November 11, 2013

Another Way Taxpayers Lose Under the Affordable Care Act

Robert Graboyes

Senior Research Fellow
Summary

State insurance commissioners have long seen themselves as protectors of the public's wallets – the officials who say "no" to insurers' requests to increase health insurance premiums. It has not yet sunk in that on this coming New Year's Day, the Affordable Care Act will flip the commissioners' motives upside-down, prompting them to approve and even encourage premium increases.

State insurance commissioners have long seen themselves as protectors of the public's wallets – the officials who say "no" to insurers' requests to increase health insurance premiums. It has not yet sunk in that on this coming New Year's Day, the Affordable Care Act will flip the commissioners' motives upside-down, prompting them to approve and even encourage premium increases.

...

Some critics argue that my swelling-premiums scenario would never occur because state regulators would never approve such increases. But why not? Until now, commissioners were strongly motivated to hold the line on costs. Until now, forbidding insurers to raise premiums meant more money in the wallets of the state's voters and possibly the state's health care providers, too. Now, however, the commissioner who insists on lower premiums reduces the amount of care available to subsidized voters and doesn't save them a dime. Because of the ACA's bizarre structure, higher premiums now mean better benefits for subsidized enrollees; higher incomes for doctors, hospitals, other providers and insurers; and higher state tax revenues from now-richer providers and insurers.

Read the full article at US News