The Affordable Care Act, Is, In Fact, Unaffordable. Unexpectedly.

In a completely unexpected turn of events, the Affordable Care Act has led, almost immediately, to rising costs in health care. Remember what Obama said in 2008?

“The only thing we’re going to try to do is lower costs so that those cost savings are passed onto you. And we estimate we can cut the average family’s premium by about $2,500 per year.”

Surprise! Things haven’t quite turned out as predicted (except by all the people who said that Obamacare would be terrible idea).

Why should this surprise?  The must-issue regulation built into ObamaCare increases costs for the insurers, who cannot draw all of the needed revenues from the high-risk pool, thanks to mandates on rates.  That means those costs have to get spread out to everyone in the pool.  This is nothing more than Risk Pool 101, a course that Congress flunked repeatedly in the ObamaCare debate.

And why are rates rising higher on individual premiums than employer-based premiums?  First off, the economics of aggregation are always going to work out that way; insurers want large groups of customers, and it’s less costly in the long run to find customers that way rather than one at a time.  I’d guess that the employer-aggregate pool might generate somewhat lower costs than the general population too (especially after must-issue), but that’s just speculation.  What isn’t speculation is that ObamaCare heavily regulates the individual markets in 2014 based on a law that doesn’t have many details in how that is supposed to be accomplished, based on state exchanges that may never exist in more than half of the states.  In that kind of environment, can anyone blame the insurers for basing premiums on worst-case scenarios this year?

The country is in the very best of hands.

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