California sparked a debate by issuing a statement a few weeks ago that premiums on its insurance market in 2014 are likely to be lower than current premiums. That sparked a lot of debate, which I’ve covered on this blog. Now, Ohio is out with its estimate of 2014 exchange premiums, and it paints a very different picture. It says the average individual premium will be 88% higher than 2013 premiums. Ohio also says consumers will have fewer choices.
At the same time, a survey of physicians was released that paints a pessimistic picture. Because of government rules and intrusion, most doctors don’t like what they do. Many would retire now if they were financially able. There’s going to be a shortage of physicians i coming years, especially when all the uninsured receive coverage in 2014. As I’ve said before, be sure to establish relationships with physicians now, because many probably won’t be accepting new patients in a few years.
It’s called “rate shock,” but it’s not shocking to people who understand the economics of health insurance. In August 2011, Milliman, one of the nation’s leading actuarial firms, predicted that Obamacare would increase individual-market premiums in Ohio by 55 to 85 percent. This past March, the Society of Actuaries projected that the law would increase premiums in that market by 81 percent. Like good players on “The Price is Right,” they both came in just under the Dept. of Insurance’s figure.
What are the drivers of the increase? According to Milliman, the two biggest drivers are (1) risk pool composition changes, such as forcing the young to subsidize the old, and the healthy to subsidize the sick; and (2) Obamacare’s required expansion of insurance benefits, particularly its mandated reductions in deductibles and co-pays.