Most people want to lower health insurance premiums. In fact, this heads the list of most desired improvements in our healthcare system in repeated polling. So understanding what drives up the cost of premiums is crucial to making premiums less expensive.

There is no doubt that ObamaCare caused premiums to skyrocket. Despite President Obama’s claims that his new healthcare bill would “lower premiums an average of $2500 per year” it actually caused them to increase about $3500 per year. That’s about $6000 more per year than promised.

What caused these significant premium increases?

ObamaCare made several significant changes in health insurance plans. It forced insurers to provide certain “essential health benefits” as determined by HHS Secretary Kathleen Sebelius. These included mammograms, prostate exams, and other routine procedures regardless of gender in all plans. In other words, the anticipated cost of these procedures was calculated into every plan, regardless of whether they were needed or not.

Every insurance plan was required to be “ObamaCare compliant”, meaning it complied with every requirement of the law, or insurers could be fined. As a result no non-compliant plans were offered.

Other requirements of “ObamaCare compliance” included plans that were “guaranteed issue” and “community rated”. These insurance terms represent a change from previous insurance practices and also affect pricing.

Guaranteed issue means policies must be offered to all applicants, regardless of previous medical treatment or pre-existing conditions. Community rating means insurers cannot charge anyone more regardless of their medical history. Insurers were only allowed to factor in age, tobacco usage, and geographical location. Age was only allowed to increase premiums by a 3:1 ratio rather than the usual 5:1 or 6:1 typically used by insurers before ObamaCare.

With these restrictions placed on insurers, premiums were guaranteed to rise. Imagine expecting to pay the same auto insurance rates for your eighteen-year-old son who has totaled three cars as your fifty-year-old wife who’s never had an accident. Imagine expecting to pay the same health insurance premiums for your eighty-year-old grandmother with heart disease as your eighteen-year-old son who’s never been to the doctor. Insurance premiums must be predicated on actuarial risk rather than government mandates or insurers will surely fail.

Which of these government mandates caused the most premium increases?

That has been the most important question when considering improvements in the system that will lower premiums the most. We now have the answer to that question.

Fred Barnes, writing in The Weekly Standard, says a new study by McKinsey & Co. was performed for the Department of Health and Human Services. The results of that study were revealed recently by Senator Ron Johnson of Wisconsin.

The study focused on premium hikes in Tennessee, Georgia, Pennsylvania, and Ohio. The increased risk for insurers from guaranteed issue and community rating caused between 73 percent and 76 percent of the rise in premiums in Tennessee from 2013 to 2017. They caused between 44 percent and 52 percent of the increase in Georgia, between 53 percent and 62 percent in Pennsylvania, and between 41 percent and 50 percent in Ohio.

Here are some examples:

For a 40 year-old male in Tennessee, the monthly premium increased from $104 in 2013 to $431 in 2017 (ObamaCare Silver plan). The increase was from $94 to $323 in Georgia, from $119 to $373 in Pennsylvania, and from $102 to $284 in Ohio.

Senator Johnson explained the findings: “Had we never passed ObamaCare, premiums should be somewhere in the $300 per month level versus $574. This is the damage done by ObamaCare. And this, I’m very sad to report is what we are not adequately addressing.”

But there is some good news. Johnson said the “good news” in the ‘root cause analysis’ by McKinsey is being ignored in Congress. He said, “The good news is you can actually cover people with high cost and preexisting conditions without collapsing insurance markets. They’re called high-risk pools.”

A second study was done by HHS to examine the impact of Senator Ted Cruz’s amendment to allow insurers to sell non-compliant policies without all the essential health benefits. Senators Johnson and Mike Lee (Utah) wrote in a letter to their colleagues, “The results are remarkable. If insurers were to offer ObamaCare –compliant plans and non-ObamaCare compliant plans there would be a significant decrease in premiums.”

The study revealed monthly premiums in the individual health insurance market would reach an average of $845 by 2024 under ObamaCare. Under the Cruz amendment with two risk pools included, premiums would be 30 percent lower for a 40 year-old man with an ObamaCare-compliant plan. But premiums for non-ObamaCare-compliant plans would be as much as 77 percent lower. The amendment would also expand insurance coverage by 2.2 million people.

Conclusions

The conclusions from these studies indicate the real culprits in rising premiums are guaranteed issue and community rating. Essential health benefits actually are responsible for only small increases. In Tennessee they’re responsible for less than 2 percent increases; in Georgia and Ohio it’s only 5 to 8 percent; in Pennsylvania it’s 7 to 11 percent. While no man wants to pay for maternity benefits and no woman wants to pay for prostate exams, these benefits have a smaller impact on rates.

The abolishment of government regulations that force guaranteed issue and community rating is the real answer to lowering premiums. Coverage of those with expensive pre-existing conditions can be provided through high-risk pools and other protections for those unfortunate enough to have chronic medical conditions. New legislation should address these culprits that are contributing to the skyrocketing cost of health insurance premiums.

 

Charlie Gard’s life was short but all Americans should be thankful he was born. He was the world’s most famous baby for awhile and everyone should be paying attention to what happened to him.

For those of you who’ve been on vacation for the last month, Charlie Gard was an 11-month-old British child who was fighting for his life due to a rare genetic disease. He was on life-support in a London hospital. British medical experts said there was no hope for him yet they refused to let his parents take him out of the hospital. They insisted he must die in the hospital.

