How Obamacare Screwed up the Individual Health Insurance Market

John Daniel Davidson:

Before Obamacare, states had significant discretion over their individual health insurance markets and many created high-risk pools for people whom insurers turned away. Most of the people insured by these pools received subsidies, paid for by premium taxes imposed on insurance companies. Of course, since different states ran their high-risk pools differently, they had varying degrees of success, usually pegged to how much the state subsidized the pool (Maryland’s high-risk pool provided $120 million in subsidies, California’s only $40 million). But at least the pools provided a way for people with expensive or chronic health problems to have some form of health coverage.

All those high-risk pools disappeared with Obamacare. Since insurance companies were barred from turning anyone away because of a preexisting health problem, there was seemingly no need for high-risk pools anymore, and states wound them down.

That brings us to the present day. Under Obamacare, all those people with preexisting conditions, who previously had been in high-risk pools, were lumped into individual insurance markets with everybody else, which of course caused premiums to rise. As premiums rose, younger and healthier people, who didn’t think coverage was an absolute necessity, simply didn’t buy insurance. That meant the people left in the individual market were on average older, sicker, and more costly to insure. Hence the skyrocketing premiums under Obamacare.

There’s more to this article than that but I wanted to illustrate the problem. Read the whole thing here.


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