TakeAway: Another study predicts higher insurance prices. The culprit: adverse selection.
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Excerpted from WSJ: Blue Cross Blue Patients, Dec 5, 2009
The Blue Cross Blue Shield Association has found that premiums in the individual market will rise on average by 54% over the status quo, which translates into an extra $3,341 a year for families and $1,576 for singles.
The Congressional Budget Office also found this week that ObamaCare will boost premiums in the individual market by as much as 13%. But the White House called that a triumph because the higher costs will be offset by taxpayer subsidies that will be transferred to the federal balance sheet.
The Blue Cross study is in fact more precise than CBO’s because it is based on real market data, rather than modeling assumptions. The association mined the actuarial data from its six million individual or small-business policies, nearly one-eighth of those sold in the U.S.
Lo and behold, Blue Cross found costs will rise if Democrats force insurers to cover anyone who applies and then limit how much insurers are allowed to charge based on age or health condition. Economists call this adverse selection; people will wait until they’re sick to buy coverage, and the Democratic rules make it perfectly rational for them to do so.
The reality is that all health-care costs are ultimately borne by consumers, whether through more expensive premiums, lower wages or higher taxes.
The regulatory schemes favored by Democrats can’t change that law of economics …
Full article:
http://online.wsj.com/article/SB10001424052748704007804574574170859847850.html?mod=djemEditorialPage
The Homa Files 
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