Charlie Gard’s situation drew the attention of President Trump, Pope Francis, the British courts and the European Court of Human Rights. The Wall Street Journal editorial board weighed in with their opinion, too:

“It may be that the experts the British and European courts invoke are right, that even with treatment Charlie won’t live much longer than he might with new interventions. But it’s not their decision to make. Or shouldn’t be. Charlie’s mother says the hospital won’t allow her and her husband to bring their boy home, meaning that if he is to die, it will be with the hospital and not at home with those who love him. Which raises a question: Whose baby is Charlie, anyway – his parents’ or the state’s? In this delicate case, Britain’s national care system has elevated technical expertise over parental love.”

 

This is what happens when you allow socialized medicine into your country. The state becomes the final arbitrator of all healthcare decisions. When further medical treatment is not considered “a good investment”, further treatment is denied. When someone’s life expectancy doesn’t meet government standards, treatment is ended. Even where you will die is determined by the state! When the state is allowed to make these decisions for the family, who’s to say when they will decide that other “abnormal conditions” will not be treated, such as Down’s Syndrome, cerebral palsy, or even hemophilia?

The sordid details of this tragedy are just now being revealed. Despite having loving parents who were willing to take him home and love him until he died, the court ordered a guardian to “represent” the child’s interests, refusing to allow the child to leave the hospital. Bill McGurn, columnist for The Wall Street Journal, says the guardian runs a charity with connections to a sister organization that promotes assisted suicide! Until 2006 this organization was called the Voluntary Euthanasia Society.

McGurn summarizes the disintegration of society this case represents:

“The essence of civilization is that the strong protect the weak. But Charlie Gard shows that the barbarian no long comes wielding a club and grunting in some undecipherable tongue. These days the barbarian comes as an expert, possessed of all the requisite certification – and an unquestioned faith in his absolute right to impose final judgments about the “quality of life” of other people’s loved ones.”

An American Example

This kind of situation is closer to home than you think. J. J. Hanson is a Marine Corps veteran of the war in Iraq. He was living the American dream with a good job, happily married with an infant son, when one day he suddenly had a Grand Mal seizure. After a series of tests, he was discovered to have a brain tumor, a Grade 4 glioblastoma multiforme. This is one of the worst forms of brain cancer. Neurosurgeons told him it was inoperable and chemotherapy or radiation was unlikely to be helpful. He was given four months to live.

Not surprisingly, depression followed this prognosis. But he is thankful that he does not live in a state where assisted suicide was an option. With his family’s support he pursued standard and experimental treatment options. He didn’t accept the grim prognosis of his initial doctors and committed himself to all available remedies. Fortunately, he lives in a country where people can still get treatment of their condition even when the prognosis is poor.

Today he is three years older and his wife is expecting another baby. He has formed an organization called Patient Rights Action Fund that fights assisted-suicide legislation across the country. Hanson says, “If suicide becomes a normal medical treatment for terminally ill patients, lives will be tragically shortened, as patients who might have outlived their prognoses by months or even years kill themselves prematurely.”

 

The Warning

If single-payer healthcare is passed in America we will see children like Charlie Gard and adults like J. J. Hanson denied the treatment they desperately need. We will see the government making determinations of who receives treatment and who does not. We must never let this happen.

 

The Republican train to repeal and replace ObamaCare has gone off the tracks. The result will be a healthcare system in wreckage.

For seven years the GOP has talked about repeal and replacement of the failing ObamaCare system but when given the chance to make historic improvements, they flinched. Too many cooks spoiled the soup.

Politics is a team sport and Republicans have not learned this truth. Democrats may have bad ideas but they stick together. There are too many big egos in the Republican Party who insist on getting attention from the media by opposing their party’s reforms.

Who’s to blame?

Republican defectors include Senators Susan Collins (Maine), Lisa Murkowski (Alaska) and the irascible Senator John McCain (Arizona). Other defectors include Republican Governors John Kasich (Ohio) and Brian Sandoval (Nevada) who heavily influenced their respective senators, Rob Portman and Dean Heller. Others who contributed to defeat include Senators Rand Paul (Kentucky) and Mike Lee (Utah). All of these should be held accountable by the voters in future elections.

President Trump should be given at least some of the blame for failing to sell his healthcare reform on the stump. His “tweets” and White House photo ops were insufficient to sell his Republican Congressional leaders or the public on the importance of reform.

What’s next?

None of this has changed the fact that ObamaCare is rapidly failing. The problem is most people get their health insurance from their employer (160 million) and don’t see the impact rising premiums have on their paycheck. The employer absorbs the rising costs but wages have to stagnate to accommodate the overhead increases.

Those in the individual market see those rising premium costs unless they receive generous subsidies from the government. But even they experience the rising deductibles that now average $6000 for individuals and $12,000 for families. These numbers will undoubtedly increase when the 2018 rates become known.

Republicans will now be forced to reach across the aisle to get Democratic support for any improvements. While this makes sense since bipartisan support makes for better policies, the Democratic position will lead us closer than ever to single-payer healthcare. This was their real intent in 2009 at the beginning of the Obama healthcare reform legislation, but they knew it was politically impossible then to get widespread support. Today that may be possible.

What will single-payer healthcare mean?

I have written extensively on this subject in the past and a review of this blog’s archives will be instructive.(Single-Payer v. Market Oriented Health Care) Single-payer healthcare is a variant of socialized medicine, which puts the government in full control of healthcare spending and treatment decisions. Not only will you lose the freedom to choose your doctor and your treatment, you will have to wait longer to receive any medical care – and then only what the government chooses to allow.

Republicans will be blamed for this failure but it should be remembered that not one Democrat stood up to help the Republicans save the country from the failures of ObamaCare. There is plenty of blame to go around.