Whether by design or coincidence, rural residents can expect to take it in the pocketbook as the Patient Protection and Affordable Care Act (aka “ObamaCare”) takes effect over the next 15 months.
Insurance exchanges, for those wanting to buy insurance, open on October 1 of this year. In 2014, everyone is required to buy “qualified” insurance coverage or pay a penalty to the IRS.
However, the new law’s impact on for people in rural areas isn’t the same as for those in urban areas.
According to the Robert Wood Johnson Foundation, rural residents are more likely to purchase their own coverage through the individual market or to be covered by employers with less than 50 employees.
Individuals under 35 are now experiencing premium increases of 40% and higher. Others are finding that insurance plans they’ve used for years are being discontinued because politicians and bureaucrats have deemed them inadequate.
Rural residents are also more likely to be covered by PPO plans because HMOs are seldom offered in rural areas. Under ObamaCare’s health insurance tax (or “HIT” tax), PPOs pay double the tax charged to HMOs and self-funded plans aren’t taxed at all.
Worse still, the health insurance tax isn’t a simple percentage added to your premium. Instead, it’s re-calculated by bureaucrats each year in order to raise enough money to pay the costs of new ObamaCare entitlements. Insurance companies can’t tell their customers how much the tax will be until federal bureaucrats decide how much blood they need to squeeze out of us.
For families who buy their own insurance through the individual market, the HIT tax is expected increase premium costs by an estimated $508 per year or $215 per year for individuals. For small employers, premiums are estimated to increase by $683 annually per family or $276 for individuals. Of course, these amounts may change drastically if the new law causes more people to stop buying insurance because they can no longer afford it or because their plan has been discontinued.
These disparities cause rural residents to subsidize more populated areas, whether along Colorado’s Front Range or in densely-populated states like California, New York and Massachusetts, for no rational purpose.
Another provision that can only make costs higher everywhere is the requirement that everyone pay for coverage they may not want or need. For example, maternity coverage is now required for everyone. That includes men, as well as women who are beyond child-bearing age, women who have chosen surgical sterilization, and, in a cruel irony, women who are physiologically incapable of bearing children. And just for good measure, women must pay for prostate cancer coverage.
President Obama claimed the new law would save the average family $2,500 in premiums. More recently, he claimed that Americans have saved $3.4 billion. The first claim is laughable, and the second is dubious, too. Here’s why:
ObamaCare requires insurance companies to spend at least 80% of the premiums they collect on medical services. No more than 20% can be spent on administration and overhead. If an insurance company exceeds 20% on overhead, it must refund the difference to policyholders.
That sounds nice until you consider that this rule has no bearing on the total cost of premiums. Whether the average policy costs $5,000 a year or $50,000 a year, the insurance company is only penalized if it spent more than 20% on administration and overhead.
Personally, I’d rather pay less in premiums even if my insurer spends 25% on overhead than to pay higher premiums to an insurer that spends only 15% on overhead.
The types of insurance to buy – or not to buy – should be a choice we make for ourselves. In a free country, it would be. Unfortunately, we live in a country where we are surrendering our freedoms one at a time.