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April 2012 - Volume 18, Number 2


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Young People Hit Hardest by Obamacare
- The Projections in Indiana

by Grace-Marie Turner


Residents of Indiana who buy individual health-insurance policies can expect to pay 75 to 95 percent more ( when the Affordable Care Act (ACA), commonly known as Obamacare, takes effect in 2014 than they would have had the health-care-overhaul law never passed, largely because of changes to the health insurance marketplace dictated by the law.


And the news is even worse for young people. Young healthy men earning $28,000 a year can expect to pay nearly 100 percent more for health insurance, even after counting the new tax credits for which most will be eligible.


Young healthy males at higher income levels earning about $45,000 a year can expect to pay two-and-a-half times more for health insurance in 2014, according to studies produced by independent actuaries Milliman, Inc., who are helping the Hoosier state calculate the impact of Obamacare.


The premium-cost increases are caused primarily by two key provisions in Obamacare — “essential health benefits,” in which the government determines what must be covered by health-insurance policies, and the community rating provisions, which require health insurers to level out premiums so younger people pay more and older people pay less.


According to the Indiana study:
● By eliminating rating on health status, the ACA brings the highest risk to the general marketplace resulting in premium increases of 35 percent to 45 percent.
● The essential-health- benefit requirements will represent a benefit expansion for the individual market,
forcing Hoosiers to buy coverage they may not want or need. This will increase premium rates by 20 percent to 30
● The increases in premiums are not equally distributed. On average, individual-market premiums will increase by 75 percent to 95 percent. However, these increases will be greatest for young healthy males due to the fact that the ACA eliminates premium rating based on gender and health status, and restricts premium rating based on age.
● Young healthy males at 250 percent of the federal poverty level (FPL), or $28,000 a year, can expect to experience almost a 100 percent premium increase even after the application of the premium tax credit.
● Young healthy males at higher income levels — 400 percent of the FPL and above, or about $45,000 a year — can expect to realize premium increases over 250 percent in 2014.


The bad news doesn’t end there: Women over age 55 with incomes for a single person of $45,000 are expected to
experience premium-rate increases of more than 100 percent. And all carriers that offer child-only policies have been forced to leave the state, largely because of Obamacare’s impossibly restrictive rules and regulations.


The state faces costs of between $2.5 and $3.1 billion between the years 2014 and 2020 because of the Obamacare mandate to expand eligibility for Medicaid. This does not include any increased
payments to providers and likely will force more cost-shifting to commercial patients, driving up premiums for all Hoosiers.


And to add to the frustration of Governor Mitch Daniels (Republican), the United States Department of Health and Human Services (HHS), headed by Kathleen Sebelius (Democrat), is refusing to answer his request to use his popular and successful Healthy Indiana Plan (HIP) as the basis for the Medicaid expansion. HIP currently provides
coverage to 40,000 Hoosiers through an innovative consumer-driven program.


While the Indiana legislature, on a bipartisan basis, called for HIP to be the coverage vehicle for the new Medicaid program, HHS has yet to respond to the state’s request.


Originally published in National Review Online’s Healthcare Blog on March 21, 2012, and reprinted with
permission of the author.

Ms. Turner is President of the Galen Institute, a not-for-profit, free-market research organization devoted to health policy, founded in 1995 to promote a more informed debate over individual freedom, consumer choice,
competition, and diversity in the health sector.


FACTS & OPINIONS is one of our quarterly membership newsletters, arriving in January, April, July, and October. It consists of short articles of public interest with an emphasis on current issues.


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