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Californians Hit with Big Rate Shocks

October 28, 2013

[First published at National Review Online.]Middle-income Americans are learning first-hand how Obamacare affects them.

stethoscope and insurance docs

[First published at National Review Online.]

Middle-income Americans are learning first-hand how Obamacare affects them. The Los Angeles Times has a scathing article about the premium hikes many Californians who have individually purchased health-insurance policies are facing because the law says they must buy policies that cover more and cost more:

Fullerton resident Jennifer Harris thought she had a great deal, paying $98 a month for an individual plan through Health Net Inc.She got a rude surprise this month when the company said it would cancel her policy at the end of this year. Her current plan does not conform with the new federal rules, which require more generous levels of coverage.

Now Harris, a self-employed lawyer, must shop for replacement insurance. The cheapest plan she has found will cost her $238 a month. She and her husband don’t qualify for federal premium subsidies because they earn too much money, about $80,000 a year combined.
“It doesn’t seem right to make the middle class pay so much more in order to give health insurance to everybody else,” said Harris, who is three months pregnant. “This increase is simply not affordable.”

The Times reports that “middle-income consumers face an estimated 30% rate increase, on average, in California due to several factors tied to the healthcare law.” And Times reporter Chad Terhune explains why this is happening: 

Their rates are rising in large part to help offset the higher costs of covering sicker, poorer people who have been shut out of the system for years.

But apparently supporters of the law thought that other people were going to be paying.

Pam Kehaly, president of Anthem Blue Cross in California, said she received a recent letter from a young woman complaining about a 50% rate hike related to the healthcare law.

“She said, ‘I was all for Obamacare until I found out I was paying for it,’” Kehaly said.

And these are not isolated examples:

Nearly 2 million Californians have individual insurance, and several hundred thousand of them are losing their health plans in a matter of weeks.

Blue Shield of California sent termination letters to 119,000 customers last month whose plans don’t meet the new federal requirements. About two-thirds of those people will experience a rate increase from switching to a new health plan, according to the company.

HMO giant Kaiser Permanente is canceling coverage for about half of its individual customers, or 160,000 people, and offering to automatically enroll them in the most comparable health plan available.

Two million people in California have individual health-insurance policies, and only about half of them are “grandfathered,” which means they haven’t had any major policy changes since 2010 and therefore aren’t subject to the rate shock. But that means than 1 million Californians are exposed — a huge number of people who no doubt believed the president when he promised, “If you like your plan, you can keep your plan.”

Grace-Marie Turner is president of the Galen Institute.