars each, which they're likely to pass on to workers. Unions have pushed for its repeal.

A new $2,500 cap on flexible spending accounts also effectively raises the cost of health care for those who had contributed larger amounts in the past to these tax-free accounts to pay their out-of-pocket medical bills. Over the next decade, this limit will cost a total of $13.2 billion. ObamaCare also hiked the threshold for deducting health costs to 10% of income, from the previous 7.5%, which will force people with high medical bills to pay an additional $15.2 billion in taxes.

Then there are the benefit mandates included in the law, which include a ban on lifetime spending limits, requiring coverage for children up to age 26, and "free" preventive care. A survey of insurers by Aon Hewitt found that the combined effect of these mandates will boost premiums close to 3% for large group plans and nearly 10% for individual policies.

Small Firms Hurt Too

Small businesses also face potentially large premium hikes, since ObamaCare will require more generous coverage next year than many of them currently provide.

For example, ObamaCare limits deductibles to $2,000 for small-group plans. But 31% of workers at small firms have deductibles higher than that, according to the Kaiser Family Foundation. Lowering the deductible tends to increase premiums.

In addition, the law imposes limits on annual out-of-pocket expenses which will likely result in higher premiums for the 14% of workers at small companies enrolled in plans without such limits .

The Obama administration's own research shows that just a tiny fraction of small group plans covered various pediatric benefits mandated by the law.

Meanwhile, millions of seniors enrolled in Medicare Advantage are losing benefits and doctor access due to ObamaCare. The popular Advantage program was slated for big curbs to help pay for the new health law, but the administration largely delayed cuts until after the election.

Those will start to bite in 2014. Seniors will have to settle for fewer benefits or pay more out-of-pocket.

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