What Obamacare Means For Me: A Burning Hole in My Pocket

Obamacare (aka The Affordable Care Act) goes into effect Tuesday. What effect will this have on me? In short, because of the Affordable Care Act my health insurance is less affordable, the policy I had can no longer be offered, and I will soon be moved to a new policy. Odd results, given the law is supposed to make health insurance more affordable, and given the president’s repeated statements that if I liked my plan, I could keep my plan.

But I’m getting ahead of myself. First some basic facts and a short history of my health insurance coverage. I first purchased my current health insurance policy in 2006 on the “advice” (read: pestering) of my mother. Given I was a healthy 22-year-old, I didn’t need coverage for frequent doctors visits or prescription drugs. I just needed coverage in the event of catastrophic injury (e.g. hit by a bus) requiring extensive medical treatment. Blue Cross Blue Shield of Illinois had a number of policy options with multiple coverage levels, but one policy was structured for my needs (high copay, high deductible, and high level of total dollar coverage). In 2006, when I first purchased that policy, it cost about $98 per month. While it sucked not having that $100 a month (rounding for convenience sake) to spend at bars or save wisely, it was worth it to have the peace of mind that if I did get run over by a bus, my parents wouldn’t go broke paying for my hospital bills. And it got my mom off my back.

I dropped that policy in mid-2007 and started receiving insurance through my first employer.  But reapplied for the exact same policy in late 2008 when I started attending law school. The price of that same policy two years later in 2008 was about $102 per month, a very slight increase in price over those two years. Enter Obamacare.

Even before passage of Obamacare in early 2010, just the debates over whether the law caused my insurance prices to increase. In October 2009, I received a letter from my insurer informing me that due to the uncertain nature of their future obligations, Blue Cross was increasing policy premiums starting in the next policy year. My premium went from $102 to about $127. After passage of Obamacare, Blue Cross, now with a better idea of exactly how costly the law would be for the company, increased my premiums again in 2010, 2011, 2012, and 2013. Currently my premium is $175 per month, a roughly 75% increase in my health insurance costs. Additionally, I will be subject to another increase starting in October 2013 because I’ll be turning 30 in the next policy year. But that’s still an extra $75 per month ($900 per year) in costs that are directly the result of Obamacare. 

Clearly, the president's line that “if you like your plan you can keep your plan” is a total lie. Because a core tenet of Obamacare is that insurers must provide minimum levels of coverage in every health policy, insurers can no longer offer plans with varying coverage levels that fall below that minimum level. So even though I don’t need or want coverage beyond what my policy originally provided, Blue Cross has to provide it. Thus, when I called Blue Cross last month to see what options I had for changing my policy terms to lower my premiums, I was told my policy was “frozen” because Blue Cross cannot offer it and cannot let current policy holders stay in it. So in a short time I’ll be moved to a new policy that provides all the coverage prescribed by Obamacare (because they know better than I do what coverage terms I need). These changes are not something Blue Cross wants to do. No, these are changes they are forced to do by the terms of Obamacare. 

Why are my premiums going up 75%?  Its certainly not because I have 75% more coverage.  No, my premium increases are going to subsidize lower premiums for Obamacare users who have pre-existing conditions and/or older policy holders. Obamacare’s success in controlling prices overall — that is, keeping premiums for older, sicker individuals lower than they otherwise would be in a pure market— hinges on making healthier, younger people like me pay more than they otherwise would for coverage.  

Basically, Obamacare sucks. My insurance costs have nearly doubled, I can’t keep my policy, and I’m prohibited from making the rational economic decision not to continue paying for health insurance (thank you, individual mandate "tax"). The extra $900 per year that I’m paying in insurance premiums as a result of Obamacare could’ve gone to paying down my student loans faster, or saving for retirement, or just spending on something else I deem to be more valuable based on my specific economic situation. Instead, that $900 has been redistributed.  Obamacare is just that, wealth redistribution. But unlike other taxelike the progressive income tax or employment taxes, which redistribute wealth based on the income of those it's being taken from, Obamacare redistributes wealth from the young to the old, by making the young and healthy pay more than they otherwise would for insurance.