News Column

Insurance Rates Will Soar if Obamacare Delayed

November 1, 2013

Baystreet Global Markets

Delaying Obamacare by just a few months could send U.S. insurance premiums through the roof.

Congressional Republicans and some Democrats are pushing to give individuals more time to sign up for Obamacare after major technical problems have stymied enrollment. But insurers say the consequences of such a move would be heavy.

That's because insurers set their rates for 2014 assuming that all Americans would be subject to the individual mandate, which requires them to get health insurance or face penalties.

Under the Affordable Care Act, insurers must provide coverage to everyone -- even the sickest people -- which would greatly increase insurers' risk and cost. To offset this, lawmakers included the mandate to prompt younger, healthier people who don't use a lot of medical care to sign up.

But if the mandate were delayed by a year, many of those lower-cost folks may not sign up. About two million fewer people would would obtain coverage in the individual market, according to the Congressional Budget Office.

If the individual mandate didn't exist, premiums would be about 15% to 20% higher, according to the CBO.

Adjusting the 2014 rates, however, could be pretty tough to do. How that would work remains an open question, one expert said.

It's possible some insurers could appeal to state and federal regulators to increase the premiums mid-year, but there's not a lot of precedent for that, said another observer.

It's not only next year's rates that could be affected. If the mandate is delayed, 2015 premiums will likely skyrocket. That's because insurers start setting their premiums for the next year in April.

1998 - 2013 Media Corp. All rights reserved.

Original headline: Delaying Obamacare would cause rates to soarDelaying Obamacare would cause rates to soar

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Source: © 1998 - 2013 Media Corp. All rights reserved.

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