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Obamacare Bait and Switch in California- Chriss Street

Nurse Kill BillLast week, the President toured California to trumpet his Patient Protection and Affordable Care Act (Obamacare) as reform that delivered on broadening the health insurance market, giving more options to individual consumers, and lowering the cost of insurance.  My healthcare provider, Aetna, whose Open Access Plan is top-rated by U.S. News & World Report and the price leader for providing individual healthcare coverage in California, promptly announced that they will stop selling any new individual policies after the end of this year.  Obamacare is completely “reforming” the California health insurance market, but the result will be less competition and much higher costs.

Advocates of Obamacare claim that between 2011 and 2012 the number of Americans without health insurance fell by 1.9 million, 86 million Americans received preventative care without co-pays, quarter-million small business claimed a tax deduction for providing employee health insurance, 2.5 million seniors saved $3 billion due to Medicare expanded prescription drug coverage and that the

average health-care costs fell in May for the first time in almost four decades.

Although these numbers may sound impressive, the real reason the number of insured went up and the average costs went down is that Obamacare extended mandatory healthcare coverage to 2.5 million of the Presidents key 19 to 26 year old voter block.  Subtracting these newly covered youth and the increase of 2 million more employed workers over the same period, a net 2.6 million older American workers have actually lost healthcare coverage.  Given that healthcare cost rise as people age, it is the older workers who have more medical needs that are actually losing coverage.

New York Times stated in May that the health insurance industry reported record profits due to lower medical care costs.  Obamacare advocates blame these “excessive profits” as proof that insurers are gouging consumers and small businesses, do little to rein in medical costs and spend billions of our premium dollars on lobbying, secret political activities, bloated executive pay and stock buybacks.  In fact, it is Obamacare’s design and implementation that maximizes free coverage for the young and the poor, while reducing medical costs by encouraging companies to dump older workers.

The President promised Americans in 2009 that after the passage of Obamacare, “if you like your plan, you can keep it” and that the cost of insurance would go down “by $2,500 per family per year.”  On May 27th, Nobel Prize winning economist Paul Krugman wrote that the bid prices for insurance companies participating in California’s healthcare exchange under Obamacare “are surprisingly low.”

It turns out that Krugman was uncritically regurgitating a State of California’s misleading press release.  Based on internet posted healthcare rates on eHealth, the typical 25-year-old non-smoker purchasing the lowest average cost Obamacare “bronze” on the California exchange will cost between 64-117% more than the cost of the cheapest five plans on eHealth this year.  For 40-year-old non-smokers, the increase will range between 73-146% more.  Although there will be subsidies for those earning less than $45,960 as an individual or $94,200 for a family of four, most Californians will pay much higher insurance premiums than they currently pay today.   

By being the price leader, Aetna grew its market share to 5.3% of the market and became the fourth largest provider of individual healthcare plans California.  But with Aetna withdrawing from underwriting individual healthcare coverage in California, Anthem Blue Cross, Blue Shield and Kaiser Permanente, who currently hold a combined 87% market share, will control almost 100% market share under Obamacare.

The Rasmussen Reports polling indicates that 59% of likely U.S. Voters would choose a less expensive health insurance plan covering only major medical expenses in exchange for a bigger paycheck, compared to 31% who would chose a smaller paycheck for a more expensive insurance policy that covered just about everything.  But as states like California roll out details about their healthcare exchanges, not only will premiums double but in addition the worker’s cost for accessing healthcare will also jump.  The average annual deductible in California will be $2,000, plus a $45 primary care visit co-pay and $250 tab for any trip to a hospital emergency room.

The hardest question is will it be a good deal and will consumers be able to afford it,” said Marian Mulkey, director of the health reform initiative at the California Healthcare Foundation.  “The jury is still out.  It depends on their circumstances.”  What does seem clear is that California’s healthcare “circumstances” will be less competition, less options for consumers, and higher costs under Obamacare.




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