Insurance Premiums could skyrocket under Obamacare
Obamacare and Insurance Premiums
While residents in California and New York may see their insurance premiums shrink when Obamacare is implemented this fall, many other states are likely to see a huge increase in insurance premiums for purchasing insurance through state exchanges. CNNMoney reports the difference may be because states expecting an increase were previously allowed to create and sell plans which excluded the unhealthiest customers and the plans were bare-bones plans.
Not anymore, Obamacare has mandated that plans must offer more comprehensive coverage, which means plans must contain many options not previously offered such as maternity coverage, mental health coverage and medications. They also must accept all persons who apply.
What if I dont buy insurance?
Americans may not realize exactly what is coming, but starting in 2014, Obamacare will force all Americans to buy insurance, whether you want it or not. Enrollment in the exchanges begins October 1, with coverage starting in January. Americans who choose not to buy insurance must pay a penalty of $95 or 1% of family income, whichever is greater. There will be some plan discrimination, however. For instance, plans will be divided into several levels from bronze to platinum, and families may choose whichever plan best suits their familys needs.
Headlines the last several weeks have touted how insurance premiums are likely to decrease in some states such as California and New York. The news isnt so great in other states. States which are lightly regulated such as Indiana, Ohio, Florida and South Carolina can expect insurance premiums to soar.
For instance, Florida state officials estimate their insurance premiums could rise between 7.6% and 58.8%, with the average closer to 35%. This estimate is based on a comparison between the average silver plan available through Obamacare and an average plan available today.
What is the driving force for the huge increase in insurance premiums? Its no surprise that costs are going to go up when you offer coverage to everyone. In Florida, for instance, there are 3.8 million uninsured and currently many "high-risk people are not allowed into certain plans. Of course, the new changes are good for people with a pre-existing condition who have had difficulty getting coverage in Florida, but not so great for the rest of us who will have to pay for this coverage with skyrocketing insurance premiums.
The news in Ohio is even worse. State officials there estimate many people could see their insurance premiums increase as much as 41%. Indiana officials estimate the costs could rise an average of 72%. But CNNMoney notes they were looking at the cost of providing care, not actual insurance premiums.
Federal Subsidies and Obamacare
Experts, however, argue the estimated cost for some families may not be as high as predicted due to federal subsidies. For instance, Americans with incomes up to $45,960 for an individual and $94,200 for a family of four will be able to request federal subsidies.
Costs could also be lower for many individuals if they choose a plan which offers fewer benefits such as the bronze plan. This type of plan will offer high monthly costs and deductibles- and less medical care- but it could save some individuals and families money each month. Others note the cost increases will vary widely by age and gender.