Obamacare apologists have been touting last month’s news from California about the effect that the law will have on insurance premiums, but, as I explain in a column on National Review Online, the law’s critics have been right to point out how Obamacare will increase rates in the individual insurance market.
Obamacare is imposing a minimum benefit for insurance that is in excess of what many consumers purchase on their own today. And the law is imposing many new rules on what insurance companies may and may not take into account when setting premiums. There is no experience anywhere indicating that these kinds of changes will lower premiums. And there’s an abundance of evidence from state experiments indicating that these changes will increase premiums, and probably quite substantially.
So Roy and the others were rightly suspicious of the spin coming out of California and decided to take a look themselves. What they found is that California officials were comparing the Obamacare exchange premiums with small-employer plans, not the existing individual market in the state. This was a completely inappropriate comparison. It is the enrollees in the individual-insurance market who will have little choice but to get their coverage from the exchange next year. Employees of small businesses can still get their insurance outside of the exchange, and do so on a self-insured basis to avoid getting pooled with insurance enrollees outside their firms. But for people in the individual market, there’s no getting around Obamacare.
You can read the rest of the piece here.