by Peter R. Wechsler
President & Co-Founder, Franklin Retirement Solutions
[email protected]
Obamacare has been a godsend for many of our clients over the years. Those who left the workforce before they were eligible for Medicare have been able to buy health insurance regardless of pre-existing health conditions. In addition, the government helped with subsidies for lower-income folks. Folks retiring before 65 do so for many reasons, not just lifestyle. They can be forced to leave early because of health issues, the need to take care of a spouse, aging parents or grandkids, or they are jobbed out and can’t find a new position at a decent pay rate.
Because of federal changes and higher health expenses, rates are going to go up for many. Our company health plan renews every September 1st, and this year our rates will increase 10%. I also assume I’ll get a nice increase in January from my Medicare Medigap plan.
The 24 million folks on the ACA—aka Obamacare or in PA, the Pennie plan—are looking at possible 20% premium increases. What’s going on?
To start, federal subsidies that help consumers pay for Obamacare plans are expiring. Enhanced payments passed by Congress in 2021 will lapse at the end of December as these payments weren’t included in The One Big Beautiful Bill Act (OBBBA) signed into law last month. With these subsidies going away, higher premiums are on the way. In addition, according to a recent article in the Wall Street Journal, some insurers indicated in rate filings that tariffs could also add to the cost of drugs and medical supplies.
When premiums rise, enrollment falls. Those left in the risk pool are generally less-healthy individuals who have higher claims cost on average, which drives up costs.
Hospital emergency rooms must provide at least a medical screening for anyone who comes in seeking emergency care, and under emergency medical guidelines must either stabilize a patient or transfer them to another facility. To make ends meet, hospitals will need to raise their fees for the patients who can actually pay. This will lead to higher insurance rates for companies, Medicare insurers, and ACA enrollees.
Yes, a vicious circle, and odds are pretty good that we’ll all see our health insurance rates go up in the coming years… or sooner. Oh… and all this is before the Medicaid cuts in the new OBBBA that will cause more to lose coverage and wind up in the emergency room.
Enjoy the cooler temps and bright sunshine this weekend…
Peter