Obama's New York Model: How the state destroyed its insurance market using ObamaCare rules

Wall St. Journal ^ | July 23, 2013

[grundle]

President Obama has found a new example for the pending wonders of his health-care reform—New York. In his latest sales pitch last week, he declared that insurance rates in New York's ObamaCare exchange "will be at least 50% lower next year than they are today. Think about that: 50% lower."

Thinking is good, which is why you may have guessed that there's more to this story than a 50% discount. The real news is that New York ruined its individual insurance market two decades ago by imposing the same regulations that ObamaCare is about to impose on every other state. If the Empire State's premiums do now fall, it will be because the Affordable Care Act partially deregulates New York insurance.

The culprit behind New York's long-standing insurance woes is a regulation known as "community rating" that hides in higher premiums the income transfers from one group to another. Insurance works best when people pay rates that are tied to their expected health risks over time. But a few states limit how much premiums can vary from person to person.

ObamaCare takes this community rating national. The law says that no individual can pay more than three times what the least expensive person pays, regardless of risk. Today 42 states have rating bands that are five to one or more.

New York's ratio is one to one. This means that insurers must vastly overprice coverage for, say, a 28-year-old who exercises regularly and doesn't smoke but vastly underprice coverage for a 55-year-old with high-cost chronic illnesses. Democratic Governor Mario Cuomo adopted this rule in 1992.

Premiums shot up 30% to 40% on average in the first year, often much more, and continued to spike. Insurers shed books of business, while customers cancelled their policies. Enrollment fell 38% in three years.

[Tzimisce]

The Tea Party was elected to get rid of Obamacare.

To date, the Tea Party has only been able to push Amnesty through the Senate.

Think about that. :(

[Vigilanteman]

Not the TEA Party, a handful of GOP imposters like Marco Rubio who used the TEA Party to get elected. Others such as Ted Cruz and Mike Lee are going a great job.

Face it, ObamaCare is a great deal for winos, leeches, druggies and illegal aliens. There may be more of them than there is of us.

[originalbuckeye]

The objective of Obamacare was always to destroy private health insurance. The objective of Obamacare was always about the money. The Government wanted control over that sixth of our economy and they will soon have that. You didn’t really think it was EVER about better healthcare for Americans did you???

[lowbridge]

bump

[Lancey Howard]

To date, the Tea Party has only been able to push Amnesty through the Senate.

Try, "killed gun control".

[SunkenCiv]

Thanks grundle.

[Tzimisce]

Really? The Tea Party has that much pull in the Senate?

Then how did Amnesty get passed?

[Lancey Howard]

Have you heard? The Democrats control the Senate.
The Senate majority leader is named Harry Reid.
DuckDuckGo is your friend.