Obamacare Premiums Increased Dramatically for Every Age Group in 2014

HealthPocket, an online insurance broker, has measured the increase in premiums for every age group in Obamacare versus the pre-Obamacare individual market. Their conclusion: Premiums increased by double digits for every age group.

What I find really surprising is the increase in rates for 63-year olds: 37.5 percent for women and 22.7 percent for men. Recall that Obamacare forbids actuarially accurate underwriting by age. The difference in rates between older adults and younger ones can be no greater than three to one. This regulation must raise rates for younger people, because the actuarial consensus is that average health spending for 63-year olds is five times that of 22-year olds.

Politically, the purpose of squeezing the age bands is obvious: The younger person, who is unlikely to vote, subsidizes the older person, who is much more likely to vote. If Obamacare had reduced premiums for older adults, I expect it would be more popular than it is today. Now, HealthPocket does point out that these are unsubsidized premiums: Obamacare disguises these true premiums by offering health insurers tax credits to reduce the net premium people pay, thus fooling many into thinking that premiums have gone down.

Another issue to note is the difference in changes for men versus women. Obamacare’s supporters made a big show about outlawing “discrimination” against women, and forcing insurers to charge the same rate for both sexes. Premiums for women of child-bearing age had been higher primarily because of the costs of childbirth. However, this turns around after child-bearing age: Men have higher costs. So, Obamacare caused a higher increase in premiums for older women than for older men.

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For the pivotal alternative to Obamacare, please see the Independent Institute’s widely acclaimed book: Priceless: Curing the Healthcare Crisis, by John C. Goodman.